Around the bay area, I hear a lot of derogatory comments about brand advertisers and agencies about how they just “don’t get it,” how “TV is dead,” and other assertions. That may be true one day, but the traditional market is still quite big and it’s an uphill battle today.
There was recently a great AdAge article called $80 Billion? Online Display Market Is Being Overhyped that I want to pull some quotes from.
On the perception of where online ad spend fits into the overall marketing budget:
The inconvenient truth is that for all its new-media spin, display
advertising is “old” media — a commercial message to be placed next to
editorial or entertainment content. And we know by now that
measured-media growth has pretty much ground to a halt as marketers
continue to increase their dollars in unmeasured disciplines such as
web development, public relations and database marketing at the expense
of paid advertising. Ad spending among the top 100 U.S. advertisers
last year grew a paltry 1.7%, with measured media only up 0.3%.
Measured-media spending is in decline in Japan, and it’s not much
better in the U.K.
On how much money, percentage-wise, that brand advertisers spend online:
The question is: Should the fact Procter & Gamble spends only 1.5%
of its marketing budget on display ads be viewed as a warning signal by
online ad sellers, or as an opportunity? (Even Unilever, Ad Age’s
Digital Marketer of the Year, spends little more on display, allotting
it 2% of its budget.)
On their perspectives on other media channels to reach consumers:
Of course, part of why large companies such as P&G spend so little
on the web is because of the feedback they get from the marketing-mix
models they still use to determine media outlays: TV and other old
media still work. (P&G increased its magazine budget by 7% last
year.)
Ultimately, for startups that are trying to tackle the advertising space, the reasons above are a lot o the reasons why it’s hard to change agency behavior – either to make them use your self-service interface, or to use a different set of metrics to evaluate their spend, etc. The amount of dollars they’re spending online, while often strategic and very much growing, is simply not large enough to justify redoing their entire business model.