You don’t often see the words “soaring” and “profits” in the same sentence these days, but one company is celebrating a 41% jump in its income to £38m — thanks to the internet.
Even more surprisingly, it’s a property company.
Rightmove: ( www.rightmove.co.uk ) reported its improving profits thanks to a surge in online advertising.
And it’s not alone. According to eMarketer ( www.emarketer.com ), online advertising spending in the UK increased by nearly 30% last year, compared with 2007.
It predicts that it will continue to show double-digit growth through 2010 and will be worth £5bn by 2012.
The revenues passed radio as an advertising medium some time ago, and are expected to overtake television early next year. (They already outstrip the terrestrial channels).
In short, nearly a fifth of all advertising in the UK is now based online. And the economic downturn could accelerate the trend.
The reason? Most forms of advertising follow the old model of throwing some mud against a wall and hoping that some of it will stick.
In other words, when I pay for a television commercial, I don’t know how many people in the audience are interested in my product.
If I’m promoting a chocolate bar, for example, I can already discount the hundreds of thousands of people who are on a diet at any given moment in the UK. Internet advertising, on the other hand, can be targeted at a given audience, providing a much more effective return on investment. When times are tight, it’s a compelling economic argument.
Interestingly, this surge seems to be a UK phenomenon. Figures suggest that the proportions of online versus other kinds of advertising are different in other European countries — and in the US, where growth in this area is slowing.
Because of the interactive nature of the web, of course, online commercials take on a much more interesting feel. It’s no longer a case of viewers or readers sitting passively while commercial promotions are served up to them.
Barclaycard: ( www.barclaycard.co.uk ) is offering prizes to YouTube users who c onstruct the best home-made water slide and upload a video of it.
Not only does this constitute a promotional campaign in itself, but it also creates a “buzz” around the company’s current TV campaign in which a huge water slide runs around tall buildings in a city landscape.
Sony ( www.sony.co.uk ) is doing something similar to promote its PSP games console.
The vast majority of online adverts, however, are straightforward graphic or Flash banners on a web page.
Their success is judged according to their click-through rate — in other words, how many visitors take an active decision to find out more.
Some suffer from the same problem as TV or billboard ads — they are not necessarily relevant to the viewer at that particular moment.
That’s why one of the most interesting recent developments on the advertising front recently has been the arrival of Dapper ( www.dapper.net ).
Unlike previous models that served up display ads based on algorithms or long-term user behaviour measurement, Dapper gives the visitor relevant information right at the moment he or she needs it — right from the first visit to a web site.
Let’s say you go to a site like Fodor’s ( www.fodors.com ) to read information about city breaks in Paris.
Instead of an irrelevant or general advertisement in the corner of the web page, you are presented with a display ad for an actual hotel in the French capital, together with current pricing. See a video of how it works at www.youtube.com/watch?v=WFVgFU-fZEs .
One of the recurring problems for online advertisers and the agencies that create the campaigns is: how do you measure effectiveness?
Click-through rates are a blunt instrument.
The digital agency Eyeblaster ( www.eyeblaster.com ) has developed a system that allows companies to track users who view an ad but only later look for the product on Google or another search engine.
This level of sophistication (like Dapper) will become increasingly important as the web battles for a bigger slice of the advertising cake.