Here’s my latest MediaPost Spin column, on why the disparity of online advertising is actually a good thing. As usual, also check out the feedback on the MediaPost discussion forum…
This Disparity In Online Advertising Is A Good Thing
August 24th, 2007, by Max Kalehoff
As a chairperson of OMMA and presenter in a number of Advertising Week events, Iâ€™ve been debating with many smart industry colleagues just what are the most critical issues to probe. Weâ€™ve been tackling every angle and category, from online video, to search, email, behavioral targeting, consumer-generated media, creative, analytics, planning, integration, strategy and accountability among others.
But at the end of the day, I have one overarching question: Why does online-media spending still lag so far behind relative to the massive share of time and utility it commands? Sure, online advertising continues to grow at a massive clip, but itâ€™s still way behind where it should be.
Thereâ€™s mounting evidence to support this, and the latest is a global online survey from IBM suggesting that personal Internet time is rivaling television time. IBM reported that: â€œAmong consumer respondents, 19 percent stated spending six hours or more per day on personal Internet usage, versus nine percent of respondents who reported the same levels of TV viewing. 66 percent reported viewing between one to four hours of TV per day, versus 60 percent who reported the same levels of personal Internet usage.â€
IBM said that â€œdespite natural lags among marketers, advertising revenues will follow consumersâ€™ habits.â€
But why such an excessive lag? With the Internetâ€™s share of total media spend in the single to low double digits, weâ€™re far from parity! Is it the client-side marketers themselves â€” afraid to move the needle too quickly? Pardon the irony, but remember the line, â€œNo one ever got fired for buying IBMâ€? Is that logic lurking among the worldâ€™s CMOs and being applied to traditional media â€“â€No one ever got fired for buying radio, print or televisionâ€?
Or is it agenciesâ€™ inability to figure out how to make online-media buying profitable, resulting in their clenching to legacy revenue streams to save fading business models? Or is it their struggle â€” even after decades of focus â€” to execute holistic, integrated plans that properly credit online potential, because of dissimilar buying procedures across media?
Or is it the inability of online publishers and media-platform providers to devise efficient and scalable means in which to aggregate, target and manage marketing and communications?
Online advertisingâ€™s disparity with other media is probably a combination of all of these factors, and then many more. Collectively, the disparity equates to the need for an entirely new business model in advertising.
Whatever the holdup, the lagging buildup of demand and spend may not be a bad thing. To be sure, the growth of online media spending is impressive , especially considering that overall media spending is relatively flat. And online is destined to continue claiming share. But the gradual rise to parity â€” no matter the source of friction â€” encourages the online advertising industry to fight hard for every percentile of budget it gets. It ensures the proper infrastructure to prevent collapsing under any premature pillars â€” such as bandwidth, platforms, databases, privacy policies, planning-and-buying procedures, standards, accountability frameworks and even raw human talent.
Let me be clear, online advertising is not in an artificial bubble. However, it shouldnâ€™t grow any faster â€” if for anything, to ensure it matures with solid fundamentals. While these times may seem disruptive in marketing and media, the swift but gradual online spending growth, kept in check by often frustrating sources of friction, will thwart implosion and chaos.
The disparity in online advertising is a good thing â€” at least in the near-term.
What do you think?