Tuesday 25 October 2016

With 21 years of clicking and waiting for links to load, online banner advertising has finally come of age

John McGee

Published 09/08/2015 | 02:30

'To say that digital has had a major impact on the global advertising industry is a gargantuan understatement'
'To say that digital has had a major impact on the global advertising industry is a gargantuan understatement'

On October 27, a little bit of history is likely to be celebrated by veterans of the online advertising industry around the world.

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Twenty-one years ago, the first online banner ads were placed on HotWire.com, the digital offshoot of Wired magazine.

Little did they know at the time, but the six advertisers - MCI, Volvo, Club Med, AT&T, Zima and 1-800-Collect - were about to take an extraordinary leap of faith into unchartered waters and, in the process, play their role in kick-starting a digital revolution that is still playing out in the boardrooms and bedrooms of the estimated 2.8 billion internet users around the world.

Although it is hard to imagine now, internet access in 1994 was of the dial-up variety and download speeds of 24.4kps were snail-like in their tempo. NSCA Mosaic was the web browser of choice and Sergey Brin and Larry Page, the two founders of Google, were still dreaming up search algorithms there as they went about their PhDs in Stanford University.

Fast forward 21 years and digital advertising will account for around €155bn, or 31.4pc, of the €494bn that media agency ZenithOptimedia estimates will be spent on advertising globally in 2015. Brin and Page, meanwhile, have gone on to create the Google behemoth that sucked in €54.15bn in digital advertising revenues in 2014.

By 2019, PwC estimates that digital advertising will become the largest advertising segment and could amount to a staggering €217.86bn globally, passing out TV as the largest single advertising category. As much as 70pc of this is likely to be attributable to mobile advertising alone, as consumers continue to embrace all kinds of mobile devices.

So, to say that digital has had a major impact on the global advertising industry is a gargantuan understatement. As media companies the world over strive to keep abreast with consumers and their media consumption habits and lifestyle choices, they are being forced to continuously reinvent themselves and their business models.

Likewise advertisers, who provide the bulk of the money required to keep the global media industry ticking over, are also re-assessing the best ideas, formats, media channels and ultimately the return on investment as they too try to win over the hearts, minds and eyeballs of an increasingly fickle, tech-savvy consumer.

In fact, it is one of the ironies of the digital age that despite the proliferation of media channels and digital touchpoints available to advertisers, it has never been harder to genuinely reach and meaningfully influence consumers.

Thanks to digital, today's fragmented advertising ecosystem has become increasingly diverse and complex. It's still print, TV, radio, cinema and outdoor but it also includes online, tablet and smartphone; it's video-on-demand, rich media, social media, branded content, blogs, native advertising, point-of-sale and search. It includes mobile apps and in-game advertising. It's 3D, virtual reality, smart watches and other wearable devices.

In the not too distant future, and underpinned by huge volumes of behavioural data (and maybe even artificial intelligence), advertising will be personalised and predicative while it will embrace the so-called Internet of Things, as brands try to make themselves more useful and relevant in our kitchens, living-rooms, bathrooms and cars.

In the advertising world, however, it is important to remember that digital is just another channel in the same way press, TV, radio, cinema and outdoor are.

While it is clearly becoming an increasingly important channel within the advertising ecosystem, and it tends to get the most headlines, the reality is that digital is to advertising what electricity is to manufacturing, albeit with more functionality and potential. Nor has digital seen off traditional media like press, TV and radio, despite what digital evangelists and the adtech vendors might have us believe.

Indeed, speaking to delegates at the recent Cannes Lions advertising festival in the south of France, Sir Martin Sorrell of marketing giant WPP, said: "There's some really strong evidence that engagement with traditional print is greater than engagement with so-called new media... I think with traditional media, particularly newspapers, the market will realise they are more powerful than people give them credit for."

This evolving and fluid ecosystem undoubtedly poses all kinds of challenges and opportunities for advertisers and their agencies. It also raises questions about the definition of advertising in the 21st century and whether or not the existing agency landscape, which is dominated by vertical silos and specialist shops, is fit for purpose any more.

Indeed there's plenty of evidence that points to a blurring of the traditional lines between PR, content creation, advertising, social, digital, sponsorship and creative.

As advertisers and their brands continue to navigate their way into an exciting future, there is, however, one certainty that they can all rely on. To paraphrase David Ogilvy, the godfather of modern advertising: "What really decides whether or not consumers buy or don't buy your product is the content of your advertising, not its form."

John McGee is publisher and editor of IMJ and Adworld.ie

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