Advertising is a leverage for the trade – that Polish saying had not been put much in practice until recently. Currently it is living its second youth. It has been a long time since advertising was so closely linked with sales. We witnessed a long period of direct independence of promotion from sales, of parallel coexistence, often side by side, of marketing and sales. There was no controlled correlation between an advertising message and sales results. Marketing created images, sales developed distribution.
Development of the Internet as a communication channel and, in consequence, development of new forms of advertising, such as obtaining clicks, leads or transactions, significantly shortens a distance between promotion and purchase. Therefore, it not only revolutionises the approach to advertising itself, but also changes operations of a whole organisation in some areas, or even influences the balance of forces in the market.
The first change is a different campaign originator, as increasingly often an internet campaign is ordered not by a marketing department of a company, but directly by a sales team, with a specific order for x customers, of precisely defined characteristics, for a specific product, in a definite time.
The second change is a known customer cost. Measurability of new forms of web advertising is a crucial, possibly the most important, quality change. Never before campaigns were so predictable, allowing precise planning of sales of a given range to a specified budget. A risk of failure of a promotional campaign carried out under supervision of experienced specialists is negligible.
Control over a campaign and its results, at the same time, provides an excellent material for ex-post analysis of promotional actions carried out and possibility for their improvement in subsequent runs or even immediately during its course.
Reduction in the time interval between promotion and sales, and wide range of analytical data available are factors dynamising operations not only of a sales department, but also of a whole organisation, as it is challenged by fast changes in a range of products adjusted to consumer’s needs, and other elements of quality competition like delivery time, service, or even appropriate financing flexibility of more dynamic company guaranteed by financiers.
New quality of advertising means not only internal changes within an organisation, but also changes in the balance of forces in the market. Previous high barriers for starting expensive image advertising based on traditional channels, such as TV or outdoor, preserved oligopolies in the market. At best, the market was divided in accordance with the Pareto principle, i.e., 20% of the population generated 80% of turnover. Whereas the current analysis of sectors based on new forms of the web advertising, f.e., e-commerce, indicates a significant fragmentation of suppliers. Amongst online shops offering household appliances/consumer electronics, 13 entities generate only 21% of turnover, and the leader holds 3% of the market; 79% of sales is executed by other shops with a share below 1%. And this model is much closer to perfect competition than to monopolistic system, at least in the area of the trade itself.
It is now easier to understand statistical changes in the advertising market. They have solid business foundations and, as it is in business, determine a series of causal relationships, and that ensures their stability. Furthermore, the website advertising sector itself also evolves dynamically, and increasingly complex forms, using social network profiles of customers and increasingly correlated with sales results, gain in significance.
A handful of statistics:
- SEM dynamics, 2010/2009 +23%
- online advertising dynamics, 2010/2009 +15%
- TV advertising dynamics, 2010/2009 +4%
- outdoor advertising dynamics, 2010/2009 -1%