Is online advertising facing the same problems as the TV market?

on Guardian Unlimited Blog
by Mark Sweney, June 26, 2006

While internet advertising continues to sky rocket, the shift in users habits to take control of new media consumption means that simply ploughing money into banners and buttons is unlikely to reap rewards in the emerging "web 2.0" landscape.

A report from the Advertising Association today showed yet another bumper performance by the internet advertising sector - a rise of 62.3% in real terms to reach £1.366bn.

The medium's seemingly inexorable growth - some analysts predict it will eventually account for as much as 30% of all ad spend in the future - sometimes paints a picture that perhaps all advertisers need to do to capture users as they shift online is throw money at the internet. But the net could suffer problems similar to the TV ad market's struggle to deal with consumers switching off irrelevant commercials.

The web is changing.

In the early days - well, the late 1990s and early 2000s - the primary view of the internet was as an "informational" (and to an extent a rise in the idea of transactional) vehicle.

Now, the preoccupation is on "community" and "personalisation".

As Chris Ward, commercial director at MSN UK, views the changing landscape: "The internet could suffer from the same pressure as experienced in TV, press and traditional media where the marketing message needs to be more relevant. Consumers are increasingly able to be selective, such as using ad blocking software and spam blockers, so we need to create the ability for marketers to create relevant maessages and target groups better."

MSN's answer is its new Windows Live products that, as they roll out, are designed to allow the next generation consumer (pretty much people under 25) a sophisticated level of personalisation of content and services. The regular MSN portal will still exist for a more general audience.

So MSN's point is marketers need to start thinking smarter now.

The likes of MySpace, YouTube and Bebo and the growth of user generated content have shown how rapidly consumers are willing to change behaviour and make the internet work for them.

The question for the next generation marketer - already in most cases playing catch up by furiously shifting ad budget online - is really the same as it always has been for all media - how to market in an engaging and relevant way.

UK digital agencies had a particularly poor year at the Cannes Advertising Festival, are they delivering the best, most effective work for clients?

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• Advertising