Chickens, Eggs and Australia's Online Advertising Industry

Four of Australia's largest online publishers today released findings of a joint-commissioned study into the effects and drivers of online advertising in Australia. Now they are calling on the advertising agencies to recommend the Internet more.

By Niki Scevak - australia.internet.com - 14th March 2002 - Back to News

Niki Scevak - australia.internet.com

The Taylor Nelson Sofres study found that just 24% of Australia's top advertisers have online opportunities recommended regularly to them - compared with 78% for newspapers and 66% for television.

The problem for the online advertising industry is that running an online campaign with its present size is simply unprofitable for advertising agencies. The fact that they are not recommending it to their clients then, is no surprise.

An agency's recommendation is powerful. Out of the top 150 Australian companies who regularly advertise online, all receive constant suggestions about how to advertise online from their agencies.

Herein lies the classic chicken and egg situation. Scale would certainly remedy the current conflict, but the challenge remains in the small value of the industry.

To help blaze the trail to more spending online, publishers are commissioning research and case studies wherever they can. Perhaps with a hint of irony the study commissioned by ninemsn, News Interactive, f2 and Yahoo! revealed that advertisers see the need for more studies, citing 'more research data' and 'more case studies' as the two key catalysts to increasing their usage of online advertising.

Yet the services of research analysts and market forecasters do not come cheap. And the required studies to correctly measure each campaign are clearly uneconomical in today's $60 million online advertising industry.

If the research is not done though, advertisers and agencies will measure the success of the small campaigns on the lazy click-through metric and the industry will continue to suffer.

Today's announcement is a move in the right direction and other efforts such as case studies ninemsn has prepared in recent months augers well for times ahead. Continued investment in this area is key.

As well as explore the strengths and effectiveness of online advertising, the study also nudges the advertising agencies into recommending online advertising to clients. The disparity between the number of recommendations of print and television versus the number of recommendations of online opportunities clearly is the embodiment of the scepticism still present in the industry and the economics of both mediums.

Education is certainly key, and there is a perception of low understanding at present. The study suggests that 70% of clients who only occasionally advertise on the Internet think that their agency's proficiency with online advertising is "not enough", whereas those regular online advertisers say for the most part that their agency's knowledge is "about right."

However even with the facts and figures, the reality is that agencies have not yet found a way to make comparable profits online, and this is - when it all boils down - the heart of the problem.

FURTHER READING

Online Advertising's Great Debate

Why Time Is The Critical Metric For Online Advertising

Why Audience Reach Means Very Little

ť View this online with the community's commentary or add your comment.

Source: http://web.messenger.com.au/

Published by: support@gippslander.com

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