A digital native title dispute

By Ray Welling

In the competition between digital natives – Gen Y, which has grown up with online technology and digital immigrants – those of us who can remember typewriters and phones with cords attached – for primacy online, it seems that the digital natives have gained the upper hand.

Think Mark Zuckerberg (Facebook, and a billion dollar online empire by the time he reached his mid-20s) vs. Rupert Murdoch (MySpace, phone hacking scandals, declining dead tree media empire). Or Natalie Tran (24-year old Australian vlogger with 156,000 Twitter followers, more than 400 million YouTube views and a cozy career in the making) against say, Tony Abbott (50-something Australian politician with 56,000 Twitter followers but no YouTube channel).

If you read the media reports on what’s hot on the web, there appears to be a strong relationship between a lack of history and Internet success.

But it’s not that simple.

It can be useful to have a long-term view of the online world, which only a seasoned digital immigrant can have. If you can combine that with knowledge of traditional, pre-Internet business principles, you can look past current fads and build a business model that’s sustainable.

For example, the current obsession with whatever is the latest online application exploding in the public consciousness ignores the fragile nature of web success.

With all the current talk of community-building and developing personal relationships, you’d think the concept was invented by Facebook. Digital natives may be too young to remember, but digital immigrants will recall that when MySpace burst on the scene, it was seen as the long-term future of social media. That is, until Facebook came along.

Early digital immigrants can go back even further and remember GeoCities, an online community where people could create personal pages and create a following of fans, which was all the buzz way back in the 20th century.

And consider the power and ubiquity of the Google empire. It may be hard for digital natives to fathom a time pre-Google, but digital immigrants can remember when Yahoo! was seen as the impregnable leader in search (As an aside, it used its cash reserves to buy GeoCities back in 1999), a crown it took from the equally-invulnerable Alta Vista.

Read the full story on Smarter Business Ideas


Will digital escape the crisis?

A study of chief marketing officers (CMOs) in the US by marketing and direct services firm Epsilon shows that while traditional marketing and advertising spend is down, partly due to the current economic crisis, digital marketing spend is still strongly on the increase this year.

The results, based on a survey of 175 CMOs, indicated that more than 60% of companies are increasing their spend on digital marketing and advertising this year, while nearly 60% are reducing their overall spend on marketing and advertising.

Other interesting results include:

  • Social computing (including word of mouth, social networking sites, viral advertising, etc.) was the most popular emerging channel with 42% of marketing executives expressing interest in adding it to their marketing mix.
  • Blogs were the second most popular emerging channel: 35% of marketing executives want to pursue blogs and 19% already use blogs
  • Almost one-third of CMOs mentioned Podcasting as an area of interest: 31% are interested in adding Podcasting to their marketing mix and 18% already have.
  • Mobile devices also elicited interest: 29% are interested in Mobile Devices (Phones/PDAs) and 22% have added them to their marketing mix.

One thing to note is that the survey was conducted in August, before the US$700 billion Wall Street bailout and all the attendant stock market fall-out occurred. It will be interesting to see what the results would be if the survey was conducted this month.

Australian online spend tops $1.5b

The IAB Online Advertising Expenditure Report for the last financial year shows strong growth in online advertising expenditure across all categories, including a record-breaking second quarter of this year. The search and directories segment displayed the strongest growth during the year ended June 30 2008 compared to the year ended June 30 2007

Online advertising expenditure in Australia for the last quarter of the financial year (three months to June) totalled $412.5 million, the largest second-quarter ever recorded. This is an increase of $28 million, or 7.3% from the first-quarter of 2008.

Online advertising expenditure in Australia for the 12 months to June 30 2008 totalled $1,523.5 million. This is the first time the market has exceeded $1.5 billion in a 12 month period, representing an increase of $324 million, or 27% from the 12 months to June 30 2007.

All expenditure types recorded strong growth, with general advertising accounting for 27%, classifieds advertising accounting for 27%, while search and directories advertising accounted for 46% of the market.

Online advertising expenditure in Australia for the first six months of 2008 was $797m, an increase of $70.5m, or 9.7% on the last six months of 2007. The results show the finance, computers and communications and motor vehicles sectors continue to be the dominant industries using general display advertising, equalling more than 50% of the general display spending.

The June quarter continues the historical trend of an increase on the March quarter, which has occurred in all years. The report, prepared by PricewaterhouseCoopers (PwC) uses data and information reported directly to PwC by online advertisement selling companies representing more than 1000 web sites.


Interactive advertising share to double over four years

Internet advertising continues on its strong upswing as the global economy stalls, according to a new report by Group M. Interactive media’s share of worldwide advertising expenditures is expected to hit 15% in 2009, almost double from four years ago, and will remain the main source of growth as ad spending in traditional media continues to decline.

Ad spending in interactive media – Internet, mobile and gaming – reached 11% in 2007, driven mainly by gains recorded in the US and Western Europe, as well as by the increased use and availability of improved handsets, inexpensive laptops, faster broadband, and extensive Wi-Fi connections.

The survey covers 35 countries and shows digital advertising’s share of total ad investment rising from 8 percent in 2005 to 15 percent in 2009.

Among other key findings of the report:

  • Almost 45% of interactive ad spending is for display ads, a figure that is expected to fall slightly. Paid search advertising accounted for 38% and is expected to grow
  • Google commanded a median 86% share of 2007 search inquiries in the survey’s sample of 35 countries
  • The mean online shopping spend per user in 2007 was estimated at $471, and the only country to break the $1,000 mark was Denmark
  • There is also strong positive correlation between the amount of broadband a country has and the internet’s share of advertising investment
  • Demographics alone will sustain growth in internet use among consumers for at least another generation, and possibly two, as those under 25 years old carry their habits into middle age and beyond
  • The amount of time consumers spend online is increasing from a mean of 27 minutes daily in 2005 to a projected 46 minutes next year
  • The increased time was generally not a result of consumers’ spending less time with TV, radio and print, but rather carving out more time to spend online each year, or possibly multitasking  

The big questions

Pete Blackshaw has just published an article on Clickz which echoes my piece yesterday. He outlines 10 ‘big questions’ every chief marketing officer should ask. The questions:

  • What’s the strategic relevance of listening?
  • How do we stay credible with consumers?
  • How do we gain permission to market to consumers? What is permission?
  • What is engagement? How do we measure it?
  • How do we stay authentic and meaningful with consumers?
  • How do we facilitate and catalyze cross-functional relationships to unleash new value and synergy?
  • How do we intervene with consumers at critical inflection points? What are they?
  • How much marketing budget should be invested in indirect activities?
  • How do we nurture customer advocacy?
  • How do we protect and defend brand equity and reputation?

As Blackshaw writes, “You simply can’t decouple service and marketing in this new era of consumer control. Without satisfied customers, we simply can’t market. Without strong customer advocates, we simply can’t sell.”

It’s all relative: Internet ads grow as economy contracts

The sub-prime economic crisis in the US is accelerating the share of ad spending on Internet advertising, according to a new IDC report.

During the next five years, Internet advertising is predicted to grow eight times as fast as traditional advertising, doubling from US$25.5 billion in 2007 to US$51.1 billion. That means by 2012 the Internet will be the second-largest area of advertising spend, behind direct marketing and in front of TV, radio, and newspapers. The Internet is currently number five on the list.

According to IDG, “Video advertising will be the principal disruptor of Internet advertising over the next five years by attracting the most new marketing dollars. Its revenue will grow sevenfold from $US0.5 billion in 2007 to $US3.8 billion in 2012 at a compound annual growth rate (CAGR) of 49.4%. This growth will take place because brand advertisers will shift significant amounts of money into these video commercials, primarily from broadcast television.”

Would love to see some equivalent statistics for Australia if anyone has them.