Until a few months ago, most Canadian marketers – like their American counterparts – dismissed the Internet as an over-hyped, limited and questionable marketing tool.

The collapse of the dot-coms, the dollars wasted on big portal deals and the lack of sales seemed to provide conclusive proof of the fiscal and career disaster awaiting those who opted to embrace the Internet wholesale.

The recent strengthening of the marketplace – with advertising revenues up 20% at major sites, increased share prices and even new hiring in the dot-com field – while real, is not creating any significant renewed enthusiasm from traditional marketers. In fact, a lot of the recent increased marketing spending is only occurring in the narrow direct marketing-oriented area of search engine marketing.

But at Starcom MediaVest Group, we are intensely bullish on the future of digital marketing, not because of a solidifying ad spend or appreciating share prices, but because we are watching consumer behaviour. While the online ad industry was spiralling downward over the past few years, consumers were embracing the digital lifestyle in massive numbers. And we have reached a tipping point.

In 1998, Americans spent just over 25 minutes a day on the Internet (on average). In 2000, it was over 65 minutes a day. In 2003, time spent online jumped again, and it’s now up to an impressive 83.9 minutes per day.

Consumers are embracing the empowering nature of this new medium, which provides them with the world at their fingertips. Online behaviour is also expanding because more and more consumers have broadband connections. These always-on ‘fat pipes’ make going online easy and let the media expand from being about communication and information, to communication and information and entertainment.

Research shows that the ability to control the Internet is what makes it particularly empowering. While communication, convenience and choice all play significant roles, it is control that stands out. This was something that many marketers forgot in the first phase of Internet marketing. If consumers can decide whether to see or block your marketing, you truly need to offer a value exchange to get them to engage and pay attention. Therefore, spamming e-mail, irrelevant banners and self-loving corporate or brand Web sites are unlikely to work. Engagement is about valuable messages, contextual positioning and smart relevant targeting.

Over the next four uptake years, digital marketing is going to take off because of increasing broadband penetration, gaming consoles, the declining price of hard drives and, most importantly, a growing number of multimedia consumers embracing digital.

As this happens, our advice to marketers is to pay attention to three critical phenomena:

The first is broadband Internet. With most businesses and schools wired for broadband, the number of Internet households using broadband is significantly under-reported. Most online content sites find that between 60% and 80% of their traffic comes via broadband. If you are a traditional brand marketer who depends on visually engaging deep messaging, you can now use broadband not only to expand your message, but to reach the light television viewer.

The second is gaming platforms. With over 60% of North American households playing games either online or on consoles, the gaming business is now bigger than the first-run movie business. Games like NFL Madden sell five million copies, each played, on average, for 100 hours. These hours come from television. And yet the gaming world is still underused by marketers.

The third arena is digital video recorders. These devices will inevitably transform TV into a consumer-controlled medium, presenting challenges and opportunities for marketers across the board.

The digital marketing era is upon us. Discount it at your own risk. Because in doing so, you discount your customers.

Rishad Tobaccowala, president of SMG IP Chicago, was recently named one of Time Magazine’s ‘Media Stars to Watch.’ He will be speaking at the CMDC’s ‘What’s Next’ conference in Toronto on April 13. He can be reached at: rishad.tobaccowala@smvgroup.com.