Insightful articles, opinion and commentary about mobile and web.

Many advertising and marketing executives wish they could just turn the Internet off, but others welcome the opportunity to create messages with measurable impact.

While traditional advertising in Australia followed the rest of the economy over the cliff at the end of last year, online advertising stayed strong, with annual spend in 2008 up 27% over 2007, according to the Interactive Advertising Bureau Australia’s latest Online Advertising Expenditure Report.

Despite the doom and gloom in Q4 – many analysts predicted that online spending growth would slow to a crawl – online advertising was $462 million, up 22% on the same period last year, which includes the lucrative Christmas season.

Sure, this compares to 34% growth in 2007, but the rate has been slowing for several years, since that growth comes off a much bigger base every year.

Search advertising in Australia grew 30% in 2008, while classifieds dragged the chain at ‘only’ 23% growth. IAB chief executive Paul Fischer has been quoted as predicting growth will be 17-18% in 2009, which is brilliant compared to the rest of the industry and the economy generally, which is widely tipped to contract and slip into recession.

Meanwhile, another Australian survey, Webtrends’ 2009 Australian Analytics report has found that 48% of Australian businesses consider Internet marketing critical to recovering from the economic slowdown….

Sixty-eight percent said more sophisticated web analytics would boost online sales (this survey was funded, after all, by a Web analytics firm), but there were a number of other interesting results related to online advertising:

• 68% of Australian businesses capture online data
• 56% rate online advertising as important or very important in helping drive e-commerce sales
• 57% say they conduct diligent research into publications and websites to ensure that their online advertising is reaching the appropriate audience
• 41% allow for dynamic content in their ads that can be changed based on the activity of the respondents.

It’s clear that not only is online advertising becoming a more important part of the Australian economy, companies are starting to come to grips with the changing landscape. As Brendon Cropper, director of Digital Training and former director of media services company Starcom Digital, says:

“A lot of people in the industry would like to be able to hit a switch and turn the Internet off, because it has created a lot more work. In the old days, it was just creating wants and filling them. However, people now spend the majority of their time on the Internet, whether at work or at home, and that’s where they make decisions about what they’re going to buy.”

He says that “Distribution (of marketing messages) now costs nothing. It’s more complex, but there’s more opportunity. It’s not just putting a message in front of them – it’s more a case of developing an experience for them.”

While Brendon Cropper doesn’t subscribe to the view that marketers should spend a set percentage of their marketing budget online (many experts have recommended 20%), he believes companies can and should be spending more than they are at present.

Retailing via social networks

Some businesses are benefitting from the boom in online advertising more than others. New research from Europe shows that there is a strong case for including social networks in a retailers’ digital marketing strategy. Twenty-three percent of social networkers post their views on specific ads in social networks, while 25% regularly forward things such as ads or links to ads to their friends, according to online researcher Metrix Lab.

Other findings from the research, which was conducted for Microsoft Digital Advertising Solutions:

• Trust leads to follow-up: 64% of consumers will visit other websites to find out more about something they’ve read on a friend’s site
• Influence opportunities through interesting and engaging content: 60% of social networkers are prepared to put sponsored/branded content on their own Facebook/MySpace, etc. pages
• Willingness to engage and interact with brands online: 43% of consumers have visited the personal space of a brand and 16% have already had a dialogue or sent a message to a brand

According to Microsoft’s RetailSpeak magazine, the research “presents advertisers with the opportunity to create new models of monetisation. With 215 million user accounts estimated to exist on social networking sites globally, advertisers can identify influential social networkers as independent brand advocates to either recommend a brand to their network or integrate it into their site.

“Based on this type of performance related recommendation, retailers can incentivise social networkers creating a new form of monetisation model.”

Exactly what form that model will take remains to be seen. Some companies have simply paid people to comment favourably on their product or service – if the response is not honest, it will backfire, big time.

Advertising without leaving your site

There has been a lot of hype about the next evolution of the Internet – Web 2.0. Most pundits will studiously avoid trying to define Web 2.0, while others will just say it revolves around interaction. A great example of Web 2.0 in online advertising is distributed content.

What’s distributed content? It’s those videos that pop up while you’re reading a story on the SMH or Age website. When done well, they’re more interesting than what you’re reading and you get drawn in.

A retro type of distributed content is the return of in-text advertising, underlined text on a page that used to simply link to an ad but now provides rich media upon rollover. People hated it when it was first introduced, but is increasingly popular in its new rich media form. Vibrant Media, one of the leading companies in the area, reports twice as many bookings as they did this time last year. Its latest reported earnings doubled to nearly US$90 million.

The next phase of what Brendon Cropper calls “rich experiences on site” is technology that enables consumers to pre-qualify themselves by interacting with an ad on a website before leaving the site to complete the transaction. Qantas is pioneering this by letting users work out flight prices and availability within an ad, before heading over to the Qantas site to complete the transaction.

Brendon says this is another step along the road to the Holy Grail of online advertising: addressable media, where all types of advertising messages can be personalised based on information companies can pull from consumers.

“It’s not just putting a message in front of customers – it’s more developing an experience for them,” he says. “Advertising is always more effective if it’s relevant.”

You can listen to the podcast of the full interview with Brendon Cropper here.