In a little over a decade, the internet has transformed the practice of advertising. By 2010, global spending on internet advertising is predicted to outrank the value of ads on radio or in magazines, reaching 11.5% of total ad budgets, according to media agency Zenith Optimedia. In the UK, the impact is even more pronounced; a report by the Internet Advertising Bureau and PricewaterhouseCoopers published earlier this year forecasts, that by the end of 2009, internet ads will be attracting more money than TV. This is no longer a niche sector.
But the web and other new digital media haven't only shifted budgets. Technological developments are yielding opportunities for marketers in the creative and media spheres that they couldn't have imagined just a few years ago. Consumer engagement is now the holy grail of all marketing that touches the digital world, from Unilever encouraging consumers to create their own Dove soap ad to Cadbury and Orange having their brands woven into the storyline of pioneering online drama Kate Modern.
As James Kirkham, director of digital entertainment agency Holler, says: "The old style of advertising was all about putting ads in front of people. Now we prefer to create content that people find and share."
The corollary in media planning terms of all this creative interactivity is much finer targeting, based on the wealth of consumer data that the internet can yield - known as behavioural targeting. The advent of social media sites such as Facebook, Bebo and MySpace mean that advertisers can now tap into the hobbies and other personal data that consumers list on their pages. Unilever, for example, targets ads for its Slim-Fast brand at women who are listed as engaged to be married.
Advertisers can also see what consumers are entering into search fields on sites and analyse the patterns of what they are reading online. There is also much potential for the use of behavioural targeting via mobiles; services could be offered depending on the location of a user, for example. Unilever's global director of communications planning, Babs Rangaiah, is an enthusiastic advocate of behavioural targeting. "This kind of laser targeting is exactly where we want to be. In five years' time there'll only be a few things - mainly major sporting events - that will deliver volume audiences and justify mass media targeting," he says.
Behavioural understanding
Although behavioural targeting is still not the norm for media planning, agencies are getting ever wiser about how to use it. Jeremy Mason, managing director of the European office of behavioural targeting provider Revenue Science, says: "A few years ago a car advertiser's media planner might want to target anyone who had read a review of a car in the last month. Now, they would want a group that visited five separate car reviews on the web as well as one active search."
But this trend towards greater use of consumer data is not without its critics, even within the media community. Derek Luddem, digital strategy director at media planning and buying agency PHD, points out that there are still occasions when it may be more efficient to place ads according to factors like the time of day or the age of the consumer. "Every layer of targeting you add reduces the size of the potential audience. Smaller doesn't necessarily mean more effective," he says.
There is also some nervousness among advertisers and agencies about consumer reactions to use of their data. Facebook got into trouble at the end of last year when it unveiled its Beacon system of advertising, which would have allowed users' buying behaviour on third-party websites to show up on their friends' home pages. The outcry from bloggers and traditional media led to Facebook altering the system to allow consumers the chance to opt out more easily.
There is some evidence that consumers are beginning to rail against advertisers' tracking of their internet activity. A survey conducted by iCD Research in July found that 77% objected to behavioural targeting and 65% would leave their internet service provider if they found that they had signed up to sell users' browsing data.
But some argue that because it is in the internet industry's interest to make sure that consumers are comfortable with the way they are marketed to, the issue can be self-regulated. Judy Gibbons is a partner at venture capitalist Accel, investor in digital companies from Facebook to digital audience-measuring firm comScore. She believes that ISPs and website owners will tread carefully to avoid alienating their users and also points out that all data is aggregated and thus cannot be traced to individuals.
"The overwhelming view in the industry [about behavioural targeting] is one of caution. No one wants to turn consumers off new technology," she says.
At digital agency AKQA, head of measurement and evaluation Simon Ricketts thinks there is actually far more public understanding about use of data than is acknowledged.
"Consumers understand behavioural targeting to a degree - Amazon's 'you bought this, so you may like this' model is basic behavioural targeting and consumers accept this almost unconditionally. In the bricks and mortar world, loyalty cards are another example of behavioural targeting that consumers accept because they understand the benefits and know they are trading their data for enhanced value."
Ultimately, Rangaiah says, it is up to the industry to figure out how to condition consumers to understand that, if they are getting free content, there has to be some exchange."They have understood for many years that TV ads finance the programmes, and that is arguably more interruptive than most digital marketing," he says.
Weblinks
Zenith OptiMedia: zenithoptimedia.com
Holler: holler.co.uk
Revenue Science: revenuescience.com
Accel: accel.com
Akqa: akqa.com
