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Marketers Lag in Shift Online

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NEW YORK Ad agencies are years behind in catching up to digitally savvy consumers who are moving their media habits online more quickly than expected, according to new global research from the IBM Institute for Business Value.

IBM found that between 2007 and 2008, the proportion of consumers saying they used social-networking tools soared to 60 percent from 33 percent; for online and portable music services it more than doubled to 46 percent; mobile Internet nearly tripled to 41 percent; and access to mobile music and video quadrupled to 35 percent.

In contrast, 80 percent of the ad executives interviewed expect the industry to be at least five years away from being able to deliver cross-platform advertising, encompassing sales, delivery, measurement and analysis.

IBM also found that interactive, measurable formats like the Internet and mobile are expected to account for 20 percent of global ad spending by 2012. Some 63 percent of the global CMOs who were interviewed said they expected to increase interactive and online marketing spending in 2009 while 65 percent will cut back on traditional advertising.

Study co-author Saul Berman, IBM global leader, strategy and change consulting services, said agencies need to understand the value shift -- and the parallels with what has happened in the music industry.

"It's very hard to accelerate analog dollars into digital pennies," Berman said. "Where will the money come from? The answer may be, 'You're going to make less money.' The money may be going somewhere else in the value chain. The music industry didn't lose money, the music companies lost money. Companies like Apple, which manufactures devices, make money, as [does] ring tone providers, retailers like Best Buy and concert promoters."

The lessons to be learned, per IBM: Traditional industry players need to identify ways to monetize new consumer experiences before new entrants do; and there are significant new consumer opportunities-beyond just the value of content through value-added services, hardware and software offerings.

For its research, which will be released this week, IBM conducted 70 interview sessions with global industry execs and surveyed more than 2,800 consumers in Australia, Germany, India, Japan, the U.K. and the U.S.

DOWNLOAD IBM RESEARCH:

"Beyond Advertising"

"Succeeding in the New Economic Environment"