Presentation to MRG

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Presentation to MRG

• Guy Phillipson
• CEO, Internet Advertising Bureau
• 14th June 2005

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Online advertising goes mainstreamLevels of
spend reach new heights
millions
Source PricewaterhouseCoopers / Internet
Advertising Bureau / WARC
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PWC/IAB Ad Revenue study has fuelled growth
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FY 2004 GrowthOnline vs total market
Total advertising market growth 5.8
Source PricewaterhouseCoopers / Internet
Advertising Bureau, The Advertising Association /
WARC
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Online breaks 4 in the second half of 2004
Internet 4.3
Source PricewaterhouseCoopers / Internet
Advertising Bureau/ The Advertising Association
/ Radio Advertising Bureau / WARC
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Steady growth in most categories
millions
Source PricewaterhouseCoopers / Internet
Advertising Bureau / WARC
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The digital media mix share of revenues for
second half of 2004
0.2
38.4
36.4
Display
Classifieds
Paid for search
Other
2nd Half Year Total - 373.9 Million
25.0
Source PricewaterhouseCoopers / WARC Recruitment
Classifieds / Internet Advertising Bureau / WARC
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IAB Listening Campaign

• Feb and March 2005

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IAB listening campaign

• Guy conducted personal interviews with marketing
  Directors in Blue Chip companies covering
• FMCG, Retail, Automotive, Finance, Travel,
  Telecoms, Pharmaceuticals, Government and Leisure
  one hour with each director

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Where is Online on Marketing Director Agenda? (on
a scale of 1-10)

• Sceptics 2Yet to find a real use for it.
  No-one searches for their products by name and
  no-one buys them online. Get the telly right and
  the Marketing Directors happy
• Converts 5-6Increasingly important as they
  understand how their customers behave, gather
  knowledge, shop around and buy Online. Some
  still consider Online predominantly a youth
  medium
• Experts 8-10Digital is an integrated part of
  Marketing Structure. Builds customer
  relationships, increases sales, saves money not
  just CPA, but cuts operations costs, too

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Can Online build preference, recall,
consideration and purchase intent?

• Sceptics dont see any evidence, but if consumer
  spends time with a brand online, it should do
• All agree the brand (landing) site has to be a
  good experience
• Advertisers crave dwell-time. Three minutes
  engaging with a brand drives preference and
  consideration
• Converts and experts much more positiveWe can
  interact and learn about our customers to make
  our brands relevant. No other medium can do that
  (expert)
• Need to measure as part of the overall media mix

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Why does FMCG use very little Online media?

• FMCGs say
• Have to sell huge volumes at low margins nobody
  buys online
• Its only proven for direct response
• Online is so time-consuming for the advertiser
• People dont need to search and find out more
  about our products
• Converts and Experts say
• Because they wrote the original rule book theyre
  set in their ways
• Perhaps they believe they need the richness of TV
  to get message across
• General feeling that FMCG is missing a trick
• It would be a good medium for them to extend
  brand experiences
• And when they understand online is part of the
  purchase decision, theyll be more positive

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Internet has the highest reach between 10-7pm
Source Nielsen//Netratings, Sep 2003
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How were going to help advertisers

• Between 10am and 7pm, online has greater reach
  than any medium (including TV). This sounds
  very attractive especially to FMCG advertisers.
  But they want to understand how many of their
  customers are out there and what they do online.
  Well be helping individual advertisers to
  understand their customers online behaviour.

Well gather behavioural research
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How were going to help advertisers

• Unlike traditional media, theres no recognised
  currency for pre-planning.
• To get on the Marketing Directors main agenda,
  online has to have an official currency to
  measure coverage and frequency like TV has BARB
  and Radio has RAJAR. More marketers will include
  online on their plans when they can see it
  planned alongside other media. Were working
  with ISBA, IPA, AOP and IAB members to recommend
  the best solution. It will take time though.

At consultancy stage now
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What advertisers say

• Online sceptics all say they need it. But even
  onlines biggest fans say it would help them too
• Need something to cut through the nervousness
  use our language
• Wed use it to see the overall media picture
• Sometimes our media agency suggests online, but
  we cut it back
• I question the budget for what its adding to
  the mix
• Online is too old not to behave like
  traditional media

Its time to act like a grown-up medium
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Appetite from agencies
The business I look after is effectively
converting brand clients to using digital
platforms and they expect to see reach and
frequency, they expect the planning to have more
rigour to it than using historical campaign
data. If somebody is going to look at digital as
part of their overall media mix, we need to have
comparable stats. Agency A
The biggest difference of online is that their
measurement of results is way more measurable
than any other media, whereas the planning side
at the moment is probably weaker than most other
media. Agency G
With DR I dont really care how many people we
reach as long as we get say, 700 sales a day at a
cost per sale. I dont care if they were
grannies, kids whatever. But when Im launching a
movie or when Im launching a car, Ive got to
achieve this, and at the moment theres nothing
that can tell me what Im doing on that
front. Agency D
The rockbed of online activity remains ROI
based.. but more campaigns are starting to talk
about branding, are starting to talk about
coverage in that area, thats where the planning
requirement isas planning tools become more
important and as more branding work comes into
the market the planning process becomes more
important. Agency I

• Source These quotes are from the IPA
  investigation of its largest online member
  agencies.

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Audience Measurement Systems
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Our mission

• To help marketers find the best role for online
  advertising, to engage customers and build their
  brands

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Our next target
To become a 1 billion pound medium by mid-2006