STEAK’s Oliver Rapson says Australian retailers continue to remain wary of digital advertising

Far too many Australian retailers remain highly sceptical and nervous about using digital advertising warns Oliver Rapson, managing director of STEAK Melbourne.

STEAK started in a very humble way seven years ago with just three people in one office in London and is now a fast growing award winning international digital marketing agency with offices in New York, Santa Monica, London and Melbourne.

Rapson says a huge number of Australian companies have simply not woken up to the true power of digital advertising and says he is continually amazed at the number of major retailers who are just dabbling and doing nothing more.

STEAK highlights that digital advertising has become massive in the UK. Rapson says the UK now has 9 times the digital spend of Australia, with 3 times the population. He says Australia is clearly lagging behind in a big way. He estimates at least 40% of major Australian retailers haven’t woken up to the effectiveness of digital advertising and says Australia has a long way to go.

Rapson says there are countless major household names, including foremost Australian iconic department stores and electronic retailers that are completely behind the eight ball. STEAK’s Melbourne MD points out that in the UK, it has now become the first economy to see internet advertising overtaking television advertising.

Says Rapson: “We are out to debunk the huge myths around digital. Figures from the Internet Advertising Bureau and Price Waterhouse Coopers show that brands in the UK – in 2011 – spent close to 5 billion pounds on digital advertising. It was a huge leap of 687 million pounds. It was a 14.4% growth and the highest growth rate seen in 5 years. In the UK right now – which was where STEAK got started – more and more money is moving out of papers and radio and traditional media and is ending up in internet advertising.”

“The world is changing at a phenomenal rate and Australian companies need to move with those changes.  In 2010 – in the USA – spending on digital media surpassed the amount of money being spent on print advertisements.”

STEAK was named “Media Agency of the Year” at the prestigious Interactive Marketing Advertising Awards in London within just two years of formation. It now has a staff of over 90 across the world and expanded into New York and Melbourne in 2008. All the company’s founders met at Espotting, which introduced pay per click search engine advertising into the European market.

Rapson initially worked for one of the UK’s first online retailers.  He says he learnt a huge amount from the experience, including watching clear mistakes the company made by not tracking its digital advertising.

Says Rapson: “Digital is growing in Australia without doubt.  Numerous marketing directors have their heads in the sand. That alarms me. The fact is that through digital you can actually track where the sales are coming from and if things aren’t working, you can see exactly where. It’s clear what is generating sales. Its transparency is one of the reasons it is such a strong and effective tool.”

STEAK has worked for many top names in Australia, UK and the US such as Big W, Best Western, Europcar, Betfair, Virgin Holidays, Allianz and Advanced Hair Studio.

Rapson added: “We ran a big campaign for Big W based around paid search. It was created to produce a new revenue stream and new accounts across Yahoo and Google were developed covering over 15,000 products. In 2011 there was 86% growth in revenue and a decrease in the cost of sales of 57%. Up until February 2012, revenue had grown again by 45% with the cost of sales dropping by 41%. For the 2011 Big W toy sale, STEAK helped produce a 747% year on year increase in revenue, whilst reducing the cost of sale by 80%.”

“Already overseas big retailers clearly understand the power of digital. For instance, Debenhams uses STEAK in the UK and STEAK was asked to increase revenue from paid search during the run up to Christmas. Aggressive account expansion techniques were used. The bottom line is that the total revenue target was exceeded by 58%. Debenhams told us we almost doubled their return on investment and said paid search is a key part of their ongoing digital strategy, because it outperforms their expectations. John Lewis constantly uses digital in the UK for the same reasons.”

“Much of the innovation is currently overseas. What concerns me is that nearly 20% of the money Australians are spending online goes to overseas stores. That just shouldn’t be happening.”

Working with the first ever online only car insurance provider, Swiftcover.com, STEAK delivered a huge 551% jump in sales and lowered cost per acquisition by 19%. They are now the market leader.

Rapson continued: “Big W is a market leader in Australia. They have been very smart with their digital strategy. Consumers’ shopping habits are changing dramatically. Statistics show 16.4 million Australians are active on the net monthly with men visiting an average of 2,700 pages a month and women 3,100. Men now spend an average of 71 hours a month on the net and women 72 hours. What may surprise some is according to Neilsen Online Ratings, the internet now has more people aged 35 plus using it than those below the age of 35.

Smartphone and tablets have immediately changed forever the way people get information and see advertising. With digital advertising, you can be much more targeted and change messages on a daily basis.”

“Search marketing is at the core of our business. We are focused on helping create websites that attract high quality traffic and then converts into sales. It’s about giving search engines and customers what they want and constantly refining that process. Part of the issue around digital is that some marketers feel it is unproven. That’s such rubbish.”

He concluded: “The fact is advertising is changing before our very eyes in a big way. Many international retailers now have multi-channel digital campaigns where every page is tagged up. That ultimately means you can understand who is buying. You can see their clear shopping habits. Australia has seen nothing yet. It’s an exciting time to be working in digital.”