This week marks the tenth anniversary of the UK's first online advertisement.
It’s been a dramatic first ten years for online advertising since the first pioneering ad from US telecoms firm AT&T in late October 1994.
At the time the UK had a tiny community of Internet users and the Internet - then known as the 'information super-highway' - was in its infancy. There was no guarantee that it would ever attract a big enough audience to make it an effective advertising medium.
Following the rise of the dot.com start ups, who threw all they could muster at the Internet only to be rewarded by the sobering crash as the sector came back down to earth, online has been steadily evolving into what is now a proven and mainstream medium.
According to John Owen, planning director at ad agency Dare Digital, the crash prompted surviving websites to cut the price of online promotions, allowing advertising to emerge strongly from the meltdown.
"What has driven the recent growth is that as a result of the bust, prices came down sharply, and all sorts of flexible deals became available," he says.
"Offers were at one point almost impossible to refuse. But prices are now set more sensibly, and the sector is very healthy again as a result."
According to recent figures from PricewaterhouseCoopers and the Interactive Advertising Bureau (IAB), online promotions are now the fastest growing segment of the UK advertising industry, with revenues on track to reach £500m in 2004, a 40 per cent increase on last year.
This has naturally encouraged other companies to follow where AT&T led, opening up lucrative new business opportunities for advertising agencies.
According to the IAB, online advertising has put the dot.com bust firmly behind it, with revenues now nearly four times what they were at the height of the boom.
While many in, what was once called the ‘mainstream,’ of advertising (print, TV, radio and outdoor) perhaps ignored the digital sector by labelling it as too technical or complicated, it is now impossible to ignore.
Creatives are beginning to grasp the real opportunity that online provides to enable brands to connect with consumers.
BMW and Diesel’s use of online film has demonstrated how far the creative canvas of online can stretch and this years Cannes festival further demonstrated how a new generation of creative talent is embracing the new opportunities.
And considering the lifestyle changes the Internet has driven, this evolution must continue.
EIAA research shows that the Internet now represents 10 per cent of Europeans’ media consumption - ahead of magazines (8 per cent) and just behind newspapers (13 per cent), and the trend can only go one way.
The challenge for media owners and advertisers is to keep pace with the change in consumer behaviour – because the revolution has only just begun. The increasing rate of change means that the next decade will be even more challenging for advertisers than the last one.
"I foresee continued dramatic growth," says IAB chief executive Danny Meadows-Klue, arguing that the reach of online advertisements is set to expand further thanks to the spread of wireless laptops and third generation mobile phones.
This trend will be further driven by the move towards convergence. Already Internet access is available through X-box, you can make telephone calls over the web and linking the PC and TV can enable you to record hours of television. The PC will increasingly become a window on all your entertainment, communication and digital needs.
Dare Digital's John Owen points out that the creative standards of online promotions are rising all the time, with designers increasingly moving away from traditional pop-up and banner displays in favour of more compelling, interactive advertisements.
Just as in online advertising it will be sectors like automotive who will lead the way, operating as they do in highly competitive markets where marketing and brand are key differentiators.
Carmaker Volvo - has recently pioneered a trend towards sophisticated multi-media campaigns, based on press and TV ads, that direct consumers to complementary online adverts.
The digital future will enable advertisers to target consumers in deeper, more personal ways than ever before. The flip side for brands however will be that consumer power will increase proportionately as service innovations deliver more personal and powerful comparison services and deeper opportunities to experience products digitally whether it’s the virtual showroom or the virtual holiday tour.
Sources: BBC Online, EIAA, MSN, UKFast, weboptimiser.com
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