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Digital and mobile advertising gives TV a kicking

Written by Robin Hague

Ad agencies go online and on the go, TV and print lack lustre

They are not just alarm bells ringing in the hallways of television networks around the world, but fully-fledged emergency sirens, the kind you hear in a Hollywood submarine thriller when the nuclear sub and its crew are heading for an atomically catastrophic ending.

What was little more than a trickle of marketing spend heading towards digital and especially mobile a few years ago is now a river, flowing away from advertising on television and other traditional media.

In its latest quarterly survey of the big US advertising firms, media management firm STRATA reports only 6 percent now separates TV and digital as the advertising medium of choice. While 35 percent of advertisers say they still most favour spot TV advertising, it's a full 16 percent down on the last quarter and 22 percent less than a year ago.

It's a wrenching change and one full of ominous augury for television networks and channels. Nearly three quarters of the major ad agencies surveyed by STRATA say they are more focused on digital than they were a year ago and nearly a quarter say it will be three years or less before they have a greater spend on digital than traditional advertising.

So by summer 2013, nearly 25 percent of the big advertising agencies will be directing the bulk of their clients' ad spend towards online and mobile advertising. Television, so reliant on advertising revenues, will be gasping in the shallows.

Mobile is a big winner in this. According to STRATA, nearly a third of advertisers say mobile advertising is the focus of their interactive spend, up 107 percent over the first quarter of 2010. This is a dramatic increase in just a few months.

The drive to mobile is led by Apple's iPhone. Nearly 9 in 10 advertising agencies say their clients are interested in advertising on the iPhone, 30 percent more than the Blackberry and Droid smartphones. Just over a quarter are also thinking about advertising to iPad users.

"High profile campaigns from Apple and Google seem to be the reason for the interest for the iPhone and Droid," said John Shelton, STRATA President and CEO. "Advertising on mobile devices is a new frontier that people are rushing to explore. Whether it will provide the necessary ROI for the early advertisers is yet to be seen, but one thing is for sure – many advertisers feel the gamble is worth it."

The 2010 World Cup may also have something to do with it. As we have reported, mobile TV platforms like mobiTV and FLO TV observed breakthrough numbers as their subscribers employed their smartphones to keep up with the action/inaction from South Africa.

2010 has had the ingredients of the perfect storm for mobile marketing, a large-scale global sporting event coupled with the arrival of some highly desirable new devices, including the iPhone 4 and iPad and additions to the range of Android phones, as well as more affordable and easily understood data plans. That the World Cup featured teams from South Korea and Japan didn't hurt; mobile subscribers from these countries lead the world in terms of mobile television consumption.

Smartphone users are also becoming increasingly comfortable with their devices for mobile online activity. ABI Research findings show nearly a third of smartphone subscribers have clicked on an Internet advertisement, such as a text link or banner ad, while using their phone. Nearly 80 have used a search engine on their phone.

More than a quarter of those who responded to ABI's latest survey have seen a commercial while watching a video on their mobile phone, forty percent more than the previous figure from just two months earlier.

Location-based marketing really works, with nearly forty percent who have used their phones to get directions or find places saying they would be interested in receiving a coupon or free service from a nearby restaurant, retailer or hotel. Vouchercloud is one of the UK's newest location based services for mobile users and it already boasts a long list of partners eager to attract smartphone-wielding passers-by.

These are all services television and print cannot offer. Or can they? A ray of hope for television lies in targeted, interactive advertising through Internet TV or even just the red button. There is no doubt television can win when advertising calls for a rich, immersive experience. And using augmented reality techniques, print media can also provide compelling new ways to reach readers, albeit via their mobile phone.

The advertising revenue is out there. STRATA's survey shows the big advertising agencies are feeling more confident, nearly half of those polled seeing their businesses increasing over the same time last year. Nearly 30 percent say they plan to hire staff this year, 99 percent up on the same time last year.

Cable television gets a bit of a boost from this survey, with 22 percent of advertising agencies saying they are focusing more on spot cable than they were a year ago.

However, for television to survive and prosper the challenge remains how to provide an attractive alternative to the very vibrant, dynamic and flexible advertising campaigns made available by the advent of the Internet and smartphones. TV delivered by the Internet is the most likely riposte, creating another perfect storm from the Internet's elasticity and television's unrivalled ability to create vivid, riveting narrative.

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