As a vertical network, Fixion Media doesn’t fit the traditional mould of most juggernaut ad networks but we have taken part in the movement that eMarketer describes here:
“Internet spending growth used to be driven by small and midsize businesses,” [TNS research director Jon Swallen] said. “Now it’s the large companies like consumer packaged goods firms which are getting more into the Internet. The percentage of budget allocated to display by the top 50 blue-chip firms is still comparatively low, but that’s changing.”
While growth at Fixion Media has been fuelled by-in-large by small to midsize clients, we also are spotting more interest at the agency level as well as with major brand clients, both within the music industry and out. This growth is encouraging as it allows us to offer better technology, more campaign types, and so forth.
But my point here is an urgent one. In the coming weeks as our clients prepare their 2008 budgets, I am pushing for increased online marketing budgets as percentage of total expenditures; conservatively, 5% or more next year. The eMarketer article reports the Internet at only a 7.6% share for the first half of 2007 in terms of U.S. advertising spending by media. More importantly, that is a 17.7% increase over the first half of 2006 by far outpacing Magazine media at 4.6% growth. In other words, if you are spending the same on magazines and the Internet as you were two years ago, you are losing major ground on companies that have realized that audiences that are shifting online in droves.
In saying this, I will pre-emptively balk at those who decry my advice as being obvious in that I own an advertising network. Of course it’s in my interest. However, my point speaks to the fact that major buyers scale their marketing more efficiently than smaller companies. Major buyers are also more open to experimenting with new technologies and marketing channels. A big budget means more options. It is much more difficult though for smaller buyers to compete as they tend to stick to the same strategies and budgets as in years past without revisiting shifts in consumer behaviour. Changing the status quo may come at a higher price but it is worth the risk.
What the eMarketer article states above is that while smaller/midsized have enjoyed the bulk of the spending power in the last couple of years, larger buyers are going to flip the balance of power on networks like Fixion Media. Five figure deals are commonplace now. Less than five years ago, I remember getting e-mails from major name brands saying that they “don’t advertise online”. And they didn’t. Many labels in particular leveraged their might to seduce media to provide promotional exposure for free while they spent millions at MTV or VH1. Coupled with debacles like Napster back in the day and other P2P file sharing services gnawing the heels of power, it’s easy to see why independent music is flourishing online right now.
My grander point though speaks to the importance of small and midsized businesses as counterbalances to power. The independent scene is akin to the minor leagues of baseball. The superstars get signed while the underground economy struggles to create the next big thing. While this wouldn’t be a problem in past in the case of the music industry, the monoliths now have a diminished pool of talent to choose from. Even major bands like Radiohead are going independent because they can but it will become a more frequent occurrence. More bands will surely follow suit as profit margins are more appealing taking the indie route.
My prediction: corporations won’t give up. There is going to be a flood of money pouring online to regain share of voice where it has eroded in the past. This may negatively impact the underground scene but it could be a catalyst to a fair, free market that the music industry deserves. The Internet has made this possible for all of us.
Filed under: Client Side, Media Planning, Branding
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