Marketers analyze Internet portion of media spend

Beer and cars aren’t a good mix, but the two industries are looking into whether they’re a match with the Internet.

Molson and General Motors Canada are working with the Interactive Advertising Bureau of Canada (IAB)

on research examining the effectiveness of different media in the marketing mix. The research forms part of the Canadian Media Optimization Study, a Canuck version of research that was done in the United States called Cross Media Optimization (XMO). The American study revealed the Internet has been its rightful cut of advertising dollars compared to traditional media—TV, radio and print.

“”I’ll make no bones about it: we feel that interactive doesn’t get its fair share of the media spend,”” said Miles Faulkner, president of the IAB. “”You have to come up with some calculations as to how should I buy of these different media. And it’s a real tricky question for a lot of advertisers and agencies to try and figure that out.””

Faulkner said the best XMO is achieved when interactive advertising comprises 10 per cent of the spend.

“”The reason for that is at a certain point, other media don’t become cost-effective. You hit mass penetration and you don’t get any more bang for your buck,”” he said, adding the results should be no different in Canada.

Faulkner said there are 17.5 million Canadians online who spend half as much time on the Internet as they do in front of the TV. He blames the snub on two factors. One is the “”new kid on the block”” factor. There isn’t a great deal of research about the degree to which interactive media is entrenched and familiar to advertisers and their agencies. As a result, there is an over-reliance on click-through rates as the only metric. To prove his point, Faulkner used the example of a billboard. No one, he said, has ever said a billboard was useless because you couldn’t click through.

The second problem is linked to the tech market crash.

“”We suffer from a hangover form the dot-com days when there was this big hullabaloo and it crashed, and sadly some of the momentum on advertising crashed, too,”” Faulkner said. “”But it shouldn’t have been linked at all. It has nothing to do with the sheer penetration and exposure the medium gets.””

According to research done with PriceWaterhouseCoopers, the IAB estimates $150 million will be spent on interactive advertising in 2003, up from $116 million in 2002. Faulkner says the normal growth rate is 15 to 20 per cent year over year, but he is looking for something in the range of 50 per cent. The goal is to get to 10 per cent of the total advertising budget.

Peter Vaz is the vice-president and general manager of M2 Universal Online, the agency for General Motors Canada. He agreed with Faulkner’s assessment.

“”They say it (the budget) ranges anywhere from three to four per cent, is that fair? No. Where should it be? I would say it should be in the 10, 11, 12 per cent range,”” Vaz said.

“”I think the purpose of why we are doing the study is so that we can get some research on how thing affects the whole thing -— the overall consumer influence,”” Vaz said, adding the two partners hope to get the result in January.

Molson has finished its portion of the research but did not return calls to discuss the results.

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