Why are we behind?
Zenith Optimedia came out with its regular report on ad spending (coverage at AdAge, PaidContent, and MediaGuardian). Online will hit many milestones:
We predict internet advertising to pass three milestones over the next three years. We expect it to overtake radio advertising in 2008; to attain a double-digit share of global advertising in 2009; and to overtake magazine advertising in 2010, with 11.5% of total ad spend.
That will put online third behind TV (37.5% share) and newspapers(25.4%). Nothing surprising there.
What strikes me again is how behind the US is versus the UK and Europe. Says PaidContent: “Britain, Denmark, Norway and Sweden are the only four places where online ads account for 15 percent or more of total spend, according to the TimesOnline. But Zenith’s projections say that will change by 2010, when the internet will comprise more than 20 percent in each of the same four markets and more than 15 per cent of the ad spend in ten other countries.” Adds MediaGuardian: “Internet ad spend is currently ranked behind radio globally but will surpass the medium’s share next year. In the more developed UK market digital ad spend passed radio last year.” Note that this occurs even though UK radio is better than US radio.
Why is the US behind? Is it that the national media markets in those countries are more competitive and thus, perhaps, innovative? Is it something about the culture of American agencies or advertisers — and if so, what? Is it the nicotine habit of TV upfront here? Is online just more of a pain to buy than upfront? The audience is shifting online faster than the advertisers. Online is more efficient and measurable and more competitive, thus less expensive. So tell me: why are we behind?
Your theories or, better yet, experience?
Tags: ads
December 3rd, 2007 at 7:49 pm
I believe it’s several of the factors you mention, Jeff. Certainly, the lack of a single online measurement standard and deal transparency runs counter to advertisers’ experience in television. I also believe American agencies, with their margins streched to the breaking point by clients who demand more and pay less each year, aren’t set up to take advantage of innovation in the same way, perhaps, as their European counterparts. But in the end, I truly believe it’s because television advertising moves product in a demonstrable way that online cannot replicate. I’ve called for this several times before in this forum without response: show me an example of a national advertiser with a new product or brand extension that has shifted a significant chunk of its advertising funds to online and has achieved a better result than a similar level of spending achieved in TV. Maybe one day you’ll have one. Until then…
December 4th, 2007 at 12:20 am
Offline media has extensive modeling and measured results that have been done for years. I would be the first to say that online has the most *potential* but people aren’t doing it right. First, buyers and sellers are speaking two different languages. A buyer wants brand lift, intent to purchase and other criteria in the same vain. Sellers offer, clicks and impressions. Where is the common currency?
There are so many people selling inventory online, but there are two issues that prevent them from deserving big brand $$. They don’t know how to package inventory on their site properly to find audiences, and most publishers use content as a proxy for people.
It doesn’t take a genius to know that traditional measurement methods like Comscore and Nielson (panels) aren’t working online since media is very fragmented.
If people are measuring correctly, media will be bought more easily.
December 4th, 2007 at 2:44 am
[...] Buzz Machine, “Why is the US behind? Is it that the national media markets in those countries are more competitive and thus, perhaps, innovative? Is it something about the culture of American agencies or advertisers and if so, what? Is it the nicotine habit of TV upfront here?” [...]
December 4th, 2007 at 7:27 am
Paw,
I’ve read you here before on how TV spots move product, but honestly does it move Tide or Coke in measurable quanitities? Isn’t it about brand enhancement for many advertisers? Please give us an example of a big glamorous TV ad moving product.
Phil,
What does this — “most publishers use content as a proxy for people” — mean? That most publishers have few readers.
And as for measurements, I’ve never understood why advertisers want the Neilsen/Comscore approach when they can read the stats directly off SiteMeter or similar.
Plz fill me in if I’m missing something.
December 4th, 2007 at 9:05 am
Maybe US advertisers are not ‘behind’ but are just waiting and observing what happens to the online ad market in these early-adopter countries. I live in the UK and the UK has a much more compact, homogeneous market than the US and therefore are probably better markets to test out an online ad strategy than the US is.
In the past few years major changes to the UK TV market have happened and we have gone from 5 free-to-air TV channels to free-to-air multi-channel digital TV. Before advertisers only had to place there ads on 1 of 3 of the TV channels which carried ads to reach a fairly high proportion of the viewing public; but with multiple digital channels fragmenting the audience they are much less likely to do so. I believe this is happening in all markets but in the UK going from 5 to 40+ channels almost overnight is a big change and shifting ad spend online is one response to it.
So with a compact, homogeneous market to address it makes a lot of sense to move ad-spend online in markets like the UK than the US. If this strategy works then I would expect the US to catch up very quickly.
December 4th, 2007 at 9:51 am
Jeff,
I’m not suggesting Internet spend shouldn’t be more, but you frame the issue as if Internet spend is less in the U.S., so therefore it is behind. The real question is not one of share here or there — that’s a horse-race mentality. The real question is: What’s the right mix that will achieve defined business results for the advertiser? That said, the U.S. has a huge legacy, and there still are some impressive clusters of massive reach and homogeneity in media distribution (i.e., reach of television networks) here which still deliver respective value and will continue to. That’s as opposed to almost any other country, which tend not to have nearly the same scale, and therefore perhaps less reason to hold on.
Secon, the legacy of advertising executives (on the marketer side), as well as agency business models and incentive structures, are defensively holding onto the margins and familiar operations of existing media planning/buying behaviors. It’s a preservationist mentality, for the individual people, and the divisions that represent those legacies, especially in the big ad holding companies.
Finally, complexity of the “great Internet advertising advancements of the past decade” is a huge factor. It’s a massive problem when an industry begins to characterize itself by inaccessible silos and geekery. Perhaps the biggest problem with this mentality is that it spawns black boxes and breeds a “keeper of the flame†mentality. That ultimately thwarts advancement. This complexity epidemic has spread to virtually every corner of online advertising, especially search, the fastest growing online sector. The result is a darkening cloud of frustration, inefficiencies and skepticism building among many marketers small and large, despite undisputed benefits and unprecedented ROI. I’m not suggesting all the great new advertising technologies and capabilities aren’t wonderful and exciting, but the blunt, underlying pain of convolution is nearing its threshold. Marketers don’t need any more features, options, solutions or clutter. What they need is relief and clarity.
-Max
December 4th, 2007 at 10:08 am
[...] on a ZenithOptimedia’s latest ad-spend forecast, Jeff Jarvis asks why the U.S. is behind in its share of online ad spending versus major European countries: Is it that [...]
December 4th, 2007 at 10:57 am
I see 2 main issues preventing a greater movement of ad spending to match media consumption is the U.S.. First, consideration of shifting ad dollars to online is inherently limited to the campaign success/failure criteria attached to the medium(ia) from which online spending steals; the classic “Does $1 in online produce better results than that same $1 spent on TV, DM, print, OOH, etc?” So online advertising’s own success parameters that can range from brand advancement to last-100-yards-sales-close in the same execution, just don’t fit neatly into the conventional budget buckets in which marketers, agencies and media exist. Most CMO’s aren’t in the position to value the wealth and complexity of data produced via online camapigns and site analytics when faced with decades of “we’ve always done it this way.”
Second, and relatedly, there are still too many major marketers and media companies which treat online advertising as a decided after-thought and place the digital marketing strategies in the hands of amateurs. 25-year Direct Mail vets, moonlighting Web operations managers and ceremonial appointments which are encouraged to not rock the legacy boat vs. producing legitimate innovation in the medium where more of their customers choose to spend more time.
Lastly J&J is a good example of a major consumer marketer which has said enough is enough. It has sat out the Upfront because the firm did the math and got fed up with an outdated, unaccountable advertising process.
December 4th, 2007 at 12:03 pm
More ads makes me sad.
I dont watch tv because its just crap and ads. And now the lovely internet is fast becoming the same.
December 4th, 2007 at 11:31 pm
I would start by saying your framing of the question is incorrect. The US is not behind anyone. Your bias that online is some how better is blinding you. Consumers select media based upon how it meets their needs.
What the research is saying is that online media is not meeting the needs of US consumers as well as more traditional media types. How do we know this? First, modeling shows traditional media are profitably reaching consumers. That is both consumers and advertisers benefit from the exchange. Firms are executing rationally. Second, we know that ROI for Internet ads are not meeting requirements for advertisers. Most firms have reached saturation points for online spend. Again we know this by data. Third, National comparisons are largely irrelevant for analytical purposes. Firms allocate resoruces for profits not to create national comparisons.
Now on to why. The US media markets are likely far larger and far more efficeint than those found in other nations. The logic that other nations are more efficeint is just absurd. Meidqa markets are larger. Media markets in the US are more dividible. Measuremet is better in the US. In sum ther is no mystery. Stop wishing and start focusing on serving consumers and clients.
December 9th, 2007 at 9:27 pm
[...] Why are we behind? - BuzzMachine “Why is the US behind? Is it that the national media markets in those countries are more competitive and thus, perhaps, innovative? “ (tags: internet media advertising stats trends forecasts analysts zenith) [...]