Guest comment: Online’s come a long way, but it’s got further to go

This is a landmark year for online in more ways than one, notably because internet advertising spend continued to grow during the recession, surpassing TV spend for the first time in the UK (PwC/IAB Adspend Study 2009). However, while advertising spend - the largest source of funding for online content – grows, so does consumer usage, and at an alarming rate.

Due to the increasing demand for innovative technology like social media integration and resource heavy content like video, many online publishers – over 70% (AOP census 2009) - are looking to supplement ad revenue with subscriptions. This model is a major shift, but makes sense when so many publisher sites have archives of exclusive content they can compile into useful reports and daily content businesses depend upon.

Indeed, the IAB has just launched a Search Toolkit for Online Publishers with a case study showcasing Timeout’s ability to create a successful subscription site alongside its ad funded model, combining paid and natural search to maximum effect. It’s not the first site to have paid-for content that works well with ad funded content either, entertainment site IGN.com and trade magazine sites have done this well for years. Earlier this month, an England vs Ukraine football match drew an audience of 500,000 willing to pay £5 - £12 to watch it online; people will pay if they perceive value.

Display advertising will thrive in this environment as advertisers seek to deliver brand messages alongside content attracting the best quality audiences, e.g. with good demographic information through registrations. Online video – watched for hours a month by over 80% of the UK internet population (ComScore 2009) - is undoubtedly the premium content brands are turning their attention to. Publishers can’t do enough to deliver inventory for this emerging and exciting channel, which grew almost 200% over the last 12 months to reach nearly £12 million in ad revenue.

Twitter must be the most used noun of the year, and while marketers are excited about social media, online publishers have been using it since the beginning of the internet to attract audiences and build brand using blogs, comments, reviews and forums. There may have been the odd blunder, but marketers are following the publishers’ lead with brands like Compare the Market, Coca-Cola, Dell and hundreds more embracing the use of this consumer empowering content by creating entertaining apps or simply striking up a conversation and asking consumers “what do you think?”

Advertisers are seeing the benefits of a maturing medium too; in 2009 the leading providers of behavioural advertising in the UK signed-up to the IAB’s Good Practice Principles. These principles demonstrate companies’ ability to meet self-regulatory criteria to reassure marketers of advertising that puts consumer interests first. Using behavioural advertising, brands can deliver more relevant and thus more effective display advertising. Most importantly, behavioural advertising transcends barriers of individual websites by personalising ads to user journeys, albeit anonymously. This is utterly vital in an environment as complex and changing as the internet.

One of the biggest changes has been the rise of mobile internet usage thanks to smart phones like the iPhone. Internet use on the go is now an everyday reality with over 11 million active users at the end of 2008. Like online, advertising plays a massive part in funding mobile content with the medium doubling in size in 2008 to reach £28.6 million (PwC/IAB Mobile AdSpend 2008). The mobile internet is still an emerging channel, but it’s developing fast as learnings from online are carried across quickly. Advertisers already take advantage of the many opportunities on mobile such as display, search and video, not to mention text and applications.

A potential advantage of behavioural advertising in the future is the tying together of online, mobile and other properties to prevent consumers seeing repeat advertising, improving their experience. This highlights a major issue with the internet: yes, we’ve come a long way in a short space of time but the surface has barely been scratched. Technology and process improves daily, yet there remain areas that could be better and people’s understanding hasn’t always kept up. There has always been an online skills shortage which is further exacerbated by fast-paced change. Never has the need for high quality training and education been more necessary.

The coming years will see increased change, making the internet unrecognisable from what we use today. For advertising, I hope this new technology not only brings with it more advanced solutions, but also far simpler ones. Online has come a long way, but it’s got further to go.

By Jack Wallington

Senior Programmes Manager

IAB Uk

www.IAB.uk.net

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