One of the most viewed postings on Media Post this week was this one on the shift in advertising from traditional to digital media. This posting provides an overview and I delve somewhat further into the reasons and implications.
Key points are that the low growth rate for the first quarter 2008 of 0.6% is only partly attributable to the cyclical economic downturn. Another contributing factor is the accelerating shift of advertising budgets from the ” expensive and highly inefficient” traditional media to the more cost-effective digital media.
There are some useful stats in the posting:
- TV + 1.7%
- Magazines +0.8%
- Newspapers -5.2%
- Radio -4.5%
- Internet Display +8.5%
The outlook seems particularly bleak for newspapers and radio. The positive result for TV is largely due to subscription TV (+4.1%). Overall, advertising revenue growth rates are forecast to lie in the 0 – 3% range, down from the 3 – 5% level the industry is used to.
Why is the Internet more efficient? Let me ‘count the ways’ as it were:
- Search is the obvious starter here (and as noted in the Media Post article). On the horizon is sophisticated location-based marketing enabled by the geospatial web and the integration of GPS and mobile broadband and other forms of pervasive computing and advances in display technologies
- Even more important to grasp though is in understanding and using the huge scale and reach of the Internet
- Distribution costs are negligible
- Behavioural targeting/data mining/profiling: particularly the connections between people and their interests
- Participation – customers can do their own thing, whether that is branded TV or video, interacting with consumers via social networking or blogs or other Web 2.0 style interaction
- New applications are being developed for video search and interpretation
- Strategies and campaigns can be revised or amended speedily and at low cost
Not an exhaustive list I’m sure, but enough to start with.
Now to the implications. Traditional techniques, strategies and skills suited to mass marketing do not map neatly to the digital migration. So there is an adjustment period…but one that may be shorter-lived than some expect.
From what I can see, a similar trend is underway in Australia in the formation and implementation of digital media strategies by newspaper, radio and television operators – but it is not so noticeable as the US situation. However, the current economic downturn might accelerate the shift to the more cost-effective digital media.
