Online ad spend has finally overtaken TV - It was bound to happen

This week saw widespread news coverage of the IAB Online Adspend Study, which found that spending on online advertising has finally overtaken TV adspend. It's not surprising given the current economic climate. It's certainly in keeping with the trend we have observed in working with our clients and the online market space this year.

ROI is king in this environment. One of the fundamental differences between online and above the line [TV] activity is that online has the ability to track the entire process from beginning to end, whereas with TV it can be very difficult to understand the process from first impression/view to conversion - therefore not really knowing how much of an impact your advertising has had on the consumer.

Using search as an example, it is possible to create a whole image of the consumer: who they are, their thought process when buying, the keywords they use, the average spend if tracked over a period of time...and yet more detail if required. Therefore the amount of information search [and other online] marketers can draw from one action is far greater than any other form of Marketing. With this level of data at our disposal, we can change and adapt the marketing mix to match what the buyer wants, and very quickly too. 

With online advertising being so focussed on ROI, it's the safest investment for advertising budgets at any time, but more so now as the economy remains unstable and marketing budgets are required to stretch further. By this I'm not saying that above the line advertising is not effective and should be abandoned altogether. Above the line will always be the best and most effective way to getting your brand out there and in people's minds - if your consumers don't recognise your brand, how will they search for you in the first place?

However, looking at online advertising as a whole, some channels are more effective than others, but again you should not use one exclusively and discard the rest. You need to analyse each channel individually and be able to contrast their performances, but also be able to understand how they compliment each other and work in different ways.

If we look at the retail industry specifically, we have seen that many brands have almost been in denial about selling their products online. Big brands such as Zara or Gap have finally had to bite the bullet and interact with their consumers. They have finally realised that online is far more cost effective than opening more stores.  Furthermore, shifting a business towards an online focus requires more than a decision from the top,  it really needs a change in culture.  Businesses need to be prepared, do their homework and realise the challenges they face offline are very different to those they'll meet online - more and very different types of competition for example.  It is a positive move though, especially with more consumers focusing their attentions online instead of going to the high street. 

Overall, I don't think companies are spending more on advertising; they are just reallocating and spending their budgets more wisely on areas that are going to give them a secure return on investment and at the same time allow them to grow closer to their customers and understand them better. Online advertising offers both these benefits and this week's news is evidence of that.