Article by Paul Fisher. First published in AdNews, April 15 2010
The recent reporting in this publication and others of Jetstar shifting 40% of it’s total marketing budget to digital and social media triggered a flurry of views.
Aaah, the joy of the digital world we live in, where opinion and even ridicule can be communicated in minutes and seen by thousands. Apart from the very dissatisfied Jetstar (and other discount airlines’) customers who just wanted to rant about their own customer experience, the themes really followed the lines of the merit or madness of shifting such a major share of marketing budget into digital channels.
For those in the madness camp, there are numerous reports of major brands shifting substantial media expenditure to online. Most recently, Warc.com reported the announcement by Unilever that they plan to double their online advertising spend this year (2010) having already doubled their spend the previous year! Whilst we can’t glean how much this is in either percentage or dollar terms, we do know that as a global brand that spent $US7.2 billion last year, they are most likely increasing their spend in online well into the hundreds of millions of dollars and possibly even fast approaching in excess of $US1 billion a year.
“What is fascinating and scary is the nature of brands is changing,” said Simon Clift, Unilever’s chief marketing officer,
“That requires a cultural change for companies like Unilever. We have to listen to genuine customer concerns. Companies aren’t set up for that.”
As the Warc article reported, “…adapting to the contemporary era will require matching the new activities favoured by its customers, who have migrated to emerging platforms at an extremely rapid speed.”
“We are all learning. Unilever is ahead of much of the competition but behind consumers, which for marketers is not a comfortable place to be,” Clift argued.
Clift stated that its creative and media partners will have to play a key role in the “really rapid catch-up” with consumers…”.
In the 2005 calendar year the percentage of total advertising in Australia spent in online advertising was a mere 5.4%. In a short 5 years to the end of 2009 that had almost trebled to 15% and is forecast to exceed 20% and that of TV and print within the next 4 years, some say 3 years.
What is interesting to note, as pointed out by my UK counterpart, Guy Phillipson, CEO of the UK IAB, this must be viewed as a ‘blended average’. That is, if the industry average is 15% then some advertisers are spending 30% of their total media budget online because many advertisers are still spending zero or single digit percentages of their overall media budgets.
