TOP AGENCIES 2003: Sponsor's statement - Online marketing sank with the dotcoms ... or did it?

Adrian Moss looks at why some of the biggest brands are flocking to the web to improve sales.

The market is flat. Client spend is down. Decisions on appointing agencies are being delayed. How many times have we read these comments over the past two years? Too many to count.

But you only have to look at the growth in combined billings of the 125 companies in this year's table to know that it is the offline advertising market that has been suffering from these problems - not the online world.

After a tough 2001, the online advertising sector has many reasons to be cheerful. In 2002 it grew by nearly 19% to £200m, according to the Interactive Advertising Bureau research programme (May 2003), outstripping all other UK advertising sectors. It now represents just under 1.5% of the UK's total advertising spend.

This has already made our sector bigger than cinema advertising and has attracted traditional big spenders to the offline world, including the two biggest sectors: financial services and FMCG.

Mainstream high-street brands have joined the dotcoms and telecoms companies, and online advertising is no longer an add-on in the eyes of professional marketers.

What is their reward for this switch? About £185m of sales in the past 12 months for dealgroupmedia clients, including John Lewis Direct, the AA, Carphone Warehouse, Sainsbury's Bank and Woolworths. That's not a bad return on their investment. ROI is the marketing director's new favourite catchphrase, one that is driving the tremendous growth and widespread acceptance of online advertising. Advertisers are demanding the ability to see clear returns on their marketing spends. Budgets are being redirected into online campaigns that focus on ROI. It's not hard to sell to advertisers because the campaigns are completely measurable and accountable.

As a result, agencies have had to get savvy - fast - about demonstrating ROI on more traditional campaigns. With online campaigns, you know how well a campaign is doing and you know what results are being delivered.

It really isn't enough to estimate how many people saw your ad or talk about increased brand recognition if nobody goes to buy.

This is where the internet comes into its own. Now that the online market has matured, smart marketers and media buyers have realised that if you want to track consumer activity, no other channel is more effective.

The measurement systems make TV methodology, to take only one example, look archaic.

It is possible in the online arena to track consumer response to ads far beyond exposure figures, giving clients hard proof that the campaigns are working. You can tell what percentage of consumers who saw an ad went on to buy from the advertiser or register for their service. No other channel can be that accurate.

Hand in hand with the growth in demand for a clear measure of return on investment, clients are reviewing how they buy and are increasingly looking for a one-stop shop for online marketing services. It is this customer demand that is helping consolidation in the industry, such as dealgroupmedia's recent acquisition of Webgravity.

This has strengthened dealgroupmedia's search marketing and internet intelligence capability and has marked the start of a wave of acquisitions and mergers in a market that is ripe for consolidation. ValueClick's announcement that it is acquiring Commission Junction confirms the view that the companies at the top of next year's table will be those that can provide marketers with the whole range of online services, from banners through partner deals to search marketing.

It really has never been a better time to be online.

DELIVERING RESULTS FOR MAJOR BRANDS

IG INDEX

Objective: To capture traffic at the point of search online.

Channels used: Webgravity (search engine optimisation) programme.

Quote: "After only four months, Webgravity had increased IG Index's already strong search engine rankings and firmly cemented us as the leading player in our industry ... on the most important search sites to UK users: Google, Yahoo! and MSN."

Julian Barnes, head of digital marketing, IG Index

Results: Increased search engine rankings and visibility on most important search sites.

NATIONAL EXPRESS

Objective: To drive targeted traffic to the National Express site.

Channels used: Webgravity (search engine optimisation) programme.

Quote: "Webgravity's search marketing campaign has delivered significant ROI to our business. As part of our integrated strategy, this has helped us to achieve a 65% increase in online transactions."

Kevin Milnes, web development manager, National Express

Results: 65% increase in online transactions.

RAC

Objectives: To deliver RAC memberships online while focusing on return on investment.

Channels used: Affinity marketing, CPM advertising, performance-based programmes, pay-per-click search marketing, e-mail marketing.

Quote: "dealgroupmedia has proved to us that the web is a very powerful sales channel."

Colin Hanna, sector manager, partner development, RAC

Results: Consistent delivery of significant RAC membership numbers, increasing month on month since campaign inception in 2001.

NTL

Objective: To generate sales of broadband product.

Channels used: Performance-based programme.

Quote: "We have been very pleased with the results achieved. We know at any stage how the programme is performing and it allows the sort of in-depth analysis necessary to maintain our current growth."

Steve Tattersall, affiliate marketing manager, NTL

Results: Maximised sales opportunities and rapid implementation of initiatives and programmes.

WILLIAM HILL ONLINE

Objective: To increase the number of customer accounts at the lowest possible cost per acquisition; to increase brand awareness across a broad range of sites.

Channels used: Affinity partnerships.

Quote: "Affinity programmes can be an effective method of recruiting new business. The strength of our brand coupled with dealgroupmedia's huge web site base and expertise allows us to recruit customers at an effective cost."

Ian William, partnerships marketing manager, William Hill Online

Results: Increased customers, recruited cost-effectively.

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