Magazine article Marketing

Andrew Walmsley on Digital: It's Safe to Count Your Digital Chickens

Magazine article Marketing

Andrew Walmsley on Digital: It's Safe to Count Your Digital Chickens

Article excerpt

The IPA's authoritative Bellwether Report was published this week, and provides much-needed good news for the advertising business. While there is an understandable reluctance to indulge in an orgy of chicken-counting, the first upward revision of main media ad budgets in two-and-a-half years has been greeted with enthusiasm.

It will come as no surprise to regular readers of this column that this is a consequence of online media's extraordinary and continuing growth, with the recent IAB/PwC survey showing 41% in 2006.

Last week, I looked at how rates of growth are declining in online as the medium matures, and this trend will continue as a natural consequence of scale.

Given this trend, how sustainable is its growth? The answer is pretty simple - very. And for two good reasons.

First, the supply of commercial audience is still growing rapidly Internet penetration grew by about 5% in 2006, but, more significantly, broadband continued to surge forward. Ofcom's Digital Progress Report in April reveals 80% of homes with internet access have broadband - that's more than half of all UK homes, and up 30% on 2005. Unsurprisingly, people spend a lot more time online when they have broadband, and the impact on audience has been significant.

Comscore reports 15% more time online per user in 2006 than in 2005, and that has fed through to a 20% increase in audiences.

This is important because it's an anti-inflationary pressure in the media market, meaning that dizzying levels of growth are still not feeding through to general inflation online. But its real significance is for mass marketers whose businesses rely on the ability to communicate daily with mass audiences. More of people's time is spent online, which continues to exert pressure to divert budget that way.

Second, and more important, the internet is not just a marketing channel - it's a channel to market. Investment in online advertising follows trends in consumer consumption patterns not just in media, but in purchasing too. Enders Analysis estimates online commerce at pounds 30bn in 2006, up 43% on the previous year, and accounting for just less than 12% of UK retail sales. This is driving the real growth online.

In the US, where brand advertising is a bigger part of the online media mix, search takes a smaller share, and online is just 5. …

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