Agency: Adam & Eve
By Alasdair Reid, campaignlive.co.uk, Friday, 10 November 2006 12:00AM
How inconvenient for Andy Duncan, Channel 4's chief executive. No sooner had City gossip columnists begun whispering his name in connection with the still-vacant chief executive's job at ITV, than he found himself creating headlines in the business pages with a controversy about a structural step-change in the advertising industry.
Duncan was pointing out that Google in the UK was likely to outstrip his channel in ad revenue terms this year. Google is likely to take £900 million, Channel 4 around £800 million. The implications were obvious, weren't they?
Well, no, actually. Senior industry figures were not slow to point out that the central thrust of Duncan's thesis - that the internet has started eating television's lunch - was fundamentally flawed. Total television revenue across the whole market has been holding up remarkably well - and even growing marginally - over the past few years.
So, the rise of the internet does not necessarily equate, in a zero-sum game, to a decline in television. Especially when you remind yourself of one small, but rather important, fact - that the money is coming out of different pots in the first place. They're in very different businesses, Channel 4 and Google. One's still in the classified advertising market, the other in display.
On the other hand, it's useful to be reminded of one rather interesting, but often neglected, consideration - that online media owners are now very much in the big league where their ad revenues are concerned. But are their sales teams similarly top drawer?
WHAT IT MEANS FOR ...
ADVERTISERS - It's a somewhat bitter irony that the fastest-growing advertising sector remains relatively unsophisticated in ad sales terms. As Chris Locke, the UK group trading director of Starcom UK, says, it's ominous to find that they are already acting like ITV - "increasingly inflexible and arrogant" - during the worst days of its virtual television airtime monopoly.
Buyers who move over from trading on other media are often astonished, first, at the low average quality of the sales operations working in the digital domain and, second,at the huge discrepancies in quality from one online media owner to the next.
Lack of talent has been a problem, and there are also huge churn levels, with people not staying very long in their jobs before wanting to move on.
As one observer puts it: "The basic principles of media sales just don't seem to apply in digital."
ONLINE MEDIA OWNERS - You could argue that they have no real need to look at their sales operations while the cash keeps flying in through the window. But Mike Buckley, the trading director at i-level, argues that the media owners are, in reality, significantly underperforming because of this. He says: "Money may be flooding in, but just think how much greater the flood would be if they understood what advertisers want. We could be talking about 5 per cent. That's a significant amount of money."
This article was first published on campaignlive.co.uk