Adam Woods | //brandrepublic.com
As many advertisers were forced to cut back last year, so media owners probably comforted themselves with the thought that no part of the industry was immune to the effects of the UK’s deepest recession since the 30s.
However, the latest research shows that digital media have, to some degree, managed to ride the storm. According to Nielsen, overall internet adspend rose from £461.4bn in 2008 to £506.3bn in 2009 – a 9.7% year-on-year increase. While half of the UK’s top 100 online advertisers cut their media spend in 2009, more than 80% of them increased their internet investment; many of them attracted by the prospect of solid ROI at a time when they were striving to cut marketing costs.
More for less
Regardless of the effects of the recession, there appears to be a growing belief among brands that increasing adspend does not guarantee marketing success. By its own reckoning, Moneysupermarket.com, the 10th-placed online advertiser in the list, spent 22% less on its marketing last year, including search, but was still able to attract 14% more customers.
‘For us, it has become less about how much you spend and more about what you say and how you say it,’ says Ian Williams, the brand’s director of communications.
In a handful of sectors there was a sharp reduction in internet adspend. While they continue to make extensive use of the channel, media/entertainment brands collectively cut their budgets for online marketing by almost 16%.
Other sectors where big falls occurred include retail, which spent 42.3% less, and the property and pharmaceutical sectors, which made reductions of 45.5% and 55.2% respectively. However, while property and pharmaceuticals cut their marketing across the board last year, retailers raised their budgets overall; this suggests that online price deflation has enabled advertisers in this sector to make significant savings.
The figures compiled by Nielsen do not include a breakdown of information on the separate online advertising platforms. Nonetheless, some upward trends across digital marketing can be easily identified.
For example, mobile internet use is growing rapidly, as smartphone handsets offer users a greatly enhanced online experience on the move. The mobile advertising market is still relatively small, but is beginning to generate fresh revenues and helping to cannibalise those of other sectors.
‘Mobile internet is here to stay,’ says Garfield. ‘Inevitably, that will eat into media consumption in other channels, mostly from print. As transactional capabilities improve in mobile, this may even affect consumer retail and internet retailing.’
Big advertisers whose internet commitment remained relatively small in 2009 included Procter & Gamble and Unilever, each of which assigned 1.4% of their overall media budgets online.
However, they also committed more than in the previous year, and the expected ongoing rise of social media and mobile look set to extend major FMCG players’
‘The growth of mobile and maturing of the social web as an advertising opportunity have underpinned a growth in digital spend from the more reticent sectors,’ says Rhys Williams, managing partner at digital agency Agenda21.
As relatively recent additions to the online advertising portfolio, mobile, pre-roll video and social media are still in their initial growth phases, and are therefore likely to make an even bigger contribution in 2010, particularly as their interplay with offline media is explored.
According to IAB figures, online was the only media channel to grow during the first half of last year. TV and press adspend may have been squeezed, but the notion that digital and traditional forms of advertising operate in isolation from one another has been questioned recently.
‘Advertisers understand the combination of opportunities online and how they fit with traditional media,’ says the IAB’s Phillipson. ‘They are thinking of digital as the platform that runs through that entire media schedule.’
Sir Martin Sorrell has suggested that the picture presented by next year’s equivalent figures could be very different from this one. The growth in digital marketing is unlikely to stop as the economy continues to recover. Smart marketers will continue to invest their budgets where they can achieve the biggest returns and if innovation in digital continues, the industry will continue to thrive.
Nielsen has improved the methodology used to work out the top 100 online advertisers for 2009. The new data is based on a Netview panel. Each panellist is given a meter and every time they view an ad online, it counts as one impression which is projected nationally. Previous surveys used a combination of figures from ABCe and declared information from the sites themselves. This tended to lead to inflated spend data. The new system creates a more robust methodology and removes the inflation factor. However, it means there is as yet limited comparative data with the previous year.
The figures are for display advertising and all figures are estimated costs based on a number of factors including rate card and industry discount factors. Details of the full methodology are available from Nielsen.