9 reasons why online has a bright future

April 19, 2012

Before analysing online advertising in depth in our last lectures, it is worth wondering: does online advertising have a real future beyond the present interest it is getting, and if so, why?

The massive answer is: YES, online advertising is there to stay. Even more, its share is certain to grow steadily bigger.. It is not a passing craze, a hype – it has a real future, a really important future.

So now, the question is WHY? There are many tangible reasons and arguments to defend this. Here are a few.

 

 

1. Advertising money follows customers

Advertisers invest their money in media that earn an audience. When the radio used to be the popular medium, advertising money went to the radio. When television took the lead, advertisers’ money followed and has stayed there massively . Now that the social web has grown in importance, we can only expect advertisers’ attention and money to go there and settle there. This is no nuclear physics, only plain sense: at the end of the day you want your advertising to bring the expected results. It can only do so if you invest it where it enables you to reach your audience.

Now, if you find it hard to believe the web is taking such an importance place as a medium, here is a chart from Fleishman Hillard which adds some credit to my claim. 

FleichmanHillard

 

 May2011_eMarketer_chart2

 

What about the future? The second table above shows what the IAB predicts for the coming years, completely in line with the argument I’m making here. The only medium to show a real increase is the Internet. Worth mentioning too, is the slight expected growth in television adspend: no, television is not dead. And this only reinforces our point, as we’ll learn in reason #9.

 

 

 

 

 

 

 

 

 

 

2. Media consumption is going social 

Instore-mobile-activities

 

Among the many applications of the web, the progressive emergence of web 2.0 since around 2004 has made the social media the powerhorse of the web. Now, social media’s main characteristic is that they give everyone a way to express themselves widely withoutany technical or financial limit, except that of using the internet.

Can you seriously think anybody will ever be able to take this facility away from “the people”? Can you seriously consider that “the people” will ever give up the right of expression they have acquired through these social media and digital tools? 

It makes real sense then to expect these interactive media to get an increasing share of advertising attention and money. Here is a chart by Forrester research that clearly shows this trend.

 

 

 

 

3. Online is recession-proof

The turn of the decade will certainly be remembered as financial crisis years: 2008 and 2011 saw a major financial backlash. This is typically a time when advertising budgets are cut, one of the first budget posts to be drastically reduced in crisis time, wisely or not.

All corporate figures show that trend very clearly. With one exception: online investments. These investments appear to be recession resistant, as most indicators show they are maintained, if not increasing even in times of financial hardship.

 

 

4. Online is traceable – trackable – measurable 

One of the physical characteristics of the Internet, is that once something has been created on it, it can hardly disappear from it. For better or for worse!

This means that anything on the Internet leaves a trace. It can then be traced, observed, analysed, measured, tracked, i.e. monitored in whatever way you want. In particular, brands, organisations, governments, webmasters, whoever, can trace, track and measure the online effect of their online efforts. Now, as more and more people are expressing themselves freely on social media, this provides a unique opportunity to tune in to what people say – about your brand, your products, your policy, your whatever. In real time. Or in the past. Watch.

MSM2_-_Tour_of_SM2_-_4.5_mins

Another aspect of the measurability of the web is targeting. The data it delivers – demographic, behavioral, contextual – enable you to target your messages in ways that are far more precise than what you can dream of outline. If you want to have a feeling of how precisely this is possible, just take a drive test: create a campaign on Facebook, stopping just before the site asks you to use your credit card. You’ll see how narrow FB targetting can be, of Google adwords – just two examples!

 

 

5. Low entry level

The advent of the written press, radio, television, cinema – the mass media, has created the notion of audience. An audience you can only reach through media channels that are only open to powerful agents: companies, organisations, parties that have the money to pay for time and space in the mass media and to produce the material. Producing a spot for the Superbowl and airing it – $3.5M on average – is so expensive that only the powerful can afford to do so.

The partipative web, web 2.0, has changed this radically. The digital world (digital camaras, notebooks, webcams, …) and the Web 2.0 have made it possible for everyone to produce and to communicate at no price (or nearly) and without great technical skills. What was required in the mass media world (money and professional tools/skills) is no longer necessary to express yourself successfully today. This is the “F.E.L.E.S.I.O.P” acronym I use in my course to summarize the characteristics of web 2.0 applications and platforms – they are freeeasylightevolvingshareableinterest-basedopenplentyparticipatory.

As a result, the entry level to online media is very low: even the pennyless SMC (small or medium-sized company) or person can start and grow an influence. Even in tracking/measuring the web, free tools such as Google analytics enable you to go a long way.

 

 

6. Broadband penetration

You may remember the days when watching a video on your computer screen was somehow like watching a Charlie Chaplin film. Sometimes you still experience this with videos on mobiles or tablets. Only high-speed connections can solve this, turning a disappointing and discouraging viewing experience into an enjoyable one. This is the price to pay to make video, one of the main attractors, an enjoyable experience on the web, on mobiles, on tablets or consoles.

What used to be an obstacle to mainstream use of online media is now disappearing thanks to the generalisation of broadband connections in our countries, over 90% in Belgium.

 

 

7. Emergence of new video formats for online

Videos constitute one of the main attractors to digital media: their ease of production, distribution and consumption – as the success of Youtube amply shows. Youtube is the second most important search engine!

Video is precisely one of the fields where there is constant progress in terms of technologies, formats, possibilities of integration, with an ever greater choice and comfort for the end-user. This ability of online to cater to the video needs of the most sophisticated user guarantees it a lasting future.

 

US-video-ad-spending

 

 

 

 

 

 

eMarketer even claimed that “Video Ad Spending Will Run Counter to Economic Trends: Video ad spending growth will run counter to overall economic developments, rising by 45% in 2009 to reach $850 million.”  Even if this statement is dated one should not forget that 2009 was a recession year. Besides, 2012 IAB/PwC figures show that “online video advertising spend continues to double every year and is showing no sign of slowing down

Additionally, there are two emerging trends that are going to see a growing partnership between the most robust mass medium – TV – and the most popular web use – social media – merge:

  • the progressive convergence of television and web video: think of Google TV, Apple TV, web TV socialTV-150x150
  • television turning social thanks to “the backchannel” : television audience giving a second parallel life to programmes by their comments on social media – a growing wave dubbed “social TV“, which is analysed in Proulx and Shepatin’s latest book and is interesting marketing communicators more and more. 
The complementarity among the different screens – TV, PC, mobile, tablet, console – is so hot that Google is partnering with Mediametrie in 2012 to launch a comprehensive survey intended to understand how these different screens complete each other.
On the Television Goes Social channel on ScoopIt you are invited to follow curated information about social TV.

 

 

8. the success of e-commerce

Another reason why I believe that online is now firmly established as a mainstream medium with a great future is the growing success and importance of e-commerce – in terms of market, penetration, (repeated) use and basket value.

One of the obvious reasons to account for this success is that when times are hard, people go bargain-hunting. Price becomes a crucial criterion. And this is an area where online players can work hard to beat offline, as the very fast emergence of social shopping sites such as Groupon and its many clones have shown.

Online, it is also easy to compare prices on dedicated platforms that enable you to track the price for a specific product in both on- and offline stores. This even extends to physical stores that have to deal more and more with connected shopping, which can take a variety of forms.

Instore-mobile-activities

Once again, social media take the lead in this field, enabling automatic discounts. Automating discounts may indeed ease the process by lowering the friction, while handing in a coupon or voucher in a restaurant can be “embarrassing for customers and time-consuming for employees. American Express has figured out how to bypass both challenges using social media“. A partnership between American Express and Twitter / Foursquare enables AmEx users to synchronize their credit card with their social media channels and benefit from virtual coupons with a simple tweet or check-in, as you can see here.


SmartphonesVSpc

 

 

 

 

 

9. Dumbphones getting smart

A last reason (for today) to justify the claim that online has a bright future is the fast spread of smartphones, phones that are connected to the web, whose users are only too happy to be able to mobile surf.

Right is a table from a very insightful presentation Henri Blodget, CEO of Business Insider, entitled The Future of Mobile, that illustrates the importance of this phenomon.

In a near future, access to social media is likely to become a mobile activity rather than a desktop one. See my earlier post about this reality.

 

 

 

 

 

So…

So, reasons enough to justify a keen interest in online – and more specifically in online advertising – in our LIVErtising course. Besides,in a second background post guest-blogged by Gaëlle Bodson, webmarketeer at eTeamsys we’ll go deeper into Internet advertising.

For the time being my #LIVErtising students will have to include the present post in their stuff, as these two posts provide an introduction to my next series of lectures devoted to ONline advertising: “Advertising goes online“.

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