The World: Insider's view - Spain

Rather than relying on the traditional medium of TV, Spain's ad industry is now having to come to terms with a multichannel marketing arena, John Lynn writes.

Spain stands at a digital crossroads. Consumers, particularly the technologically savvy ones, are comfortable with all aspects of new media, including 3G mobile technology. Their age also helps: more than 40 per cent of the population is under 35.

That should add up to a new-media heaven for advertisers. But there's just one issue. Companies tend to rely too much on traditional media, and view channels such as the internet as experimental. This is worrying if the advertiser is trying to reach a younger audience. New media is used as a test bed, not as a strategic approach to consumer engagement.

There are some positive signs of change, though. While TV is still the chosen vehicle for many of the country's leading brands, others are beginning to spread their wings. ING Bank is already investing heavily in its internet communications; and Nokia has mounted some innovative campaigns using outdoor. The car-maker Seat is also building interactive support through its brand communications platforms that are aimed at both consumers and dealers.

So, while it's still not up with countries such as the UK in terms of new-media applications, it is on a par with others such as France and Germany. There's an advantage that Spain also enjoys: its booming economy.

The prediction for 2007 is GDP growth of 3 per cent, one of the highest in Europe. The Spanish government even, bravely, predicted that by 2010, per capital wealth will exceed that of Germany.

Although Spanish advertisers are slow in embracing new technology, they're still enjoying expansion in areas such as financial services and consumer goods. Media investments in the Spanish ad market have risen by almost 6 per cent in the past few years - a trend likely to continue.

What impact is this having on agencies? Over the past few years, the industry has consolidated into large communications groups; small, independent creative and marketing services agencies have also sprung up. They will all have to be prepared to offer clients a seamless approach to communications as more budgets get diverted to non-traditional channels as competition grows.

Interestingly, while the largest advertisers prefer to split their ad and marketing services requirements among separate agencies, it's the medium-sized companies that are taking advantage of a more holistic approach, and looking for those who can help in the multichannel marketing environment.

It's only a matter of time before Spain's creative talent becomes immersed in developing stand-out work, which takes advantage of the new-media landscape. The reality facing Spanish advertisers is that brands can no longer "broadcast" to survive. They will have to leave their comfort zones and learn to "network".

- John Lynn is the president and chief executive of Grey Group Spain.