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YouTube and Twitter to Dilute Traditional Advertising Pie

31 Mar 2010

WHEN Jetstar announced it's plans to allocate 40 per cent of its 2011 advertising budget to social media traditional media companies were given a practical wake up call for their future survival, embrace it in some form.

In an article published in Business Day by Gordon Farrer he suggested; "It's not only the ad revenue-dependent media that should be worried. Why pay big dollars to an ad agency when you can create your own inexpensive in-house campaign and get your nephew to launch it on YouTube and Twitter?"

In the old days, a seller of, say, limited edition gold-plated solar-powered propeller-hats would pay big dollars for space in a newspaper, magazine, or for time on a TV channel to advertise that product.

Business Day went on to say, the seller had to trust the newspaper, magazine or TV station's claim that their content a) attracted lots of readers/viewers and b) attracted readers/viewers interested in buying limited edition gold-plated solar-powered propeller-hats. That's why newspapers and TV stations do a lot of audience research - to convince advertisers they can deliver eyeballs.

This kind of marketing is an expensive and, arguably, wasteful approach to advertising products. Even when a newspaper or TV station has a large audience, a good part of that audience will not be interested in propeller-hats, whether limited edition, gold-plated or solar-powered.

The theory went that while most of the people who might see your ad would not be interested in it, your marketing strategy had to take this scattergun approach to be sure you reach your desired audience.

The internet - social media, in particular - has changed that. Now it's much easier to target an ad campaign with great precision (by advertising on and to tap in to places where real people with strong, non-sponsored opinions about products can say nice things about your product and convince others to buy it (the ''which propeller hat is right for me?'' discussion forum).

The Nielsen 2010 Social Media Report released this month found that more than 5 million Australians now engage with companies and organisations through social media sites, by being a ''friend'' on their Facebook page or by following them on Twitter, for example.

The report also found that 9 million people watched an online video about a product or service they were considering buying; and nearly 4 million discussed products and services with other social media users.

Business Day added, companies have started to realise this. Jetstar's decision to recast its ad spend came after experimenting with PR campaigns on YouTube and Twitter.

David May, Jetstar's head of marketing and PR, said the response had been ''phenomenal''. May said the cost of advertising in traditional media compared with its reach is much higher than social media, where ''you can potentially reach hundreds of thousands of consumers with the one simple online message''.

Jetstar's move fits the trend in which large US advertisers such as Unilever, Coca-Cola and Procter & Gamble are turning away from expensive websites and instead building brand-focused Facebook pages to connect with customers.

This follows a survey of US companies in December by publishing analyst Outsell that predicted online advertising would outstrip print in 2010, and the news in September that the UK had become the first major economy in which advertisers spent more on internet advertising than on TV advertising.



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