"Massive opportunities" ahoy, say ad industry execs, but watch out for pitfalls...
As digital continues to account for an increasing amount of advertising spend, marketers should be prioritising their online efforts in social media and on mobile, experts believe.
Both offer massive potential for online advertising, according to industry experts speaking at a Westminster eForum seminar in London last week.
Despite one pound in four spent on advertising now going online, according to figures from internet advertising trade association the IAB UK, the way in which budgets are spent remain at odds with the realities of consumers' online behaviour.
Consumers spend around a quarter of their time online using social networking services, according to research from online audience measurement company UKOM - that's around six times more than they spend on search engines.
Yet search accounts for 60 per cent of online advertising spending, compared to just three per cent spent on social media - meaning there is a significant untapped opportunity for growth in social marketing, according to CEO of the IAB UK Guy Phillipson.
"We spend as much time playing games online, like Farmville, as we do doing our email," Phillipson told the Westminster eForum.
Phillipson continued: "Twenty-three per cent of time spent on Facebook, MySpace, LinkedIn at el is monetised by only three per cent of the money so there's clearly an opportunity within social to grow."
Social games also offer a "golden" opportunity for marketers, in Phillipson's view, taking less than one per cent of the online ad spend but accounting for seven per cent of consumers' time spent online. "The dwell time playing a game - I could be playing FarmVille for half an hour - is a golden opportunity for advertising because the longer a consumer is exposed to advertising the better a marketer likes it," he said.
The 'gamification' of online services could even extend to interactive display ads - extending the lifespan of the humble MPU ad unit in the process, according to Neil Morris, director of innovation at marketing agency Engine.
"Display is not dead yet," he told the seminar. "The MPU might be a much abused format but through the intersection of video, of the kind of high-intensity game playing-based interactivity that we've seen in other areas, I think the display sector is likely to be reborn."
Mobile phones are another area with rich potential for marketers, according to Rich Sutcliffe, editor of marketing website Brand Republic, who was also speaking at the event.
While mobile marketing currently only...
...accounts for about one per cent of digital advertising spending in the UK, Sutcliffe said the medium has significant potential as a new visual advertising medium, not just another, smaller screen to push banner ads at.
"[With mobile] we need to forget about the relative share of ad spend and realise the opportunities that brands have to engage with customers through mobile by actually improving their lives," he said. "It presents the opportunity to actually enter into people's lives in a very intimate way."
Sutcliffe highlighted the highly personal nature of mobile hardware - with devices never far from their owner's hands - as a particularly attractive proposition for marketers.
"Brands can be at the point of purchase - wherever that point of purchase is," said Sutcliffe. Mobiles can also be used to augment other non-interactive ad campaigns such as TV adverts, he added - "to close that transactional loop by tagging TV campaigns or other online campaigns".
Mobile operator O2 UK is already tapping some of its mobile users' data for targeted advertising. The operator has an opt-in advertising programme called O2 More which launched nine months ago and has profiled around 988,000 customers who have signed up to receive personalised marketing messages via their handsets.
Response rates for O2 More vary by campaign, with the lowest rate around two per cent, and the highest around 52 per cent, according to Shaun Gregory, MD of O2 Media.
"[On mobile] you can do things quickly, you can drive results but you can measure it really, really well," he added.
Mobile apps are already offering significant marketing and sales opportunities for companies, the seminar heard; whereas consumers expect full-fat websites to be free, the proliferation of mobile app stores show they are willing to pay for their apps, said Brand Republic's Sutcliffe.
On mobile, "the potential for brands to become part of my everyday existence is huge, whether through general useful branded utilities or compelling content", he added.
Social and mobile also offer opportunities around search-based online advertising - via social search, mobile search and the rise of location-based services such as Foursquare, according to Engine's Morris.
"Already we're seeing through social search, through mobile search, the kind of innovation that's going to reinvent a new medium."
"It would be, if I were a betting man, a place where I would put a lot of my focus on," he added.
However, despite growing digital marketing opportunities in overlapping domains such as mobile and social, the Westminster eForum also noted some pitfalls for marketers to avoid...
"A mobile is a very intimate device," Brand Republic's Sutcliffe said. "I've got to be totally comfortable with a brand before I want it to reach inside my pocket and insert itself on something that I generally wouldn't even want my friends to have access to."
"If brands want to spend more time with me or join my conversations... ultimately they have to offer something a little bit more than a message," he added.
Mobile's crowded app marketplace also means advertisers need to work hard to earn - and keep - a place on consumers' phones by creating compelling content, or face being binned.
"You can see the drop-off of audience attention span after starting to look at your mobile application," warned Engine's Morris. "So designing for a mobile user experience is increasingly critical. We're not simply presenting our marketing information on a smaller screen."
But the biggest concern looming for digital marketers is the thorny issue of data privacy - a particular problem where social overlaps with mobile.
"Privacy is a massive problem that I don't think we're anywhere near scratching the surface of," Brand Republic's Sutcliffe said.
"We are building this incredible marketing tool [to tap mobile and social] but at the same time it's a bit of a Big Brother database and I'm not sure it's absolutely sustainable," he added. "I don't believe consumers will continue to be willing to hand over all this personal data unless - and it's a big unless - they see real value in the transaction."
There are other, more subtle, risks for advertisers in the web 2.0 world, according to the IAB's Phillipson - specifically failing to be engaging enough and fading into the background as a result. The warts-and-all environment of social networking means brands risk being publically badged as boring.
"The most successful brands have thought about 'how do I engage an audience?'" Phillipson said. "They almost have to think of themselves as an entertainment media owner in their own right, to produce content which is going to generate a million fans" on Facebook.
"The biggest risk [social media] creates for companies is the risk of just not being very good," concluded Jon Watts, co-founder of marketing company MTM London. "There's nowhere to hide this stuff anymore so if your product or service is inferior, or if you have a catastrophe like a BP, millions upon millions upon millions of people are going to hear about it."