The headline is pretty spectacular, to be sure, if you are in the Internet marketing biz. The UK has become the first major world economy to report that online ad spending has topped that of television. The IAB put together numbers as reported by The Guardian that attests to the true coming of age of the Internet space as an advertising channel. Or does it?
Apparently, while there is a rush to make this announcement it is one of those situations that requires peeling back the onion a little bit more to see what may really be happening. Here’s a bit of background first
UK advertisers spent £1.75bn on internet advertising in the six months to the end of June, a 4.6% year-on-year increase, according to a report by the Internet Advertising Bureau and PricewaterhouseCoopers. To put this in perspective, in 1998, when the IAB first measured internet advertising, just £19.4m was spent online.
The internet now accounts for 23.5% of all advertising money spent in the UK, while TV ad spend accounts for 21.9% of marketing budgets.
Well done, chaps! (Please note: As a nod to Andy Beal’s British pedigree I fully acknowledge that any attempt to sound like him will come off as lame so save your breath). Interestingly enough, the IAB had predicted this to happen by the end of this year but the worldwide economic climate has sped the process as companies look to spend less and get more, at least theoretically.
As you might expect the TV side of the house is putting their 2 cents (or is that pence?) in on the subject.
Thinkbox, the UK TV marketing body, has taken exception to the IAB’s figures, arguing that the internet is now mature and diverse and it is inaccurate to collate all the figures as if it is one single medium.
“It is interesting but meaningless to sweep all the money spent on every aspect of online marketing into one big figure and celebrate it,” said Lindsey Clay, marketing director at Thinkbox. “Online marketing spend is made up of many things, including email, classified ads, display ads (including online TV advertising) and, overwhelmingly, search marketing. They should be judged individually.”
In all honesty, I can’t say I completely disagree on that assessment. Online advertising as a whole is much more diverse than the option that TV presents. Maybe that’s TV’s trouble moving forward though. It’s a one trick pony that has just enough mileage on it that people are looking for a new ride.
So before the online ad world pops the cork on the champagne there are some sobering numbers that were reported in addition to some thoughts about the direction of online ad spend.
Despite the seemingly inexorable rise of internet ad spend, a closer examination of the IAB’s figures show that the recession has had an impact. In the first quarter £920m was spent on online advertising, representing 8.6% year-on-year growth. However, in the second quarter, spend fell almost £100m to £832m, representing only a 1.1% increase on the amount spent in the same period last year.
Not exactly setting the world on fire but not a negative number either. Hey folks, let’s face, this world economy sucks right now. If there is any expectation of big numbers then you should have your head examined. Even Microsoft reported its first sales decrease EVER in its history so go no further for evidence that we are far from being out of the woods.
So while interesting, we will need to sit tight to see any trend in this shift of ad dollars. The online space is struggling in another way right now as social media is overtaking the time that Internet users spend online but it has yet to show that it is a strong advertising play. How that turns out could affect the rest of the Internet advertising world in an adverse fashion. As you already know, that scenario is just starting to be played out so we’ll have to see. As a final note:
Adam Smith, futures director at WPP’s combined media operation Group M, argued that the internet’s share of total UK ad spend could be close to its peak.
“This day was bound to arrive, as the internet has been attracting a huge long tail of advertisers that have not advertised before doing completely new things,” he said. “It is a memorable event. However, it is a bit simplistic to make this comparison [and] it is always possible that internet’s share [of total UK ad spend] could go backwards if TV has a good year.”
So what is it Pilgrims? Is this the start of a trend or a blip on the radar for now?