Online advertisers have taken digital ad spend above £4 bn in the UK according the latest research published by internet advertising trade association, the IAB and PriceWaterhouseCoopers (12.8 per cent, from £3.5bn in 2009 to £4.1bn a year later).
This is probably more than the GDP of most countries outside the G8 (I tried to work it out but gave up). The news should warm the hearts of the UK digital marketing industry with £1 in every £4 spent on marketing going to digital campaigns.
The full release from the IAB can be viewed here and below we’ve rounded up comment from various digital agencies, technology providers and the like to tell us what they think of the news.
Chris Bunyan, MD of video adevertising company, Localstars.
It’s no big surprise that spend on online video advertising has nearly doubled in 2010 to £54m – average click-through rates for digital video ads tend to be over three times higher than traditional online advertising. And it’s not just about major brands supporting their big budget TV ad campaigns with digital video executions. We work with lots of smaller businesses who’re showing a big appetite for video. The increasing spend on this area will fuel greater innovation, with new ways of making digital video more interactive, as well as more sophisticated measurement systems.
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Rupert Staines, Managing Director of RadiumOne
The IAB’s figures prove that online advertising is showing no signs of relenting, but putting it all down to the Facebook effect may be a little premature. The key to this acceleration is that the entire Web is now social, rather than just what you would label “social networks”.
All aspects of internet use, such as email, copying and pasting, URL shortening, in fact anything that involves sharing or some sort of social connection, is what is really responsible for this phenomenon. When you consider that comScore recently said that Facebook is responsible for 9.9% of web surfers online time, advertisers are clearly asking themselves “what about the other 90.1%?” Social networks do a good job of targeting their audiences, but they do also represent walled gardens.
For advertisers looking to expand their presence, it’s all about targeting their prospective audiences across the open and social web.
Dan Ruch, VP for Europe at online video advertising experts, Tremor Media
And the growth looks to continue as most of the UK’s online video content has not been enabled for monetisation. Moreover the UK population’s online video viewership is roughly only 20 per cent of the US population’s at present, and 2010 online video advertising spend in the UK represented roughly 6 per cent of the total US online video spend (approximately $1.4 billion).
The online video industry must look to the US’s success and offer the same technologies and services to marketers in the UK, with an aim to close the spend discrepancy between this and that side of the pond.
You can follow Tremor on Twitter here.
Jamie Harvey, operations director at digital agency Addiction Innovation:
Digital was once the annoying little brother trying to hang out with the big kids whereas now it sits at the heart of everything. Where you once had very defined boundaries you now see digital buyers pinching TV spend while outdoor budgets are being used by digital planners to create really engaging media experiences. Essentially it comes down to immediacy, data, communication and usefulness. We can now give you what you want, before you know you want it and then let you share your experience with your peers afterwards. It’s almost too easy.
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Paul Soanes, group business development director at destination media specialists, Brandspace.
Some agencies will tell you that traditional advertising is either dead or dying, as online advertising offers more measurability. While that is true, it’s important to consider a customer’s frame of mind when exposed to any type of display advertising.
The truth is that we don’t yet know how far to push the limits of online advertising in terms of infiltrating “personal space” before consumers switch off completely. Having 100% share of voice is one thing, but if this is in an environment that consumers consider to be personal, what’s the cost?
Media buyers are pressured to demonstrate value now more than ever, yet the most savvy brand managers know that brand saliency relies on consumer engagement, which relies on a relaxed, passive frame of mind. This means that supporting traditional channels, such as experiential marketing, with online is fast becoming the norm.
It would be interesting to see how the increase has compromised ad spend in other areas, but I would say from experience that online is a complimentary channel to the traditional ones. without generalising, I would say online advertising seems to have added value – rather than provided a standalone alternative.
You can follow Brandspace here.
Simon Mansell, CEO, TBG Digital
The advent of the Internet and social networking in particular has transformed the advertising industry. Today’s figures from the IAB confirm the unstoppable rise of Facebook and its place in helping to drive significant growth in this sector. The unique nature of Facebook and social networking generally lends itself to constant innovation and evolution. With 600 million Facebook users worldwide, new techniques and initiatives will continue to be critical if companies are to appeal to individuals and keep them interested and engaged in ongoing campaigns.
Specifically, marketers should look to employ tactics to address these issues through a combination of strategy and technology designed to increase personalisation and user engagement in order to achieve greater ROI. Holding the attention of an individual for a period of time requires a methodological approach, creativity and insight. In the online world marketers can gain competitive edge by not just reaching an audience, but drawing an individual so that they interact and respond based on detailed testing and analysis.
Marketers should understand that by deploying technology-oriented tools in conjunction with a powerful strategic approach, they can drive greater revenue and deliver a more engaging, constructive dialogue with their online audiences. This approach will continue to fuel both brand success and future market growth.
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Giles Luckett, digital planner at balloon dog:
When I heard that online advertising had broken the £4bn mark my first thought was, ‘It’s about time!’ and my second was ‘Why is it still only 25% of UK ad spend?’ Don’t advertisers want to know exact return on investment figures? Do they not value free exposure that viral campaigns bring? Do they not like instantaneous feedback? Do they not want to give their customers a level of brand engagement they’ve never before enjoyed and a level of control that was once merely the stuff of brand-owner dreams? No, apparently 75% of them don’t…
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Steve McGrath, Managing Director, Big Dot Media:
With £1 in every £4 being spent in online advertising, and with social networks now accounting for 25% of time spent online in the UK, it is essential for brands to have an on-going, well planned and consistently maintained social media strategy. All the main sectors in online advertising including display, PPC , mobile and video advertising are experiencing tremendous growth and this will continue for some time.
Brands are falling over themselves to tap into this market, indeed we are seeing huge increases in the demand for social media applications and digital advertising assets, which we are expecting to continue for the foreseeable future.
In addition, the 2012 Olympics will add an incredible boost to mobile and digital advertisers over the next 18 months and we are already being asked to help plan social and mobile advertising strategies to take advantage of this.
Follow Big Dot here.
Nathan Fulwood, business development manager, Realise Digital:
The fact that online ad spend is increasing is hardly news these days, but we’ve certainly seen more sophistication over the last year when it comes to online media buying. Apart from the big ad portals, our clients are getting interesting results by focusing more on niche, highly targeted audiences. I only see this increasing over the next year and it’s potentially a very cost-effective route for companies to consider, especially in the B2B arena.
Elsewhere, the rise of mobile is also going to be a massive opportunity for brands. But marketers need to tread carefully as the considerations for mobile advertising are completely different. Careful planning is needed to make the most of this evolving channel.
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Marc Heal, business development director at Duke & Earl:
Although search advertising continues to dominate, and display has grown healthily, the IAB figures show that the really explosive growth has been in social media ads (up 200%) and ads around online video (over 100%), though admittedly from a much smaller base. Those advertising trends are surely a reflection of changing patterns of internet use – the web as a portal for social connectivity and for viewing video as well as a tool for search. From those continuing shifts, it is clear that building consumer loyalty through social networks, and increasing consumer engagement through more imaginative uses of interactivity (and especially, online video) are going to be key creative challenges for online advertising over the next few years.
In any event, the advent of internet connected digital TV platforms (most importantly, YouView) will make the boundaries between “TV” and “Online” ad spend ever harder to define. In five years time, what will be the difference?
Follow Duke & Earl here.
Jake Bailey, Chief Evangelist, RichRelevance:
Brands are strategically shifting their focus from traditional to digital media. Today, there exists a $50 billion global opportunity when we compare ad spend vs. media time spent. While consumers spend 28% of their time online, only 13% of ad dollars are spent there, with the majority of these dollars languishing in traditional media channels (where people historically spent time).
As ad dollars transition to the internet, a tremendous opportunity to close the gap is available to retail publishers, who have a lower penetration of the online display market, but command much higher CPMs than social networking or email sites.
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Robin Bonn, business development director, Code Worldwide:
This may only be the tip of the iceberg. As consumers demand greater personalisation and brands seek a competitive advantage, more businesses will invest in marketing technologies that make the production of high volume online advertising a more streamlined, tailored and cost-effective process.
For example, in one click, banks can now implement rate changes into all campaigns and maintain 100% brand and legal compliance. Also brands in hard-fought sectors such as telecoms can now respond far more quickly to competitor activity, bulk-building new campaigns in minutes rather than days.
Our automation platform ‘adZU’ already enables mass banner creation at effectively zero incremental cost. This revolution in what was historically one of the most labour-intensive areas of marketing production will push digital ad spend to even greater heights.
Follow Rob here.
There’s more comment coming, in the meantime if you would like to get your thoughts included, drop us a line at email@example.com.