Internet Set to Trump
Newspapers in Ad Bucks
In four years, new media outlets like the Internet and cable and
satellite TV will command a larger market segment than
newspapers and network television, predicts recent research.
However, while new media's ad power grows, the time individual
users spend on overall media immersion is shrinking. That may be
because new media delivers the information faster.
By 2011, Internet advertising is expected to become the largest
advertising segment, surpassing newspapers for the first time, a
new study reported Tuesday.
The same study predicts overall communications spending to top
US$1 trillion in 2008, making it the third-fastest-growing
sector in the U.S. economy, just shy of government and
agriculture.
The forecast comes from the "VSS Communications Industry
Forecast 2007-2011," an annual report published by the private
equity firm Veronis Suhler Stevenson, which has published the
report for 21 years.
"We are in the midst of a major shift in the media landscape
that is being fueled by changes in technology, end-user
behaviors and the response by brand marketers and communications
companies," said James Rutherfurd, executive vice president and
managing Director at VSS.
"We expect these shifts to continue over the next five years, as
time and place shifting accelerate while consumers and
businesses utilize more digital media alternatives,
strengthening the new media pull model at the expense of the
traditional media push model," he noted.
Out With the Old, In with the New
Consumers are increasingly turning to the Internet, video games
and cable or satellite TV at the expense of newspapers and free
broadcast TV, VSS reported.
On average, the time consumers spent on the newer media jumped
19.8 percent from 2001 to 2006, while time spent on traditional
media declined 6.3 percent over the same period.
Surprisingly, for the first time since 1997, consumers spent
less time with media in 2006 than they did the previous year --
a 0.5 percent decline. The drop in consumer media usage was
driven by the continued migration of consumers to digital
alternatives for news, information and entertainment, which
require less time investment than their traditional media
counterparts, VSS reported.
For example, consumers typically watch broadcast or cable
television at least 30 minutes per session, while they spend as
little as five to seven minutes viewing consumer-generated video
clips online; however, VSS expects consumer media usage to
stabilize in 2007 and increase slightly through 2011.
It's All About Control
"What people are finding is they have more choice and more
control on what and when they consume media. Cable TV is
increasingly about on-demand programming and gives them lots of
choices while broadcast TV offers fewer choices," Greg Sterling,
an analyst for Sterling Market Intelligence, told the E-Commerce
Times.
"The Internet is even an more extreme example of that -- where
people have unlimited choices. The paradox is that it can be
confusing and overwhelming, but consumers are responding to the
choices and the tools that give them more control," he added.
The Cultural Catalyst
"If the person to my left and to my right are no longer watching
TV and are instead watching user-generated YouTube videos, the
likelihood that I'll do that too increases," Sterling noted. "So
there's a cultural element to all this as well."
Spending on alternative advertising -- including Internet,
mobile, video games and digital out-of-home, among others --
grew 36.6 percent to $26.53 billion in 2006, VSS reported.
Traditional advertising spending, however, grew only 2.4 percent
to $183.21 billion in 2006. Meanwhile, spending on alternative
marketing -- including branded entertainment, interactive
marketing and e-custom publishing -- increased 17.3 percent to
$61.67 billion in 2006. In contrast, spending on traditional
marketing, such as direct mail and promotions, grew only 5
percent to $192.34 billion in 2006
"Leading national advertisers have accelerated their diversion
of dollars from traditional print and broadcast media to
alternative digital platforms to combat media and audience
fragmentation, increased consumer control and multitasking, and
the growing impact of advanced technology on conventional media
models. The result has been the extraordinary growth of
alternative advertising and marketing," Rutherfurd noted.
Down but Not Out
"There's the sense that everything is moving in one direction
and traditional media will lose their audience entirely -- and I
don't think that will happen," Sterling said. "The audiences
have fragmented and continue to fragment, but traditional media
will have an audience -- just smaller than it has been
historically."
The Internet, Sterling noted, is talked about as a single,
monolithic entity, but it's really incredibly fragmented. A
handful of sites and products, like MySpace and Yahoo (Nasdaq:
YHOO) , reach large audiences, but most Internet traffic is
spread out over millions of sites, pages and services.
"The big brand advertising dollars are starting to migrate to
varying degrees to online, but it's a lot more complicated for
those advertisers to get the same reach online as they can on
broadcast TV -- in one moment [on one show] you can reach huge
audiences," he noted. "It's much more difficult to reach an
audience like that on the Internet."
By Chris Maxcer
E-Commerce Times
Part of the ECT News Network
08/08/07 11:48 AM PT.
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