net savvy

’The future of advertising is the internet’

The future of advertising is the internet. And that’s not from my mouth. It’s from Bill Gates’. At an Interactive Advertising Bureau (IAB) conference in the UK in October this year, Gates said this when he was asked whether he thought the online advertising industry would continue to see its strong growth of the last few years.

Gates said he that he actually saw the debate between online and offline advertising as obsolete, because soon all media channels will be powered by the internet, as the boundaries blur between the virtual and physical world.

It is a view that was echoed by Danny Meadows-Klue, the Chief Executive of IAB Europe, at a conference in Madrid in November this year that I attended. In Klue’s opinion the “boom is now taking place”.

Up until now, it’s been no secret that the initial migration to online has been slow and underwent a correction with the crash and a subsequent image problem.

Guru book publisher Tim O’Reilly says on his blog that the bursting of the dot-com bubble in 2001 marked what he saw as a turning point for the web. O’Reilly says “shakeouts” typically mark the point at which an ascendant technology is ready to take its place at centre stage. The pretenders are given the “bum’s rush” and the real success stories show their strength.

That would be the internet he is talking about.

Even the sceptics, if there are any left, have to admit that there is something happening out there. There are now more than one billion people online worldwide and its estimated that one new blog is created on the internet every second.

Klue cites figures from his home country, the UK, saying that online adspend there in 2005 topped the one billion pound mark, which is almost six percent of total adspend in that country. This now makes online advertising bigger than outdoor advertising. In fact it also now makes online advertising bigger than radio and cinema combined. It’s also an industry which experienced phenomenal growth – an industry that is five times larger than it was in 2000.

But six percent is still just six percent. It’s significant but hardly a juggernaut. Klue reminds us however that that six percent doesn’t really tell the full story. He says some advertisers are still spending absolutely nothing online, whereas some advertisers in the UK have migrated as much of 40% of their budget to the online medium.

According to Klue an average of 15% of the time Europeans spend with the media is now with the internet. Daytime is primetime for the net. The reason for the online medium’s success is its growing importance as a daytime channel. It is one of the few channels that people use with increasing regularity at work, at lunch hours or during work.

I did wince every now and again whenever Klue used words like “incredible”, “unstoppable” or “explosion” to describe what he sees as an amazing upward growth trend. It’s hyperbole that I have not heard since the histrionics of the dot.boom era. But this time it was more than just bravado and loose talk. The hyperbole was backed up by facts.

For him online advertising is at a “tipping point” which will see even more rapid growth as it moves more into the mainstream. Different countries are at different stages of this tipping point. In Klue’s opinion the UK is probably at its tipping point and ready to explode.

In South Africa we have also seen spectacular growth in online advertising numbers despite expensive internet, but we are probably further from our own tipping point? No one doubts online advertising will hit the big time, but people are still asking when that time will happen. Some say it’s happening already. No one wants to jump in too early, but also no one wants to miss out and be left behind by their competitors.

One thing for sure, however — expect it to happen.

Matthew Buckland publisher of the Mail & Guardian Online @ www.mg.co.za

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