Figures released today by the IAB and PricewaterhouseCoopers show that advertisers spent a record £1.75 billion on digital marketing in the first six months of this year, outstripping TV to become the UK biggest advertising medium.
In case you don't know, as of today the web accounts for 23.5 per cent of all advertising money spent in the UK, while TV takes a 21.9 per cent share of marketing budgets.
This landmark has been a long time coming, but today was the day that David finally took off his specs, put down his MacBook, walked up to Goliath and sucker punched him right in the chops.
It goes without saying what a sea change this represents, but to put things in perspective in just six years the internet has gone from the smallest advertising medium (worth just £19.4 million) to the biggest.
In fact, when the IAB first started measuring online ad spend back in 1998 it was virtually impossible to mention ‘the internet' to marketers without getting shoed away in the direction of the IT manager.
Now, thankfully, things have changed. While still dominant, TV no longer monopolises the media schedule like it used to in the nineties, and marketers have realised that digital is a cheap and effective way of building their brand.
Of course, the swing-shift has been prompted by a fundamental change in consumer behaviour. Thanks to the rise of the internet, and media fragmentation in general, it's no longer possible for brands to reach a captive audience of eight million people during Coronation Street.
The smart money is now being invested online where consumers are watching video clips, downloading shows and consuming entire series on-demand. Media consumption habits have evolved and advertisers have cottoned on to the fact that TV, while still a marvellous medium (there you go Thinkbox), is not the be all and end all.
However, this is only just the beginning. The majority of big-name brands still devote a woefully small portion (usually between five and ten per cent) of their total media spend to the internet. And the digital industry, while becoming increasingly sophisticated, is still in its infancy.
What today's landmark does signal is the need for a fundamental structural change on the part of both advertisers and agencies. Brands need to re-engineer their marketing teams to ensure that digital is properly integrated into the media plan, while agencies need to re-focus to serve clients that no longer distinguish between traditional and digital media.
Clearly, the boundaries between the internet and TV are continually blurring so today's announcement is not a case of one medium winning out over another. However, it does point to a future where brands value ‘pull' over ‘push' advertising and two-way conversations over broadcast messages.
Comments
Thanks for the comforting words, Gareth. TV is indeed still marvellous – and proven to be the most effective ad medium pound for pound by impartial sources like the IPA – and proven to be even more effective when internet is added to it. But then you know all that.
You write as though this is the day you've been waiting for all your life. Did your parents not let you watch TV? What did it do to you that made you so triumphant? Is it anything to do with your crush on Valerie Singleton when you were a tot?
The only depressing thing about this story is the unseemly glee coming out of online communities as if TV has blighted their life for too long, when in fact TV makes internet marketing better and when TV content is making the internet more fun. There'd be a lot less Twittering without telly!
I am about to post a more official response to Revolution on the main story and I hope you will then understand why we think that the story merits another perspective.
But I'd just like to remind you how much I - and TV companies - love the internet too. Don't want to spoil the IAB's big day in any way!
dano - 30/09/2009
Tess Alps love 15, Gareth Jones to serve
Forgot to add that your point about Coronation Street is quite wrong. You can certainly still get 8m all in one moment in Corrie on ITV1 \(10.5m in the X Factor if you like), plus millions more in a short space of time via a plethora of broadcast channels and online catch-up services.
Broadcast TV fragmentation has nothing to do with the internet but has all been driven by digital broadcasting , whether satellite, cable or DTT. And it's this multi-channel growth that is delivering the highest ever viewing to commercial TV - yes, including young people - highest ever commercial impacts \(2.45 bn ads a day seen on UK TV) and greater targeting and segmentation possibiities.
Under the circumstances, it's testament to the power of TV content like Corrie \( or Peep Show, Flash Forward, live football and hundreds of other shows that you might like) that millions of people chose to consume exactly the same TV at the same moment.
Thanks as always for your comments Tess. I love TV. And Valerie Singleton.
The point I'm trying to make is simple: internet ad spend overtaking TV ad spend is symptomatic of a fundamental shift in consumer behaviour.
As wonderful and creative as TV advertising can be, it has often been the mainstay of lazy marketers and arrogant media planners eager to get off to their long lunches. But now, thanks to the rise of digital platforms, brands and agencies can no longer afford to rely solely on tried and tested marketing methods, because in an age of social media, engagement and conversation, they don't always work as well.
If I appear gleeful it's simply because the IAB figures prove that marketers have woken up to a world where advertising is about dialogue with consumers.
Ultimately, it's not about the internet versus TV, it's about exciting new opportunities for brands.
I will confess, however, to taking a small amount of joy in seeing the internet crowned \(according to the IAB) the UK's biggest ad platform. For years, the web was the underdog, spurned by the 'grown up' media industry for its banners and pop ups. Now, for the moment at least, it's having its day. Come on. Everyone loves an 'underdog comes good' story don't they?
Whilst the shift in investment to online may, in Gareth's words, represent 'a fundamental shift in consumer behaviour', there is also a danger that the digital champions over-play the decline of TV. Trotting out cliches like TV advertising is the preserve of 'lazy marketers' and 'arrogant media planners' is unnecessary and simply damages the media industry as a whole. Celebrate the rise of digital ... but don't do it at the expense of other channels.
Thanks Martin. I'm not arguing that TV is necessarily in decline, just in a state of flux.
Good TV advertising has been, and will continue to be, one of the most creative and effective forms of mass media marketing.
I was simply suggesting that in the past, due to a lack of alternatives, it has been the default option for some, shall we say, less insightful brands.
Obviously I'm not implying that all TV advertising is the preserve of lazy marketers and arrogant media planners, otherwise we wouldn't have gems like the Cadbury Gorilla ad and Comparethemeerkat, to name just a few of the most recent examples.
I'm not one of the grand fromages of media nor would I claim to be. What I am is one of the odd lot that started "mucking about" with the Internet and development "little" communications methods which were perceived as being "too technical" to bother with. I am one of the people who for years appeared at client meetings only to be shouted down in private break out groups by ATL creative directors. I am one of the people who were paraded by the same agencies in front of clients to wave my hands and sound enthusiastic about digital and then placed back in my box whilst the adults got on with the serious business of making TV ads. I'm one of the gang that stayed up to date on new techniques and presented to boards who then promptly ignored me. I'm the one who had a lot of highly creative people working for me with a lot of strategic knowledge that clients needed to hear but who were considered a production department and nothing else.
I'm one of the group who can humbly say today "See we did know what we were talking about, and we didn't deserve to be ignored."
I hope that's forgivable... just this once.. sir... ma'am.
IanC - 30/09/2009
Why online versus TV? The comparison is a bit meaningless and tend to agree with the theme of Tess' article.
OK, a bit of TV budget might be migrating to online channels, but (for example) the work we do shows that for most larger advertisers the search channels feed off TV budgets because TV helps drive more efficient CPCs and higher volumes. The online versus TV comparison gives us a nice headline but really it's nothing more than a little milestone to get a bit of discussion going. The channels should be complimentary not in competition.
I acknowledge these figures probably mean quite a lot for some media owners and I don't envy the challenges many will face migrating and evolving their business models, but for advertisers the numbers are not really that relevant at all. Brand owners surely see things in a more relevant way.
Search accounts for the majority of 'online' revenue but is it really replacing TV? The answer is yes probably a fraction, but search competes far more with other offline budgets. In search the entry costs are tiny. This means the share of revenue is misleading as their advertiser universes are not the same, they are different advertisers in nearly every case. It costs tens of thousands just to produce a TV ad whereas it costs about a £1 to start a paid seach campaign. The figures we hear quoted imply that most advertisers now spend more online than they do on TV. Most will, but thats only because there are probably millions of advertisers on search engines and all but a couple of thousand spend nothing on TV, never have done and never will. For every 1000 search advertisers only about 1 will also advertise on TV.
I suspect the trends hidden in these misleading stats are far more worrying to traditional directory businesses and regional press recruitment sales teams than they are to the TV companies. The TV companies should be looking to exploit the complementary aspects of the channels and grow their online properties. TV companies' big problem is fragmented audiences and an increase in TV channels (it still costs the same to produce a program even if only half as many people watch it).
If we are trying to understand the shifting of budgets a much more informative set of stats would be to understand what has happened to the share of budgets of the top 2000 advertisers. I'll say it again, media owner revenue dominated by search engines does not necessarily equate to how individual advertiser budgets are shifting.
Don't get me wrong (as the phase goes) it's very interesting to see the data, but as someone who manages a digital department I find the emphasis placed on these figures by my peers and the notion that 'online' is a single channel more than a little embarressing...
What we should all be concentrating on is the relative strengths of the different channels and the opportunities they offer brands and brand owners. 'Online' (like offline) is home to so many different opportunities to drive ROI, to be creative and engaging and build brands.
Please don't group all the online channels together and talk about them as though they do the same job and compete for the same budgets, we don't talk about offline in this way because we would be too embarressed to.
A rant without Gordon Brown being mentioned, first time this month...
Thanks IanC.
And I agree with you both, Gareth and Aaron, that there is a fundamental switch going on and that interactive media was under-valued for too long.
However, please don't besmirch TV or me in either of those observations. TV is growing too as the world moves away from analogue and we move away from paper and ink. TV's never been the biggest medium overall and has only very recently become the biggest display medium.
And I used to run PHD's interactive specialist PHDiQ!
So enjoy the day, but not at TV's expense please.
Comments
TESS ALPS - 30/09/2009
Thanks for the comforting words, Gareth. TV is indeed still marvellous – and proven to be the most effective ad medium pound for pound by impartial sources like the IPA – and proven to be even more effective when internet is added to it. But then you know all that. You write as though this is the day you've been waiting for all your life. Did your parents not let you watch TV? What did it do to you that made you so triumphant? Is it anything to do with your crush on Valerie Singleton when you were a tot? The only depressing thing about this story is the unseemly glee coming out of online communities as if TV has blighted their life for too long, when in fact TV makes internet marketing better and when TV content is making the internet more fun. There'd be a lot less Twittering without telly! I am about to post a more official response to Revolution on the main story and I hope you will then understand why we think that the story merits another perspective. But I'd just like to remind you how much I - and TV companies - love the internet too. Don't want to spoil the IAB's big day in any way!
dano - 30/09/2009
Tess Alps love 15, Gareth Jones to serve
TESS ALPS - 30/09/2009
Forgot to add that your point about Coronation Street is quite wrong. You can certainly still get 8m all in one moment in Corrie on ITV1 \(10.5m in the X Factor if you like), plus millions more in a short space of time via a plethora of broadcast channels and online catch-up services. Broadcast TV fragmentation has nothing to do with the internet but has all been driven by digital broadcasting , whether satellite, cable or DTT. And it's this multi-channel growth that is delivering the highest ever viewing to commercial TV - yes, including young people - highest ever commercial impacts \(2.45 bn ads a day seen on UK TV) and greater targeting and segmentation possibiities. Under the circumstances, it's testament to the power of TV content like Corrie \( or Peep Show, Flash Forward, live football and hundreds of other shows that you might like) that millions of people chose to consume exactly the same TV at the same moment.
Gareth Jones - 30/09/2009
Thanks as always for your comments Tess. I love TV. And Valerie Singleton. The point I'm trying to make is simple: internet ad spend overtaking TV ad spend is symptomatic of a fundamental shift in consumer behaviour. As wonderful and creative as TV advertising can be, it has often been the mainstay of lazy marketers and arrogant media planners eager to get off to their long lunches. But now, thanks to the rise of digital platforms, brands and agencies can no longer afford to rely solely on tried and tested marketing methods, because in an age of social media, engagement and conversation, they don't always work as well. If I appear gleeful it's simply because the IAB figures prove that marketers have woken up to a world where advertising is about dialogue with consumers. Ultimately, it's not about the internet versus TV, it's about exciting new opportunities for brands. I will confess, however, to taking a small amount of joy in seeing the internet crowned \(according to the IAB) the UK's biggest ad platform. For years, the web was the underdog, spurned by the 'grown up' media industry for its banners and pop ups. Now, for the moment at least, it's having its day. Come on. Everyone loves an 'underdog comes good' story don't they?
Martin Thomas - 30/09/2009
Whilst the shift in investment to online may, in Gareth's words, represent 'a fundamental shift in consumer behaviour', there is also a danger that the digital champions over-play the decline of TV. Trotting out cliches like TV advertising is the preserve of 'lazy marketers' and 'arrogant media planners' is unnecessary and simply damages the media industry as a whole. Celebrate the rise of digital ... but don't do it at the expense of other channels.
Gareth Jones - 30/09/2009
Thanks Martin. I'm not arguing that TV is necessarily in decline, just in a state of flux. Good TV advertising has been, and will continue to be, one of the most creative and effective forms of mass media marketing. I was simply suggesting that in the past, due to a lack of alternatives, it has been the default option for some, shall we say, less insightful brands. Obviously I'm not implying that all TV advertising is the preserve of lazy marketers and arrogant media planners, otherwise we wouldn't have gems like the Cadbury Gorilla ad and Comparethemeerkat, to name just a few of the most recent examples.
Aaron Savage - 30/09/2009
I'm not one of the grand fromages of media nor would I claim to be. What I am is one of the odd lot that started "mucking about" with the Internet and development "little" communications methods which were perceived as being "too technical" to bother with. I am one of the people who for years appeared at client meetings only to be shouted down in private break out groups by ATL creative directors. I am one of the people who were paraded by the same agencies in front of clients to wave my hands and sound enthusiastic about digital and then placed back in my box whilst the adults got on with the serious business of making TV ads. I'm one of the gang that stayed up to date on new techniques and presented to boards who then promptly ignored me. I'm the one who had a lot of highly creative people working for me with a lot of strategic knowledge that clients needed to hear but who were considered a production department and nothing else. I'm one of the group who can humbly say today "See we did know what we were talking about, and we didn't deserve to be ignored." I hope that's forgivable... just this once.. sir... ma'am.
IanC - 30/09/2009
Why online versus TV? The comparison is a bit meaningless and tend to agree with the theme of Tess' article.
OK, a bit of TV budget might be migrating to online channels, but (for example) the work we do shows that for most larger advertisers the search channels feed off TV budgets because TV helps drive more efficient CPCs and higher volumes. The online versus TV comparison gives us a nice headline but really it's nothing more than a little milestone to get a bit of discussion going. The channels should be complimentary not in competition.
I acknowledge these figures probably mean quite a lot for some media owners and I don't envy the challenges many will face migrating and evolving their business models, but for advertisers the numbers are not really that relevant at all. Brand owners surely see things in a more relevant way.
Search accounts for the majority of 'online' revenue but is it really replacing TV? The answer is yes probably a fraction, but search competes far more with other offline budgets. In search the entry costs are tiny. This means the share of revenue is misleading as their advertiser universes are not the same, they are different advertisers in nearly every case. It costs tens of thousands just to produce a TV ad whereas it costs about a £1 to start a paid seach campaign. The figures we hear quoted imply that most advertisers now spend more online than they do on TV. Most will, but thats only because there are probably millions of advertisers on search engines and all but a couple of thousand spend nothing on TV, never have done and never will. For every 1000 search advertisers only about 1 will also advertise on TV.
I suspect the trends hidden in these misleading stats are far more worrying to traditional directory businesses and regional press recruitment sales teams than they are to the TV companies. The TV companies should be looking to exploit the complementary aspects of the channels and grow their online properties. TV companies' big problem is fragmented audiences and an increase in TV channels (it still costs the same to produce a program even if only half as many people watch it).
If we are trying to understand the shifting of budgets a much more informative set of stats would be to understand what has happened to the share of budgets of the top 2000 advertisers. I'll say it again, media owner revenue dominated by search engines does not necessarily equate to how individual advertiser budgets are shifting.
Don't get me wrong (as the phase goes) it's very interesting to see the data, but as someone who manages a digital department I find the emphasis placed on these figures by my peers and the notion that 'online' is a single channel more than a little embarressing...
What we should all be concentrating on is the relative strengths of the different channels and the opportunities they offer brands and brand owners. 'Online' (like offline) is home to so many different opportunities to drive ROI, to be creative and engaging and build brands.
Please don't group all the online channels together and talk about them as though they do the same job and compete for the same budgets, we don't talk about offline in this way because we would be too embarressed to.
A rant without Gordon Brown being mentioned, first time this month...
TESS ALPS - 30/09/2009
Thanks IanC. And I agree with you both, Gareth and Aaron, that there is a fundamental switch going on and that interactive media was under-valued for too long. However, please don't besmirch TV or me in either of those observations. TV is growing too as the world moves away from analogue and we move away from paper and ink. TV's never been the biggest medium overall and has only very recently become the biggest display medium. And I used to run PHD's interactive specialist PHDiQ! So enjoy the day, but not at TV's expense please.