Let’s hope Richard Eyre is a man with a sense of irony. This week, the former chairman of the Internet Advertising Bureau announced he will be joining London radio group GCap as its chairman – just as the IAB triumphantly unveiled a stunning set of growth figures which suggest the internet has knocked radio off its perch as the second most consumed medium in the UK.
The IAB, now steered by Guy Phillipson, deserves its moment of triumph. The 2006 figures really do scintillate across a number of facets. To begin with, online advertising spend growth, at over 41%, has amply fulfiled Phillipson’s sanguine expectations that it would pass the £2bn threshold this year. Put into perspective, that means it has overhauled national newspapers (£1.9bn) and holds a market share of 11.4% compared with 7.8% last year. In effect, online is coming within challenging distance of the top-spending medium, television, whose share last year fell nearly 5% to £3.9bn.
How long can this vertiginous growth curve be sustained? Much of online’s explosive popularity is ascribable to the step-change in broadband penetration over the past year. Wide availability of broadband has in turn encouraged advertisers to be more experimental with rich media advertising (graphics, audio, animation and video – not necessarily “television” as such). Another catalyst has been the burgeoning phenomenon of social networking websites, which have encouraged advertisers to seek a new kind of engagement with younger audiences.
All three strands of this high-octane growth story would seem to have plenty of mileage left in them. The problems for the digerati lie elsewhere. For this is a lopsided success story that continues to highlight some of online’s limitations as a communications medium. Paid-for search, at about 58% of total online spend is still overwhelmingly dominant, a dominance that is unlikely to be subdued by display any time soon, since the growth rate is over 50% per annum. Furthermore, usage by advertisers is heavily skewed towards a restricted number of categories, notably recruitment, finance and technology.
Which suggests that the internet, for all its new pretensions to brand-building capability via rich, broadband-borne media, is still at its best as a direct response mechanism.
At the moment, this is not too much of a constraint for the medium. The seductive availability of apparently scientific metrics (web analytics) make the digital budget an easy sell to a finance director or procurement department intent on immediate return on investment.
But to the extent that the role and power of “traditional” media are being eroded in these self-same annual budget discussions (because spend is harder to justify), marketers should be on their guard. They are laying up a store of trouble for themselves: the internet is not some panacea that displaces the need for the rest of the communications mix.
Ironically perhaps, online needs to become a bit more like traditional media if it is to further improve its brand-building credentials. It must provide user-friendly points of comparison with other brand-building techniques available to the media planner. A start has been made with Jicims, the Joint Industry Committee for Internet Measurement Systems. But the development of a single online planning currency that can be integrated with existing cross-media planning tools is going to be a long, arduous and expensive task.
In the meantime, capable operators in traditional media need not hold their breath. There will always be a place for the likes of Richard Eyre.