Andrew Walmsley on Digital: comparing online and tradtional media spends

Andrew Walmsley
Andrew Walmsley

Online advertising's position at the top of the spending tree is not as clear-cut as it may seem.

Another notch on the bedpost, and this time it's telly. Online adspend in the first half of this year hit £1.75bn, comfortably ahead of TV at £1.64bn, and the Internet Advertising Bureau (IAB) can't resist bragging about its conquests. The media industry has never let the facts get in the way of a good story, and, as you might expect, for every bit of triumphalist gloating from the digital industry there's been harrumphy crying of foul from the traditional end of the pitch.

As ever, there's no simple truth. Some of the criticisms levelled against the IAB are a fair cop, and others reveal a degree of denial that speaks volumes about the many ways in which digital is still underestimated as a medium.  

So, as a public service, today I'm going to have a go at both sides - partly to try to get to the truth that lies between, and partly because it's the most efficient way of annoying the maximum number of worthy people.

The first brickbat thrown at the IAB is that classified advertising is included in the digital count, and it's not there­fore a like-for-like comparison with TV. This point was originally made when online overtook press, and it's a fair one. The value of total press display is still greater than online without classified, and TV is £272m bigger.

Martin McNulty, client services director at online agency Trafficbroker, was quoted on Sky News as saying: ‘Long the protagonist on the global advertising stage, TV is rapidly becom­ing the bit part.' McNulty's hubris seems premature, and the silo in which he lives makes him an easy target for Thinkbox's marketing director, Lindsay Clay, who says this ‘misses [online and TV's] complementary relationship'.

However, Thinkbox then takes a turn to throw a poorly aimed stone. ‘It is interesting, but meaningless, to sweep all the money spent on every aspect of online marketing into one big figure and celebrate it,' rejoins Clay. Slightly patronising, but she may be right. Let's strip back the numbers another way. The biggest online player, Google, is almost 60% bigger in ad revenue than ITV, which tops TV's charts. And yes, that's just in the UK.

Should search be counted separately? If it were, it would still be bigger than regional press, direct mail, national newspapers, classified press, outdoor and so on. It is bigger than every one of the Advertising Association's media categories - except for television.

So there is an argument for this delineation. However, Clay is right; it's interesting to look at online collectively, because it relates to a single channel, and that's why it's done that way.

So much for reasoned argument.

One commentator asserted that online TV ad revenues, which are credited to the IAB, should be included in ‘TV', on the basis that it exploits the expensive programmes paid for by TV ads. Of course, it could similarly be argued that revenue from movies shown on TV should be allocated to cinema.

The same observer noted that online display advertising declined in the first half of 2009, speculating that ‘it is not a very attractive medium'. Indeed, it was down 5% year on year, but if a decline in revenue were a sign of ineffective­ness, TV would be in a worse place - spot advertising fell 16%. Of course, the real reason is nothing of the sort - both were hit hard by the recession.

So where does this leave us?  We should recognise that digital has grown up. Online's supporters should have the confidence not to rely on dodgy comparisons, and old media should celebrate the success of a new sector of their industry, rather than carping about the newcomer like ‘angry of Tunbridge Wells'. But that wouldn't be any fun, would it?

Andrew Walmsley is co-founder of i-level

30 seconds on internet adspend growth

  • According to the biannual online adspend study by the IAB, PricewaterhouseCoopers and the World Advertising Research Centre, the plat­form grew by 4.6% to £1.75bn in the first half of 2009.
  • The £82m increase in spend gave online a market share of 23.5%, making the UK the world leader in the platform's share of all advertising.
  • Paid-for search grew 6.8% year on year to just over £1bn in the first half of 2009, equiv­alent to a 59.8% share of all online adspend.
  • Classifieds grew by 10.6% to £385m, or 22% of online ad revenues.
  • However, online display was down, falling 5.2% year on year to a value of £316.5m - a 18.1% share of online spend.
  • Technology is the biggest-spending sector, accounting for 19.1% in the first half of 2009, followed by telecoms, which grew to 13.3% from 9.7% last year.
  • Advertising by finance brands rose 1.2% to 13.2%; entertainment and media took an 11.8% share; and consumer goods grew 1.9% year on year to 8.1%.

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