When Trendlines Cross

Veronis Suhler Stevenson, a private equity firm with a strong tilt toward media properties, is forecasting that online advertising revenue will reach $62 billion in 2011 and thus surpass newspaper advertising revenue.

If the prediction is correct—and the trends pointing to it (online ads up, newspapers down) have been fairly inexorable for the past couple of years—this will be a watershed moment in the media business. Online has been exploding as an advertising medium for the past few years, and its leapfrogging ahead of newspaper ad spending (though still behind TV) illustrates the relative fates of the two types of media.

Mind you, the Veronis Suhler numbers measure all online advertising; this is not the inflection point when newspaper Web sites surpass print newspaper ad sales, though that's coming down the road too (Veronis Suhler has newspaper Web site ad revenuemore than doubling over the next four years). But it's a clear sign that online advertising is a Big Business, and getting bigger. And unlike newspapers (and TV), online isn't as much a mass advertising medium as it is a targeted one, with the ability to more precisely serve readers' and viewers' needs and desires. That makes it a more efficient medium.

That efficiency is seen in another part of the report, which suggests that the total time Americans spend with media declined in 2006 for the first time in a decade. From the report:

The consumer migration to digital media—which require less time investment than traditional media counterparts (think 3-minute YouTube clips versus 30-minute TV shows)—has spawned a year-over-year decline in the amount of time consumers spent with media, VSS researchers say. The tally came in at 3,530 hours in 2006, a per-capita decrease of 0.5%.

None of this should be too surprising, but it's very interesting as a signal that the audience's consumption of media is shifting as signficantly as it did 50-plus years ago, when television changed everything. These major changes in the advertising and consumer landscape argue for major changes in the products that serve advertisers and consumers—and we're still not seeing enough change from the dinosaurs of the industry.

Comments

[Mary Specht]

2011? Is it seriously going to take *that* long for advertisers to realize the immense value web ads are giving them?

[Metaprinter]

The internet is good at doing certain things, social networking, multimedia, publishing to nobody and everybody at the same time. Print publishing and advertising has obvious restrictions placed on it, however one should not overlook its value.

Where should my local car dealership advertise online? Who would see the ad? Where should the NJ performing arts center advertise online? Who would see the ad? The internet is not a "catch all" for advertising destinations.

There is still great value in print media and smart publishers will see that and adjust their business model accordingly. 2011? maybe, maybe not.

[Rocky]

@Metaprinter - A lot of that advertising will simply disappear or go to niche venues.

The short answer is they should advertise where car buyers and concertgoers are.

The newspaper companies are fortunate in that car dealers and real estate agents are reluctant to change their habits. Those data intensive activities are best suited for the Internet. Car/home shopping through newspapers is a horrid consumer experience.

For the NJ PAC, their ticketing provider/Web site becomes where they advertise. I get emails direct from Wolf Trap. I'm a highly qualified prospect (been there before) and the cost to reach me is next to nothing by email. I also get emails from Ticketmaster based on what I've purchased before.