Driven by big brands applying a greater proportion of their marketing budgets to online advertising, figures in the online ad business anticipate the industry’s share of the overall advertising industry is projected to double from 2pc this year to 4pc next year, siliconrepublic.com has learned. Encouraged by this resurgence, at least two new online ad agencies have entered the Irish market.
Simon Ferguson of online advertising firm Sales Online said the surge in advertising online is being driven by large, traditional brands increasing their proportion of online spend in their total advertising budgets. His company looks after the online advertising for big brands across media sites such as Yahoo, MTV, iVenus.com, UTV and Q102, to name a few.
Ferguson said at least five Irish-based online advertising players – Sales Online, RTE, Eircom, BT Ireland, Daft.ie and Entertainment.ie – reported a total of €650k worth of advertising across their websites in September alone.
“As an indicator of total spend in 2004/2005, online display advertising in Ireland was valued at €8m, classified advertising such as recruitment, motor and property sites is worth some €15m and the whole area of online search is worth up to €10m. In total that adds up to almost €35m. The total figure for advertising in Ireland annually is about €1.3bn so the online advertising side is worth only 2pc of that.
“However, we would predict this could double to 4pc in 2006. This is being driven by large brands increasing their spend on internet advertising as a proportion of their total marketing budget. For example, Bank of Ireland recently indicated that its online advertising spend would be increased to between 4pc and 6pc. Some financial institutions would be higher. Permanent TSB would be spending up to 10pc of its total budget and Rabobank would be spending 20pc of its total budget online.”
Ireland, Ferguson agreed, is far behind the UK where according to the UK’s Internet Advertising Bureau total spend on online advertising is at 7pc of total advertising spend. In the UK, internet advertising expenditure for the first half of 2005 reached £490.8m sterling, according to the bi-annual advertising spend study carried out in partnership with PricewaterhouseCoopers and the World Advertising Research Centre. Online revenues increased by 62.3pc on a like-for-like basis when compared to the same period in 2004. In the UK, BT is currently spending £9m sterling or 6pc of its total budget online.
Ferguson acknowledged that a major difficulty facing the online advertising industry in Ireland is the lack of shared data on actual internet traffic figures and the effectiveness of online advertising. An earlier attempt by the industry in the form of the Internet Advertising Bureau of Ireland (IABI) was wound down by sales online as well as Eircom, Cybercom and BT Ireland two years ago. “Things got tough, the industry was too small for a start and the members were too busy trying to stay alive than have time to devote to the IABI and pay its bills.”
Today, he SAID, the only real sources of information on the market would come from the Institute of Advertising Practitioners in Ireland and the Joint National Industry Research (JNIR) figures, which various players pay a subscription to be members of. “The problem with the JNIR is that it only covers a number of websites, so you only get figures for those that pay for it,” says Ferguson.
At least two new online advertising agencies – Brando and Blue Cube – have entered the Irish market in the past year. However, the need for clear, independent research based on shared information could impede progress, said Robert Pryce of Blue Cube, a subsidiary of Belfast ad agency AV Brown, which began life in 1929. “In the US all companies share their figures. Here, however, everyone is jealous about sharing statistical information.”
Willingness to share information, Pryce reckoned, could help this segment of the market. “McDonald’s shares its information, it increased the online share of total advertising spend from 5pc to 8pc and share that in the public spectrum. In the Irish market, people don’t share this information.”
Nevertheless, said Pryce, the online market is enjoying a renaissance. “Broadband has made all the difference. Ads can be much more interactive and interesting. It’s a direct stream to the customer. In fact there are complementary creative opportunities in online and TV advertising.”
Another firm to enter the fray is Brando, which describes itself as an “all-inclusive digital advertising agency”, aiming to make brands relevant through online, digital media, mobile campaigns and interactive TV. Founder and managing director Darren McGrath explained: “Online advertising is becoming more accepted and the onus is on agencies such as ourselves to develop the right propositions in terms of creativity, which until now has been lacking in the Irish online market.
“There is a resurgence in interest in online advertising and spend is increasing. Bigger brands with more experience of online are investing a higher percentage. BT is a very good example,” said McGrath.
By John Kennedy