Ads on Internet are becoming more effective

O&M Toronto began its awards haul for the ad with the Cannes Lions and is set to pick up more. And an enthused WPP (advertising majors like O&M, JWT and Grey Worldwide form part of media conglomerate) can’t have enough of the success story. Even the spoofs of the ad, particularly the one called Lardo, have only driven the ad’s popularity further.

That’s just one indication of how powerful digital media is becoming in the communications space. Advertisers and their agencies across the world are today looking closely at channels like websites, blogs, social networking sites and mobiles phones to influence consumer decisions.

Consumers are beginning to participate in advertising and communication, becoming part of the creative department. Once you do good work, you have the consumer acting as the evangelist.

With the internet surfing emerging as a daily activity for young and old alike advertisers across the world are looking closely at channels like websites, blogs and social networking sites to attract potential consumers.

Digital media today accounts for 8% of global ad spend. In the UK, it’s already as high as 17%. Over the coming years, it is expected to touch about 25%. Consumers spend 20-25% of their time online, so ad spend should follow that and stabilize around that level.

In India, digital media spend is currently less that 2% of total ad spent but the expectation is that it will be 8% to 10% by 2010.

After years of stagnation, advertising expenditure in digital media in 2006 showed a steep growth of over 150% over the previous year, says director, Dentsu Communications, who predicts a 50% CAGR in ad spend on digital media over the next several years.

Online advertising is interactive and has greater measurability with hits being constantly monitored and in some cases, conversion rates of hits-to-purchase as well. Search engines like Google are currently the biggest driving force of online advertising. Internet phenomenon like social networking sites as well as blogging is catching on especially amongst the youth, ad agencies are coming up with different ways of targeting these channels. Sunsilk’s, which offers from fashion and beauty tips has been one such success.

Advertising on blogging and social networking sites offer an opportunity to match unique keywords for each ad unit and narrow the targeting directly to the theme you want. Better targeting offers higher response to ads.

Interestingly although the number of mobile phone users in India is around 150 million (with five million subscribers being added every month) and internet users are only about 40 million, ad agencies are betting higher on internet than mobile. For one, mobile phones are far more personal and push SMSs don’t work. There’s great potential for mobile phones, but one needs to work out models to suit the medium. The models need to ensure that a large number of consumers are targeted and yet, should not annoy the consumer the way some telemarketing sales pitches do.

Globally, while online advertising is estimated to be $32-33 billion in 2007, advertising on mobiles is expected to be just about 3% of that. However, companies like Bangalore based mGinger are trying to offer advertising solutions in the mobile phone space. We send SMSs based on categories – like travel or apparel – only with the permission of the user. Besides, the SMSs usually have a discount incentive, says CEO of mGinger. Nallan is planning to tie up with ad agencies to reach out to a wider client base.

Given the sheer number of mobile users and their reach across urban and rural India, there will be more such models. Mobile phone advertising spends will exceed internet ad spends in the coming years.