March's Column By New Media Age Editor Mike Nutley
"The long-awaited and much talked about new media recovery is gathering strength. The tentative optimism of last summer was followed by promising signs in the autumn, with the Interactive Advertising Bureau (IAB) reporting that online advertising had overtaken cinema in terms of share of the UK's total advertising spend. Then Christmas 2003 was another record breaker, with 10.4m people buying presents online, according to NOP World.
And the growth continues, with NMA reporting every week on new media agencies staffing up to meet rapidly increasing demand for their work. In fact, a couple of senior agency people I've spoken to recently have gone so far as to say that not only do they wish things were moving a little more slowly, they're concerned we might be seeing a repeat of the dotcom bubble.
This seems unlikely, for a number of reasons. The most significant is that, as the great Canadian economist JK Galbraith pointed out in his book The Great Crash 1929, one of the pre-requisites for a bubble is that everyone has to have forgotten the last one. It's certainly true that businesses are reappraising the use of interactive media as channels of communication with their customers and starting to spend money on those channels again. But you'd be hard pushed to find anyone now who believes the Internet was a more important invention than fire, or that online will replace the established order.
Secondly, the money coming into the sector, and particularly into online advertising, is much more sustainable than it was at the turn of the millennium. Then the bulk of online advertising was being bought by dotcom start-ups using money from VCs who in turn were valuing companies by such metrics as the number of eyeballs they would attract. Now it's coming from the marketing budgets of established businesses.
Thirdly, a lasting effect of the dotcom crash has been to focus everyone's attention on return on investment as a key parameter in their work. There may be areas, Wi-Fi for example, where the business models are unclear and investment is more speculative, but in the mainstream of new media measurement and ROI are still dominant.
However, all of this shouldn't be taken to mean that we have nothing to worry about. While the recovery of the sector as a whole seems to be following the sort of path established by such disruptive technologies as the railways, the telegraph and the telephone, individual companies and segments are still vulnerable. Those agency types, for example, might be right; we might be experiencing another "we've got to revamp our Web presence" period from businesses, leading to a flurry of work that dies away once everyone has the 2004 version of their site. But this seems unlikely to me.
That emphasis on ROI I mentioned means that the people who are still using interactive media are using them because they work; because they've delivered. There's no sentimentality in business; NMA regularly covers elements of companies' new media strategies that were cutting edge at the time, but have now been dumped because they didn't perform. I've said before that we're only now starting to figure out what interactive media are best at. We're also only now working out how much better at those things interactive media are than conventional channels. And we've barely scratched the surface of what interactive media is going to make possible."
Michael Nutley, Editor, New Media Age, http://www.nma.co.uk/