After a slow start, digital marketing began to take off in Ireland in mid-2006. Increasing broadband penetration, ever-more confident users and a passion for social networking mean Ireland's digital media sector is fast catching up with the UK.
However, many observers believe the Irish digital marketing renaissance has stalled in the face of a severe recession. These are interesting times for the digital sector: those marketers, agencies and media owners who can get clear insight now into the opportunities, potential pitfalls and future direction of the fledgling industry will be strongly placed to take advantage in the coming months and years.
In many ways, it is surprising digital marketing took so long to take off in Ireland. With an average age of 35, compared to 39 in the UK and 42 in Germany, the Republic of Ireland has a relatively young population.
Furthermore, as Damian Ryan, head of digital, Ireland at media consultancy Results International, says: "In Ireland we read more papers than most countries, we send more texts and we play more online games. In short, the Irish population is really into its media."
Ryan also points out that the Irish are enthusiastic adopters of new technology. "Ireland is the world's largest exporter of software, and Google, Yahoo, MSN, AOL, eBay, Amazon and Intel all have bases here.
"There are more people working in digital media in Dublin than in traditional media. Yet their output barely registers, because so much of it is of an international nature."
The widely accepted explanation for the delay is that the Irish government was slow to promote the roll-out of broadband in the Republic. Ryan adds: "Eircom was allowed a stranglehold on the development of the business, which means broadband is only just kicking into gear (see box, page 5). We are lagging about three years behind the UK in terms of online use, online media and online marketing."
Opinions vary as to the extent to which Ireland is catching up with the UK. Ask anyone who works in digital media and they will enthusiastically tell you Ireland is on the verge of an explosion, and that digital is the only medium maintaining share during the recession.
Leading market intelligence firm iReach predicts the value of the Irish online advertising market will increase almost 50% in 2009, to ¤80m.
Yet not everyone is so sure. Richard Howard, director of audit and assurance services at Deloitte & Touche, says: "The economic gloom has led to a fall in online advertising, with one advertiser noting that 2008 spend was falling to 2005/06 levels. For many companies, online advertising was last in the door, so it's first out when the inevitable cuts come. Unfortunately, this seems to be happening: online ad spend in Ireland fell 27% between 2007 and 2008."
Grounds for optimism
While Howard's gloomy assessment may be more accurate than those of the understandably upbeat practitioners, there are still clear grounds for optimism. Firstly, broadband penetration surpassed one million subscriptions in July 2008, and there were 1.2 million broadband subscriptions in the Republic at the end of Q4 2008 (source: ComReg]. This growth represents an increase of 6.7% on the previous quarter and an increase of 35.4% year on year.
Secondly, online media owners are starting to get their act together. For example, news website Independent.ie has registered a huge jump in users. In March, it attracted more than 2.2 million unique users, up 19% on October 2008 (source: ABCe). Eileen Ruddy, group online sales director at Independent Digital, says: "We are doing an increasing amount of online work with clients such as Budget Travel, which ran a highly successful promotion last Christmas."
The third cause for optimism is the Irish enthusiasm for social networking. In March 2007, Bebo replaced Google as the number one website in Ireland, exceeding one million monthly users (source: Alexa Internet). Meanwhile, Facebook reported in January 2009 that it had 400,980 users in the Republic and, by June, this figure had jumped to 672,240 - up 40% in five months.
David Hayes, managing director of Mediaedge:cia Ireland, says: "Social networking use has grown rapidly in Ireland. Bebo used to lead the way, but Facebook has overtaken it very recently in terms of overall unique users.
"However, Bebo remains king of the 15-24 age group, while MySpace doesn't have a significant presence as it is considered a niche music social network. Twitter has recently entered the frame and its growth has been rapid, although users visit Twitter far less often than Facebook."
As in the UK, financial services, telecoms and travel companies led the way in Irish digital marketing. However, this is changing as more and more fast-moving consumer goods brands get involved - a trend Hayes believes is creating greater sophistication in online marketing. He points to the campaign he is running for Xtra-vision, Ireland's largest entertainment retailer, whose online presence now encompasses customer rewards, DVD reviews, entertainment, news and gossip.
"The long-term aim is to turn the site into an entertainment destination, which will attract consumers who will then buy from the site," says Hayes. "We have used display, e-mail marketing, viral and social networking with great success."
Re-evaluating client spend
Dan O'Boyle, head of digital influence at WPP-owned Wilson Hartnell PR, believes the recession, far from damaging the online media sector, is proving its saviour. "The tough economic climate is forcing marketing managers to re-evaluate their spend," he says.
"Digital is increasingly seen as a cost-effective means of generating buzz around a brand. One of the key benefits is that digital is completely measurable. Marketers can get a clear view of the return on their investment, and this is vital in a recession."
Last month, Wilson Hartnell launched a social media campaign for Lucozade Energy, which was designed to engage the online community through sharing and content contributions. O'Boyle says: "We held an exclusive launch event for key bloggers and we developed wallpapers, widgets and so on for sharing.
"Consumers can access the campaign through both digital and mobile. Lucozade is the second most-popular soft drink in Ireland after Coca-Cola, so this is a good example of the type of large-scale, sophisticated digital campaigns major brands are now running in Ireland."
Justin Cullen, managing director of Net Behaviour, agrees the growing involvement of FMCG brands is driving online marketing away from basic response-driven campaigns. He is working on a campaign for 7Up that runs the gamut from content creation to search.
However, Cullen believes understanding of, and enthusiasm for, digital marketing is patchy. On the two main Irish banks - Allied Irish Bank and Bank of Ireland - he says: "As soon as the recession hit, Bank of Ireland halted all digital marketing. AIB carried on, suggesting it has a good understanding of the medium's potential, but Bank of Ireland's decision showed it views digital as just a cost. This patchiness is replicated across the board."
He concludes: "The digital sector will grow by 12%, maybe 15%, this year. However, if you'd asked me a year ago, I would have said 25%. We're making progress, but there's a long way to go. Digital is still too often tacked onto a campaign at the end of a strategy, rather than introduced as a core element at the start.
"Whenever I visit London and see what agencies there are doing, I realise how far we still have to go. But at least Ireland's digital media industry is now heading in the right direction."
National Broadband Scheme set to provide 100% coverage by 2010
In 2006, the Republic of Ireland had very poor broadband penetration at just 14.5%, compared to 100% in Northern Ireland.
Keen to improve the situation, the government launched the National Broadband Scheme (NBS), and in December 2008 the Department of Communications, Energy and Natural Resources announced it had awarded the contract to deliver NBS to 3, the mobile subsidiary of Hutchison Whampoa.
The existing broadband provider, Eircom, expressed its disappointment at the time, claiming its broadband programme was on track to cover 900 exchanges - 96% of working telephone lines in the Republic - by 2009.
However, this March, Eircom admitted the economic downturn would force it to review its investment in next-generation broadband infrastructure.
Following this stalling of private sector investment, the Irish public is even more dependent on the success of 3's publicly funded broadband rollout.
There are approximately 223,000 buildings located within the NBS coverage area (see map) and 3 will extend its network to provide mobile broadband services to the NBS catchment zone.
The mobile broadband service will have a minimum download speed of 1.2MB and the Irish government has set a 21-month rollout schedule.
By the end of June 2009, at least 15% of the broadband scheme area must be covered, 48% must be covered by the end of 2009 and 100% must be covered by the end of September 2010.
Richard Howard, director of audit and assurance services at Deloitte & Touche, comments: "A country such as Ireland - which has a population density of 57 people per square kilometre, compared to the UK's population density of 246 people per square kilometre - will always find it hard to roll out a high-speed broadband scheme at an economic price.
"In Ireland, we are still looking at standard 1MB to 3MB bandwidths, compared to more than 20 to 30 times that speed in countries such as France and Korea."
Mobile: consumer obsession hindered by cost of handsets
Mobile phone consumption in Ireland is the highest per head of population in Europe.
Statistics from Irish telecoms regulator ComReg prove the extent of the Irish mobile phone obsession:
- At the end of December 2008, there were 5,357,036 mobile subscriptions in Ireland
- The total number of SMS messages sent by mobile users in Ireland reached 2.8 billion in Q4 2008, compared to 2.5 billion in the previous quarter
- In Q4 2008, SMS volumes were up 32.5% on Q4 2007 and 70.3% on Q3 2006
- If the total volume of text messages is averaged over all active subscriptions, an average of 174 SMS messages were sent per subscription per month in Q4 2008, compared to 138 in the same period in 2007
- More than 13.4 million MMS messages were sent in Q4 2008
Piaras Kelly, account director at communications agency Edelman, comments: "Ireland is still mobile mad, with a penetration rate of 114%
"Brands are using mobile for a variety of advertising solutions, starting with the standard wallpapers, ringtones and banner advertising on the likes of Vodafone Live.
"We are also increasingly seeing proximity marketing, with the launch of the first Bluetooth campaign, and targeted solutions such as branded maps for concert-goers at music festivals."
Adam Taylor, head of interactive at GT Media, expects his division's revenue to be up 50% this year, with a large part of that coming from mobile activity such as the text campaign his agency ran for Honda.
"We wanted to increase awareness of the sporty Civic models to a young audience," he recalls. "So we picked a digital poster site in a trendy part of Dublin and produced a striking creative that was activated by people texting a number. They were then sent a text directing them to a website."
However, although mobile is undoubtedly a major medium in Ireland, Justin Cullen, managing director of Net Behaviour, warns against over-estimating the market.
He says: "Despite all the hype about mobile in Ireland, the medium still rarely features in marketing campaigns. This is because handset upgrades are much more expensive here than in other countries.
"Until these next-generation handsets become more affordable in Ireland, mobile marketing won't really take off."