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April 20, 2007

Web Hit Or Miss – Online Advertising in the UK

David Gent queries the hype surrounding the advance of online advertising in the UK

Advertising spend on the internet has now overtaken that on radio, we are told, and it won’t be long before it leaves behind national press, then television as the nation’s favourite marketing medium. If we are to believe the hype, and hype there certainly is, we’ll soon be spending more time online than watching TV, ‘silver surfers’ are eschewing traditional retirement activities like gardening for the web, and the only media predicted to grow their audiences in the near future are the internet and, somewhat unaccountably, radio.
When you realise that last finding comes from an online poll amongst heavy internet users and radio listeners by advertising bodies with vested interests, that the Office of National Statistics reports this month that there is a distinct lack of enthusiasm amongst the over 65’s for internet usage (just 15%), and that reliable sources such as the Government, BARB, the BBC and the IPA all report that TV is still our most popular leisure pursuit, watching an average 4 hours per day, then you might conclude these flattering online figures are somewhat skewed. As one American pundit observes ‘People don’t believe all the hype, they just go home and watch television, as always’.
Nevertheless, the national press, busily polishing up their online versions, and the broadcast news seem willing to accept such statistics without applying normal journalistic standards, reporting excitedly on the next advance of the internet and recording that ‘millions of people’ are watching a webcam of cheeses ripening online (as if). Frightened of missing out on ‘the next big thing’ and searching as always for a marketing magic bullet, many board directors are investing heavily in their internet presence, transferring budgets from offline to online without necessarily applying the same rigorous ROI measures and neglecting proven media channels in favour of sexy new technology.
Then when the web doesn’t prove as self-sustaining and business-building as hoped, they blame this on their own lack of technical knowledge, feeling that if everyone else makes it work, why can’t they? They overlook, perhaps, the fact that there are already more than 110 million websites in the UK alone, with a further 10 million going online annually, and that the average well-travelled web page looks like a racing driver’s overalls, with its confusing mix of pop-ups, banner ads and video streams. So you have to accept this is an extremely competitive channel of communication, where you cannot simply ‘set out your stall’, pay for some click-through advertising and wait for the world to beat a path to your electronic doorway. You need to throw something else into the media mix to make your online investment work. Why else, despite their ubiquitous web presence, would Google and eBay choose to advertise on TV, if not to drive traffic that they cannot generate solely online?
A central shortcoming of online marketing is the lack of agreed, universal and independently- audited web traffic measures. With direct mail you have postcode data and CPR metrics, with press and radio there are regularly-updated circulation and listenership figures, whilst the independent BARB TV panel not only provides reliable ratings for programming, it also measures viewers for every single advertising spot, a unique capability. On the other hand, take website ‘hits’, the term universally used by the popular press and web amateurs everywhere. For years, I suspect web designers, engineers and masters have been sniggering behind our backs, because they know a web ‘hit’ simply describes a single request for a server to send a file and that every element on a web page (text, graphics, images, sound) generates yet another hit. Which means that your newly redeveloped home page, with its extra content and features, will instantly trigger ten or twenty times more hits, without necessarily attracting a single extra visitor (although your web designer probably won’t reveal that).
The number of unique site visitors and page impressions are more useful measures, although these can be exaggerated by search engine robots checking out your site (there are hundreds apparently), users who land on a page then leave immediately, as well as people and computers that generate fraudulent and invalid clicks for various nefarious reasons. In fact, ‘click fraud’ is already such a concern in the States, reportedly costing online advertisers up to $800 million annually, that almost a third have already decreased their online spend, with a further ten per cent planning to do so unless search-ad publishers can arrive at a proper solution. Moreover, at a recent search engine strategy conference, participants reported experiencing fraudulent click rates of 20-40%, threatening the entire paid search industry, although Google insists invalid clicks remain below 10 per cent. The obvious solution is for independent auditors, with no motif for under or over valuing click fraud rates, to provide an audience measurement system, just like BARB, RAJAR and ABC in fact.

That aside, the £2 billion online adspend attributed to the UK market seems, to an old marketing man like me, to be predominantly below-the-line, much like direct mail and sales promotions, with search advertising accounting for a massive 58%, three quarters of that on Google. Nielsen research suggests the top 100 online advertisers actually spent some £260 million on display ads only, excluding search and affiliate marketing and website building costs, although the IAB puts this higher at £450 million. Whatever, it is salutary to note that the internet’s biggest presence, YouTube, which attracts 133.5 million visitors worldwide, only sold around $15 million of advertising last year, putting ITV’s UK-only ad revenue of £1.3 billion into some context.

Then there is the question of whether the internet is a marketing medium at all, but an enabling technology, like printing, broadcasting or telephony. Just as you wouldn’t attribute every telephone call your business receives to the Yellow Pages, it’s shortsighted to allocate every website hit to your online marketing strategy. Every marketing tool you use, be it sales leaflets, PR, e-shots, press ads or TV commercials, will undoubtedly feature your corporate web address for channelling further enquiries and it’s vital to set up systems for identifying the source of online traffic, to determine whether it’s click-through activity, brand name searching, online magazines and directories, or just keying in your url. Otherwise, the online cost-per-response metrics are going to be unduly favourable, just like bus backs are often disproportionately mentioned in customer surveys, simply because they were the last ads seen on the journey to the shops. Using coded ‘landing page’ domains like .com/tv or .co.uk/radio is one solution, although human nature being what it is, most people will just enter the standard web address and not the all-important suffix; there are, however, tracking systems that provide more sophisticated web visitor data than your standard server log, which means the tools are available for more rigorous ROI analysis, should you choose.
If all this suggests that I am something of a techno-luddite, trying to hold back the inevitable online tide, then I’m not. We have had a web presence since the earliest days, when newcomers to the net used to wave to each other, and since then have invested, with a greater or lesser degree of success, in trickier graphics, new websites, search engine optimisation, online directories (don’t ask), paid search, a blog site, e-shots, even banner ads, but not yet pop-ups or video streaming (perhaps a bit too much for B2B). It’s just that I find the unremitting hype and hoopla surrounding the online advertising industry a little too self-serving; if you don’t believe me, search for ‘online adspend’ (Did you mean online ad spend?) on Google and you’ll find pages and pages of the stuff.

There’s no doubt, the internet is a valuable marketing channel, among its many other attributes, but building a brand, even an online-only brand, on the web alone is a costly and I suspect frustrating experience, because so often it doesn’t work. The golden rule is to ensure consumers or trade customers will recognise your brand name from the offline world, so that you have standout from the competition, which means paying equal attention to less glamorous, yet well-honed marketing techniques, be they trade PR and press ads, direct marketing, radio and TV advertising, even good old exhibitions. Get the offline and online marketing mix right and you’re talking! (Postscript: Google has just announced a deal in the US, designed to encourage its online clients to advertise on radio as well. Great minds eh?)
Author:  David Gent is MD of advertising agency David Gent Creative, telephone 01706 220388, www.davidgent.com

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