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.