Friday, 2 November 2007

Digital Has Changed Everything: Except For Traditional Advertising Agencies

Working on the launch of Rogers@Home High Speed Internet, I remember thinking - this is the easiest gig I have ever done. The clients thought the subscription numbers were high but having tracked the growth of online for a while, it was obvious to me that the chasm had been crossed and the pace of change was going to be much faster than their highest expectations.

And here we are again. I was looking at some Forrester and Jupiter numbers for the growth of online advertising and while to the Advertising world these numbers look a bit scary, the truth is I think they are low. Why? Couple things...

1. These numbers only encapsulate traditional online advertising - meaning CPM, Cost per click and cost per action numbers. This doesn't include all the other digital advertising that is going on including corporate websites and digital experiences.

2. People are starting to get that it's not online vs. offline but rather everything is digital. Everything being connected to everything else. The implications of that will be staggering as more and more communications companies attempt to be invited into people's social graphs. The complexity and the pieces that will need to be twined together to create any meaningful stories will require new skill sets and new tools that we have not even conceived of yet.

3. Clients are starting to mandate the allocation of their budgets frustrated with the fact that traditional advertisers are not moving pace with their needs and consumer habits. I had one Sr. Executive tell me a US based client requested 35% of their budget go to digital. 35%!!! Imagine if all clients did this in the coming year. Are the CFOs out there listening?

The IAB has a recent study that states:

"More than 80% of marketers surveyed indicate consumer insights and behavioral targeting are major priorities, underscoring digital's ability to understand the customer." (please excuse the colours of the chart below - blame the IAB not me)

So it goes, digital has changed almost everything - everything except the way traditional advertising agencies build brands and communicate with customers. But the chasm has officially been crossed. It won't matter anymore if Agenices offer up communications plans without signficant homage to digital...customers by their actions are now mandating it and clients are therefore demanding it. It's finally a sea change and it's going to be a wild ride.

Update: I just found some great stats from recovering journalist further proving the point (oh by the way, i have a friend who distributes newspapers for one of the biggest here in Canada - he said his revenue goes down about a third every year if that doesn’t tell you something)

More New Stats: Via Paul Kedrosky, new emarketer stats

Even More New Stats From the IAB (this is a good one as shows history although take it with a bit of a grain of salt bc the IAB has a pretty serious bias)


Gavin Heaton said...

Isn't it interesting that this is being driven mostly from the client side? Agencies have been very slow to respond ... as if they have been caught in the headlights of a changing world.

As you note, organisations are already shifting their spend. So the decisions have been made. It will be interesting to see where that money goes!

Leigh said...'s follow the money time. We are likely going to see some big purchases (WPP has bought up two big interactive companies in the past 3 months)maybe some key hires or as DDB did a new division...but I think similar to the .com days, the issue is that they aren't doing anything fundamental to change the CORE of their business. How they build brands, develop strategies or plan.

(by the way Gavin, great blog - loved your post about data...might have to blog about that later today)

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