Digital Essays: A social currency

Marketers are making a fundamental mistake if they continue to assume the internet is no more than just another channel to reach consumers.

Amid the general excitement that accompanied the recent announcement by the Internet Advertising Bureau/PricewaterhouseCoopers adspend study that internet advertising expenditure in the UK broke the £2 billion barrier in 2006, there seemed to be a tacit acceptance that the best way of putting this milestone into perspective was to compare UK internet spend with that of traditional channels such as TV and print.

Of course, such a comparison makes the task of writing headlines that much easier: "Internet overtakes national newspapers" and "UK advertising sector driven by internet" certainly capture the mood. However, these comparisons, while useful, risk adding further fuel to an increasingly dangerous contention that from a marketing and communications perspective, the internet is no more than just another channel to reach consumers.

This line of reasoning was neatly summarised by the WPP chief executive, Sir Martin Sorrell, in The Times last year, when he said: "Slowly, the new media will cease to be thought of as new media; they will simply be additional channels of communication. And like all media that were once new media but are now just media, they'll earn a well-deserved place in the media repertoire, perhaps through reverse takeovers - but will almost certainly displace none."

While this argument is entirely convenient from a traditional agency perspective, and strangely compelling for those who wish to preserve the status quo at any cost, it ignores the most fundamental impact of digital technology and particularly the internet: that it has significantly altered the balance of power between consumers and the media they consume. This is something that, in contrast to Sir Martin's point of view, has been recognised by another grandee of the media sector, Rupert Murdoch. In the July 2006 edition of Wired, he said: "Technology is shifting power away from the editors, the publishers, the establishment, the media elite. Now it's the people who are taking control."

In response to this new-found control, consumers are not just changing their media consumption patterns by moving from one media channel to another, they are much more fundamentally changing the way they choose, consume and create media.

As the managing editor of Time magazine put it in support of naming "you" as its person of the year for 2006: "Individuals are changing the nature of the information age ... the creators and consumers of content are transforming art, politics and commerce - they are the engaged citizens of a new digital democracy."

While there may be just a hint of hyperbole here, it can be almost entirely justified when one considers that these changes are potentially so significant that they threaten to undermine the mass-product, mass-marketing, mass- media paradigm that has served clients, agencies and media owners in marketing communications so well for so long.

For evidence of this, one only has to look at the turmoil that has engulfed the music industry in the past few years. While the impact of the internet on the music industry as a channel for illegally sharing music has been well documented, some of the other changes that it has driven have received much less attention. The inexorable rise of iTunes and other digital music platforms have fundamentally changed the characteristics of the industry from a classic mass-market structure, where relatively few hit artists dominate sales, to a much more fragmented one, which is rapidly becoming an almost perfect example of what Chris Anderson (the editor-in-chief of Wired magazine) refers to as "the long tail". As this transformation takes hold and the number of million-selling artists continues to fall, so the traditional mass-marketing models that supported their existence are becoming less and less relevant and affordable for the record labels that promote them.

Paradoxically, the unexpected, but well-documented success of the Arctic Monkeys' debut album in 2006, driven as it was by a huge swell of interest in the band in social networking sites such as MySpace and Bebo, perfectly illustrates the flipside to these changes. In these social environments, the power of word of mouth and personal recommendation proved to be at least as powerful as, and considerably more cost-effective than, any traditional marketing activity.

Recent research by Hitwise suggests that this should not be seen as an isolated case. In a survey which tracked the movements of approximately 8.4 million UK internet users in the week ending 18 November 2006, Hitwise found that while one-third of all visits to UK music websites started with a search on Google, 10.4 per cent originated from social networking sites. In effect, these sites have become critical components in the discovery of new music, rendering social currency as important as traditional currency.

One could argue that with its preponderance of young technology savvy consumers, the music business is not representative of other industries. While it is true that those industries that are most exposed to the digital generation are likely to feel the impact of these changes in consumer behaviour more rapidly, to isolate this as a generational phenomenon is a serious mistake. After all, at its most basic level, the control that the internet and digital technology provide to consumers can be and is being just as easily exercised by grandfathers as grandsons. For evidence of this, one need look no further than Ofcom's 2006 Older People and Communications Technology consumer panel report.

So, as more and more consumers of all ages use this new-found control to choose which messages and media to engage with, the challenge from a marketing communications perspective will become much less about deciding how much budget to move from traditional media to online or vice versa and much more about how to adapt to a world where brands have to earn the right to their consumers' attention, rather than just expecting it.

In this new world, those who cling doggedly to the hope that digital is just another channel, rather than a catalyst for fundamental changes in consumer behaviour, will be rapidly overtaken by brands that talk with rather than at their consumers, media owners that embrace consumer participation rather than avoid it and agencies that recognise digital as a fundamental challenge to their way of thinking, not just another channel to be added to the communications mix.

- Nick Blunden is the managing director of Profero.