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by James Perrin on 7th February 2012
Ofcom have recently announced that UK broadband speeds increased by 22% last year. In addition, they plan to cut the cost of line rentals and broadband connections. Simultaneously, there is also huge growth in online advertising from some of the largest firms in the UK. So can we assume then that as broadband speeds quicken, more money will be spent by firms advertising online?
According to the Internet Advertising Bureau (IAB) Ofcom, announced that the average broadband speed in the UK had risen from 6.2 Mbit/s in November/December of 2010 to 7.6 Mbit/s in November of 2011. The number of people with an advertised speed of over 10 Mbit/s also increased from 48% in May 2011 to the current level of 58%.
However there is still room for improvement, as 4 in 10 households actually had broadband speeds of less than 10 Mbit/s, highlighting the fact that the UK still has some way to go before being totally digital. Companies such as BT and Virgin have introduced much faster speeds recently, and BT in particular has set a goal of ensuring that 50% of the UK has access to superfast speeds by the end of 2012.
In addition to this is the announcement from Ofcom that line rental is being slashed by 19% from April 2012. This means that the prices UK consumers are paying for broadband as well as line rental will be significantly reduced as Ofcom plan to cut down what BT will charge for rival telecommunications companies to rent their lines. Whilst BT is in the process of disputing the amount to ensure they get a fair rate of return, if the plans are approved by the European Commission, it could mean cheaper broadband as a result.
Increased Ad Spend
So what does this mean in terms of ad spend? Well, according to Reuters, British companies increased their marketing budgets as of the last quarter in 2011. Also, back in October we announced a 13.5% Increase in UK Online Ad Spend for just the first half of 2011. The increase put ad spend to £2.26 billion, some 27% of overall UK advertising. Sectors such as Fast Moving Consumer Goods (FMCG) were attributed with much of the increase as they made up 15% of the market in terms of expenditure. However, their rise in expenditure is as a result of faster speeds, greater access to the Internet and the advancements of technologies; the proliferation of Tablets and Smartphones, for example.
So with broadband getting cheaper and faster (although premiums will be applied for superspeed connections), it does mean that a lot more of the UK will be digital in the coming years – and this will affect the amount businesses spend online year-on-year. It also means that online will take centre stage in terms of brand exposure and advertising or certainly play a prominent role in any firm’s marketing strategy.
We only have to look at the US to see how firms are taking a different approach to advertising – take the almighty Super Bowl advertising as an example. Here we used to have a very traditional form and still a very powerful way of advertising; firms invest millions of dollars producing adverts which would then be aired at half time of the main event. With average rating figures of 111.3 million people, the half time show and subsequent adverts was an event within the game itself. However at the 2012 Super Bowl things were markedly different.
More than ever before fans were encouraged to participate in ‘tweeting’ and ‘liking’ ads using hash tags as well as QR codes as they saw their favourite ads being broadcasted; thus transferring the ad from the screen back onto the web, where it can be shared on various other platforms. In this case, multi-screen advertising is the norm, where TV viewers simultaneously share their views and opinions via social networking sites.
This is just one example of the way in which the Internet is being used to harness online advertising. With faster speeds, better and more sophisticated adverts can be created and with the advancement of technologies, such as Google TV and Apple TV, it is believed that a lot of our television viewing habits will change as they will be solely streamed online. Therefore, this points to one thing and one thing only, more firms will advertise online, and larger firms will spend even more.