For All the New Media Spin, It’s Just an ‘Old’ Media
Published: July 28, 2008
NEW YORK (AdAge.com) — The exuberance isn’t so rational this time, either.
It’s déjà vu all over again as the web giants scurry to build massive internet-ad networks: Microsoft makes plays for Yahoo, both of them talk to AOL, Google tries to milk a display powerhouse from DoubleClick, and venture capitalists throw money at ad networks and exchanges.
But amid the frenzy, it might be worth taking a look at whether today’s economic and marketing developments are shrinking that pot of gold they’re all after. Because guess what: The trough of ad dollars flowing from places such as TV and print to the web isn’t bottomless after all.
The inconvenient truth is that for all its new-media spin, display advertising is “old” media — a commercial message to be placed next to editorial or entertainment content. And we know by now that measured-media growth has pretty much ground to a halt as marketers continue to increase their dollars in unmeasured disciplines such as web development, public relations and database marketing at the expense of paid advertising. Ad spending among the top 100 U.S. advertisers last year grew a paltry 1.7%, with measured media only up 0.3%. Measured-media spending is in decline in Japan, and it’s not much better in the U.K.
Sure, dollars are shifting within those media budgets, with some moving out of traditional media into interactive. But most of the top 100 advertisers that wield the big budgets are still primarily TV and print spenders. The question is: Should the fact Procter & Gamble spends only 1.5% of its marketing budget on display ads be viewed as a warning signal by online ad sellers, or as an opportunity? (Even Unilever, Ad Age’s Digital Marketer of the Year, spends little more on display, allotting it 2% of its budget.) Instead of thinking of how much more P&G could be spending on internet advertising, sellers should be asking why it doesn’t spend more.
Cheaper trad. media
“They’re chasing the wrong rainbows or they’re on the wrong side of the rainbow,” said Anne Benvenuto, exec VP-strategic services at R/GA, talking about all the M&A chatter. “If they don’t invent the new models they’re going to buy something that’s soon obsolete.”
Of course, part of why large companies such as P&G spend so little on the web is because of the feedback they get from the marketing-mix models they still use to determine media outlays: TV and other old media still work. (P&G increased its magazine budget by 7% last year.) But, as Group M Futures Director Adam Smith pointed out, this softening of measured media also is making traditional media cheaper — giving advertisers less incentive to move money out of it.
For all its glory, the internet still has not proven itself capable of being a primary branding medium. Most ads online are response-based and work best for brand marketers when they complement a branding campaign in other media.
“The biggest gating factor to internet ad growth is the obsession of the players, the [venture capitalists] and the press with ‘bottom of the funnel’ marketing in a world where the big money is spent at the top,” said Rob Norman, CEO of Group M Interaction. He said display ads do indeed have a chance to be as big a business as the web giants hope — but it’ll require better targeting that helps discern intent (à la search advertising), a set of metrics that can at least be proxy for sales, and messaging that is valid and useful for users.
Internet growth is also stumbling, thanks to recession woes. Companies such as ValueClick, Yahoo, Bankrate and WebMD — and even search giant Google — have blamed the economy for softness in several ad sectors. The sky is not falling, and digital is faring better than its more-traditional counterparts, but it’s impossible to say it’s growing at the rate it would have were the economy booming or even normal. And jobs in the space? They declined last month.
Of course, the simple traditional- vs. digital-media debate skips over what could end up being a much larger issue. Anyone hoping to sell an ad increasingly faces new competition, in many cases from the would-be buyers of said paid ads. More marketers are creating their own media and their own consumer experiences. Nike Plus, of course, is the perennial example of marketing taking an advertising budget and creating a real-world utility that essentially becomes proprietary media.
But consumers are also proving effective, if unpredictable, carriers of brand messages. Mark Haas, CEO of Publicis’ Manning Selvage & Lee, said this kind of earned media is also becoming more important, thanks to an evolution in reaching toward a group of influencers who can market the product for you. He offers a hypothetical example of how Febreze might target college students by handing out samples on move-in day. Soon it becomes a subject of conversation within a social network of that community (and if it doesn’t, a brand can suggest it become one, asking students what they’re going to do to make their rooms smell better when their parents come to town).
“Advertising ought to be designed to support the social-media program, because the tip of the marketing spear ought to be the consumer-generated-media piece,” Mr. Haas said. “Let’s see where consumers take the product and brand, and shape advertising and rest of the marketing opportunities around that.”
That leads us to Mr. Norman’s third point: Making something compelling enough that users will want to create the media requires advertisers and their agencies “to have a good look at themselves and their brands,” he wrote in an e-mail. “There is now a requirement to create new, better and more-engaging forms of content that answer two questions: Why should consumers keep that content? Why should they share it?”
Today, the model is paid advertising. But in five or more years, there may not be one dominant model, said Ms. Benvenuto. And Microsoft chasing after Yahoo? Sure, it’s newer than TV, but it’s an old internet model. Her prediction is that in the next five years, acceleration and change will be much bigger than in the last 10. “What was new will be old more quickly,” she said.