I find it amazing that NZ clients are still not getting the value that their overseas counterparts have come to expect as a standard.
In the US, online advertising is now 59% performance based and only 37% CPM based. In NZ, online advertising is only just into the CPM space and still has a legacy of “rental” advertising, supported by publishers who think of online as billboards and agencies that either lack sophistication or motivation. The end result is that the client ends up paying far more for their campaigns than they should and often on the least effective mediums.
Consider the recent statistics.
In the UK - the most “online” market – 20% of ALL marketing is now spent online, second only to television at about 23%. Of this online spend, 57% is spent on
search marketing – a whopping 11.5% of total spend – GBP2 BILLION.
Closer to home, even the Australians are enjoying a better deal, with online accounting for 13% of total spend and search topping 50% in the most recent quarter, almost 6.5% of total spend - A$850m. Online has moved up to third behind press and TV, similar to other developed markets, such as the US.
NZ lags woefully behind, even using the most optimistic figures from the IAB, which are approximately 4 times larger than Nielsen’s, the total Online spend in NZ is 8.3% of the total budget, with search only accounting for 31% of this, an overall 2.6% of total spend at NZ$60m. Using Nielsen’s figures, Online accounts for only 2% of the marketing budget, meaning the search share is a pitiful 0.6%.
Search has consistently been proven to outperform other channels, so why is so little being spent on it in NZ?
Are we any less sophisticated consumers of the Internet? Unlikely. What accounts for this poor performance compared to our global peers?
Agency allocation of overall budgets?
- Poor analysis and reporting on the effectiveness of different online channels?
- Complexity of search?
- No agency commission from search?
- A bit of good old wool pulling?
There’s probably some truth in all of these areas.
