At this year’s New York Ad:tech, the online advertising and technology conference, Sir Martin Sorrell, Chief Executive of global advertising group WPP, stated that brands and companies are under-investing in digital advertising.

In a bold statement during his keynote address at the industry event he is reported to have referred to agencies handling brand’s media budgets and online PR,

“The people who run agencies tend to be of an older vintage – to put it politely. They tend to be resistant to change and want to spend the last three to four years of their careers traveling around the World rather than dealing with fundamental strategic issues on a daily basis”

He stated that brands in general invest only 13% of their overall marketing budgets in online activities such as online lead generation, link building, SEO, PPC and display advertising.

Whilst this may be true of many companies, some are more proactive in their approach to online PR and marketing and recognize that online advertising is delivering more sales pound for pound than other media channels.

The World’s biggest premium spirits brand Smirnoff, announced in October it was to increase its’ digital media budget to 20% of it’s overall advertising spend, as did fashion house Burberry. Fiat also announced it was to increase it’s online spend to 40% for the launch of it’s new Alpha Romeo MiTo model.

The European Interactive Advertising Association conducted a survey of European marketing executives, and found that 83% have already increased their online spend this year, with 93% by 2011. Much of this money is being diverted away from direct marketing budgets and TV advertising budgets. Alison Fennah, executive director of the EIAA, said, “Online advertising is continuing to thrive and grow due to its flexibility, accountability and ability to offer brands a robust return on investment while the recession has an impact on overall marketing budgets.”

Gary Collins, CEO at Status Media, a digital agency based in the UK, commented that, “we are definitely seeing a trend in rising SEO and link building spend with companies exceeding their targets for natural search, likewise the trend for online lead generation is also very positive. Perhaps the biggest growth next year will come through CPA driven advertising with companies measuring their return on investment more closely, Status Media is perfectly placed to offer this type of results driven marketing.”

Ad:tech continues it’s World tour in Beijing this week, from 17–18 November.

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