How Online Media is Changing Advertising

Some fantastic pieces of insight from industry leaders in the FT as to how the online media is changing the advertising model. You could go over there and read it for yourself, but that would spoil all my fun.

Robert Shaw, professor at London’s Cass Business School:

“The problem with online is that many of the [media] costs are so much lower that it’s dragging everything down. But for agencies, the irony is that their costs are so much higher online than they were on television. That eats into their profit margins.”

Quentin George, Chief Digital Officer at Interpublic’s Mediabrands:

“Because the internet audience is more fragmented, every pound spent on advertising space online costs almost three times more, in terms of time and labour, than it would if you spent it on traditional media”

Rich Silverstein, co-founder of Goodby, Silverstein & Partners, an Omnicom agency:

“The traditional time-based billing model is tough to uphold when developing online campaigns. The internet is so deep it’s like drilling for oil. So far, I don’t think we’ve really charged for all the time we’ve put into it.”

Mark Lund, chief executive of the UK government’s Central Office of Information

“In the past 20 years, “the ability to measure and control [marketing] spend has got so much more sophisticated. Overall expenditure has been allowed to go down. It’s not that people are marketing less well but it is being better planned.”

i.e. Advertisers, which have long complained that half of their budget is wasted but they do not know which half, are now ensuring they get a better return on their investment.

David Eastman, worldwide digital director at JWT:

Traditional agencies tend to see themselves as guardians of the brand, while interactive agencies approach briefs from the consumer’s perspective. These are two fundamental opposing views which exist and are very much entrenched today.

Analysis: So what does this mean?

The marketing and communications discipline needs to get more efficient and online is driving this change. However, someone still has to plan for an increasingly fragmented media marketplace – this planning is in and of itself inefficient. And therein lies the irony. If you want more efficient media spends, you need to pay for them.

The question of who the agency serves is an interesting one? David Eastman clearly believes that there is a growing divide and, as consumers become more empowered, this will only grow. Can the two mediums find a happy compromise where the needs of the brand meet the consumer needs/expectations?  Jeremiah Owyang has some interesting thoughts on communities being represented by (PR) agencies. I’m not sure this is the right way forward but it is an interesting thought experiment to see where that could take us.

8 Responses to How Online Media is Changing Advertising

  1. […] Fantastic analysis of new agency challenges: How Online Media is Changing Advertising [link to post] (via […]

  2. […] 2009-08-28T12:19:07  Accurate article on how online media is changing advertising. Perspectives from agencies, educators and business [link to post] […]

  3. […] 2009-08-28T12:32:59  RT @odonnell: Accurate article: how online media is changing advertising. Perspectives fr agencies, educators & business [link to post] […]

  4. […] 2009-08-28T14:06:21  Good quick read: How Online Media is Changing Advertising (summarized points from industry leaders) [link to post] […]

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