Online marketing spend is now matching, or overtaking, spend on other media. If you’re not on top of this trend, Diane Charton offers some tips on how to prepare your online marketing for the year ahead.

It’s that time of the year again, when marketers prepare budgets and assess objectives for the year ahead. And this time the money is starting to flow in different directions. Unless you’ve finally managed to take that year long sabbatical, you’ll probably know that the big news this year was the amount of money flowing into the online marketing space.

2006 was the year in which online marketing spend started to make good on all the predictions and began matching or surpassing spend in other areas. No longer is internet marketing simply an add-on to the marketing budget in order to hedge against a medium that isn’t quite understood. This year internet marketing arrived in full force - where it counts: the marketing budget.

Some statistics

According to a recent survey in The Economist, over 70 percent of marketing executives across the world believe that the internet will be the central determinant of how major marketing campaigns are planned and implemented by 2008. In addition, 73 percent of leading advertisers believe that online marketing delivers a higher return on investment than traditional media channels do. This is backed up by research from Millward Brown, which reveals that 61 percent of marketing professionals believe that online marketing provides much better measurable Return on Investment (ROI) than television, radio or magazines.

Online adspend now a major budget item

This is a refrain that has been heard for the past few years, only with more people singing it this time. What made 2006 a watershed year is that these beliefs were actually reflected in real adspend budgets. Figures released by the Internet Advertising Bureau (IAB), in conjunction with PriceWaterhouseCoopers, show that internet adspend in the UK has a market share of 10.5%, compared with 11.4% for national newspapers. The IAB anticipates it will overtake spending on national newspapers before the end of this year.

The UK online advertising market is now worth three times the radio advertising market, according to Ofcom's annual communications market report, and it is now fourth behind newspapers, TV and direct mail. It has already left outdoor advertising in its wake, along with the business magazine and consumer magazine markets.

And in South Africa?

We can see internet growth locally as well. Statistics from the Online Publishers Association show a 52% growth in unique users from June 2005 to May 2006. And where the audience goes, the advertisers are bound to follow.

Hopefully none of this is startling you. Hopefully you’ve been paying attention and thinking about how you’re going to take online marketing to the next level in your organisation. If not, you’ll be pleased to know that you’re still in time.

A few tips on preparing for the year ahead

Understand the medium. As online marketing grows and evolves, it becomes critical to leverage its full potential. If organisations are to meet their business objectives it is imperative that they understand the online offering and ensure that they maximise it. It therefore becomes critical to approach online initiatives (and every other campaign element) in a structured, measured way.

Define your objectives. It sounds obvious, but it’s surprising how often this crucial step is omitted. Without clear objectives, the planning process becomes directionless. This is not merely understanding who your target market is (an important part, of course) but how you want them to interact with you and how you will measure this. Do you want them to subscribe to your newsletter, enter that competition or make an online purchase? What are you doing to help them achieve these objectives? How easy is it for clients to interact with you?

Take an integrated approach. Websites, technology, creative, media placements, search tactics and user experience are all integrated in the online environment. None of these act in isolation from each other or the broader marketing campaign. To ensure an integrated solution, each campaign should begin with a plan that joins all the dots and lays the groundwork for a clear strategy that continually ties back to the objectives. The right technology should be in place to track and measure this, thereby adding to the strategy, not detracting from it.

Track performance. The performance metrics need to be established in the planning phase as a foundation for the campaign – not as an add-on at the end. A key benefit of an online campaign is its measurability against the predefined objectives. Actual performance therefore extends beyond the number of impressions served or click-throughs gained. It’s about getting people to do what you want them to do. Tracking online includes understanding placement performance and creative messaging all the way through to the website experience. All of these are key factors in understanding the effectiveness of the campaign.

Close the loop. Gathering data is interesting; using it makes it relevant. Performance figures need to be interpreted and understood and used to review the campaign to maximise its effectiveness. By having clearly defined objectives, and information about what does and doesn’t work, results can be improved by tweaking the offer, creative, placement or even website.

From cost centre to revenue generator

A sound online strategy can, and should, deliver real ROI. With the correct strategy in place, you can begin to see online as an arena for creating interactive solutions that are no longer cost centres, but real revenue generators.

That's according to Jacqui Boyd, media director at Acceleration. She says that social networking sites such as MySpace, YouTube, Friendster, LiveJournal, LinkedIn, Flickr and FaceBook continue to grow fast and already rank among the most popular sites on the World Wide Web.

"Our research shows that these Web sites are attracting millions of page views from South African Internet users each month. MySpace and YouTube already rival the largest local portals for popularity among South African Internet users, with more users discovering them with each day that passes," says Boyd.

The trend underlines how important it is for South African advertisers to keep the global nature of the Internet in mind when they are planning and executing their online campaigns, she adds.

Social networking sites have turned into a big business in the US, with some market watchers predicting that they could eventually become bigger and more heavily trafficked than search heavyweights, Google and Yahoo!. Google recently bought popular online video site YouTube for $1.65 billion in stock to propel itself into the social networking world.

Marketers will spend about $280 million on advertising and marketing on US networking sites this year, which is expected to grow to nearly $1.9 billion by 2010, according to eMarketer.

YouTube users download more than 100 million videos (many of which are short videos created by the site's users) each day from the site. MySpace, already the sixth most popular Web site on the Web, hosted more than 100 million member profiles by August this year. MySpace's 30 billion page views are second only to Yahoo.

"South African brands can target local users on international social networking portals with geo-targeting. Apart from traditional banner adverts, most social networking portals also allow advertisers to target registered users that fall within a specific demographic such as age group," says Boyd.

"Social networking sites also allow companies to sponsor specific categories or types of content that are aligned with their brands or likely to attract people within their target markets. For example, a company might want its ad to be served to users who download Paris Hilton or Madonna music videos," Boyd adds.

"Social networking sites are certainly no longer the exclusive domain of teens, although age demographics vary widely between the various portals" says Boyd.

Boyd notes that more than half the visitors to Myspace are now 35 or over, up from less than 40 percent last year. The proportion of the audience aged between 12 and 24 has fallen to 30 percent from 44 percent, according to a recent comScore Media Metrix survey.

Concludes Boyd: "Some local brands are already experimenting with social networking sites with some of their online advertising budget and are surprised at just how many South Africans are using these sites to communicate with friends, create content, entertain themselves and access information. For the right brand, devoting some of the online budget to social networking sites can provide great returns."