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FMCG advertisers are missing a trick in ignoring online advertising

LONDON - With broadband penetration at a record high and young people spending more time online that with traditional media, why don't FMCG brands recognise the power of internet advertising, asks Guy Phillipson, chief executive of the Interactive Advertising Bureau.

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Way back before the dotcom boom, the sound effects associated with dialling up to the internet started with a high-pitched bubbly noise like the irritating sound of misdialling a fax machine, followed by a "boing, boing, boing" meaning connection confirmed.

This was usually a desk-thumping moment as the modem invariably failed and made several attempts before the aural relief associated with three Zebedee-like sounds. Boings meant I was actually online and a homepage was set to load -- well, after a few more minutes.

By contrast, last Saturday my daughter bid for a used copy of 'Sims 2' (the homemaker-come-domestic-dictator video game) on eBay, duly won it and paid for it in less time than it used to take me to dial up. Broadband is a wonderful thing.

Brits have taken to broadband big time and half the population now has fast, cheap internet connection. These enlightened users spend twice as much time online as they did on dial-up, searching, researching and spending like Elton John in a flower shop -- £15bn was spent shopping online last year.

So it should come as no surprise that advertisers have followed their newly empowered customers online and increased their collective internet spend from £400m in 2003 to £635m in 2004, an increase of 60%. Advertisers now spend more money online than they do on radio -- online accounts for 4.3% of all advertising expenditure, radio accounts for 3.8%.

So why is online the advertisers' darling?

Well many have realised that three times as many people are online right now than watch 'Coronation Street'; that my daughter and the rest of her generation tend to avoid most other media except online; and we all spend more time surfing than ever before.

Coupled with the fact that advertisers can measure every impression, every click, every sale (and aborted sale) then online is by far their most cost-efficient medium.

But I would say that, wouldn't I? Maybe, but until December last year I was head of advertising for Vodafone and I've had a wee bit of experience in this area. I clearly remember our first online handset sale back in 1998.

We booked some banners on a couple of websites to see if we could sell phones from our new online store using the incentive of a free £10 top-up voucher. It wasn't long before someone in cyber space, near Wolverhampton, bought one. This epoch-defining moment is still a talking point at dinner parties, sadly.

We can all guess that telecoms is a big online advertiser, like finance and travel. But future growth is set to come from FMCG and retail advertisers. These guys are currently conspicuous by their absence. Such marketing directors tell me that their customers would never go online for products.

Maybe, but they don't deliberately watch telly for them either.

I think these advertisers are missing a trick because the entire audience for, say, youth products has migrated almost entirely online.

FMCG advertisers would kill for an opportunity to engage with a young person -- traditionally 30 seconds on TV, why not three minutes or more online?

The technology is already in our homes thanks to cheap, powerful PCs and cheap, fast broadband. The coming years will see an explosion in re-cut or made-for-the-web video-streamed advertisements.

Smart advertisers are waking up to sophisticated on-demand video ads in the same way that the music and movie business has been streaming film trailers and pop videos at us for the past couple of years.

I'm not talking about viral ads -- those quirky chopping the head off a cat clips that may come our way -- I'm talking about big audience, TV-like spots delivered to your desktop. Web-streamed ads are effective at building brands and hit the jackpot when a user clicks through to a website to download a promotional e-voucher, which in turn helps build loyalty.

Today, one of the most popular web activities is going online to listen to your favourite obscure jazz legend, death metal combo or shock jock. My radio-online epiphany arrived last week when my daughter heard an ad for the dreadful Crazy Frog ringtone on Fox FM and immediately searched for it online. I cringed as she bought it within seconds and almost wished we'd still only got "boing, boing, boing" dial-up.

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