Advertising Shift

The Wall Street Journal reported that the Internet is poised to overtake newspapers as the second-largest U.S. advertising medium surpassed only by television. This should not come as a big surprise to any of us as we all know that print advertising has been in a nose down dive. We can see it in the thinness of magazines and the consolidations or ceased operations of newspapers.

Price Waterhouse Coopers has released a study showing that the online ad business will grow to $34.4 billion in 2014 from $24.2 billion in 2009 and that print advertising revenue dropped an extraordinary 28.6% in 2009 to $24.82 billion. The online numbers do not include mobile advertising which, although still small, is growing rapidly.

The report is especially bullish on the growth of advertising in video and and online TV fueled by the fact that two-thirds of U.S. households now have broadband Internet service. The other key factor is that today’s TV advertising  is limited in how many ads it can run since it is all in broadcast mode — we all see the same ads. With online video and TV each viewer can receive unique advertising based on their preferences. This allows the producer of the content to charge premium rates to the advertisers. Needless to say there are numerous privacy issues around this that are just beginning to surface. We will be hearing much more about that subject moving forward.

The mobile advertising market is also poised for growth as wireless networks are upgraded and more smart phones such as the iPhone and Android models hit the market. Mobile advertising in North America is predicted to quadruple from $414 million in 2009 to $1.6 billion in 2014, according to the PwC report.

Does all this mean that newspapers are dead? No. They are just moving to the Internet. A recent study by Comscore showed that 57% of Internet users in May said they had looked at a newspaper web site. During the month 124 million people looked at 5.4 billion pages for an average of 43 pages per visitor. Seems people who read newspapers online do a lot of reading and that is why advertisers are willing to pay nearly triple the average Internet ad rate for placements on newspaper sites.

Another significant trend is that more “local” news is moving to the Net thanks to efforts such as AOL’s Patch. AOL says that Patch has all the news covered — “No matter what’s going on in your community”". Patch is using local bloggers and journalists to report on news, businesses, events, photos and videos from “around town”. Needless to say this presents yet another opportunity for targeted advertising.

Tags: advertising, aol, internet, Mobile, patch, print, print advertising, tv, tv advertising

Conversational Media Summit – Part 2

Being a believer in Boxee, I have been following CEO & Co-Founder Avner Ronen for some time. He offered a very clear view of the future of TV. He said the graphical interface we see from our set top boxes is “embarrassing”. What you get on your iPhone and other small devices is actually getting pretty good but the big screens and flat panels in our family rooms have lousy interfaces. He makes the valid point that people have proved they are willing to pay for music — they will pay for Internet video too. We just need those controlling the content to be willing to make content available. Looks to me like traditional TV will be slow to do so and meanwhile many new sources of video are showing up. Revision3 is a good example of an early Internet TV “station” that seems to be doing well. There will be thousands. I thought Avner’s most important point was that the model that needs to evolve is to pay once and watch everywhere. (The same is true for news. It is ridiculous to have to have a Wall Street Journal subscription on your Kindle, another on your iPad, and another on the web).

One of the most knowledgeable people I can think of when it comes to the business models of the Internet is Mary Meeker at Morgan Stanley. I remember years ago when she made a very bullish presentation about eBay. This was when all eBay had for sale was baseball cards. People at the conference looked at each other thinking she had gone off the deep end. In fifteen minutes she painted a picture supported by metrics of where things are headed. A few key examples — more smart phones than PCs by 2012, mobile infrastructure now at critical mass, iPad usage more like a PC than a phone, USA now the innovation leader in 3G, bullish on advertising, Amazon growth accelerating, social networking now exceeds email traffic. I would add that the Internet has grown beyond infancy but is still at the early stage.

In addition to the many other excellent speakers and panelists there were two interesting demos by sponsors. First was Stickybits. Their idea is not new but their implementation is timely. Stickybits has a method to attach digital content to real world objects using barcodes. Let’s say you have a motorcycle. You put a stickbits barcode label on it and scan it with the stickbits app on your iPhone. You can then add content — a picture, maintenance records, a story you wrote, music, anything digital. Now you can take the bike to a dealer for maintenance, they can scan the barcode and see all the information on the web site. Or you can scan the barcode on a book and find a review you wrote, someone can scan a code you put on your business card and they can read your resume, scan a for sale flyer and get details on the item, or friends can scan your holiday card and read the annual family letter.

Tags: advertising, barcode, brand, cloud print, conference, digital media, ePrint, HP cloud print, HP ePrint, IBM, marketing, print, social networks, stickbits