March 30, 2007
Will Online Ad Spending in U.S. Follow U.K. Lead?
For the first time ever in the U.K., share of advertising sales was greater among online sites than newspapers.
According to the Internet Advertising Bureau (IAB), television ad dollars were down last year while newspapers were flat. Online dollars for ads were up 41 percent over the year before and now represent 11.4 percent of total ad dollars. As a point of comparison, newspapers represented 10.9 percent of ad dollars.
Online as a percentage of ad spending continues to run higher in the U.K. than in the U.S. The percentage of total ad dollars dedicated to online are estimated to be roughly seven percent here. Globally, the average is below six percent.
“Advertisers are continuing to switch more of their budgets online to build their brands and interact with their customers,” Guy Phillipson, chief executive of IAB, told The Guardian. “With consumers now enjoying even faster broadband and installing wireless routers in their homes, the growth of online advertising in the UK is set to continue unabated.”
The growth of broadband, opening up the use of video has played a substantial roll in helping to move ad dollars online. That combined with the rise of social networking and consumer-produced content has an increasing number of people in the U.K. spending longer periods of time online. Even the lowly banner ad has been “reinvigorated,” according to the IAB through the use of video and animation.
Still, U.K. experts say search advertising is the king when it comes to actual dollars spent online. Spending in this area now represents nearly 58 percent of total online ad dollars.
On the other hand, pop-ups have been hit hard (one would assume because they remain annoying) with less than one percent of online ad dollars going to this tactic.
Discussion Questions: Do you see online overtaking newspapers and perhaps other forms of advertising in the U.S., such as magazines and television? What do the changes taking place in advertising mean for retailers and other consumer marketers?
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Internet advertising will overtake newspaper advertising, it’s only a matter of time. As newspaper readership continues to decline and they move more of their content online, it only stands to reason it will continue to be a smaller % of total ad revenue. For local advertising dollars the other big competitors, direct-mail, radio, and cable all offer various advantages and disadvantages but just like newspapers, they too are going to feel the Internet squeeze. Both Google and Yahoo are in a race to develop sophisticated localized search engines and when these take hold in the marketplace, it will begin to dramatically alter how local ad dollars are spent. Newspapers are never going to go away, but in the face of stiff competition they are going to have to learn how to sell themselves as a targeted ad medium and not the local mass media they’ve relied on for years.
Online advertising and public relations will become increasingly more dominant with each passing year vs. newspapers and to only a lesser degree, TV. In order for newspapers to be a factor in the future they will need to radically change the way they attract advertisers with new methods designed to serve a different purpose not easily duplicated by the opportunities on the internet. To date, this has not occurred and newspaper advertising has shown little progression over the past five years or more. Today, online advertising more easily gets in front of more consumers for more of the attentive hours of each day, at work, home, at school, at the office, and now, even more-so on commuter trains and other mobile environments thanks to the growing number of people with broadband and wireless access. Television, on the other hand, will still have certain advantages, because TV is not going away, however, it will continue to lose advertising market share to online because it cannot compete with the efficiency, cost, or viral advantages of online.
Online advertising has at least three sustainable and tremendous competitive advantages over newspapers and print in general. First, the ability to segment and target the advertising. The Internet is all about segmentation, and advertisers can now place their content on portals or sites targeted to consumers at a level of distinction print can never match. Second, online advertising is flexible and leverageable, with the ability to alter content to meet slight, albeit important differences in consumer segment need profiles. It would be the equivalent of having a different set of features or lifestyle identifications show up in a print ad based on the exact preferences of the consumer reading it…not just assumptions based on zip codes. Third, online offers multi-media. Advances in Flash animation and streaming video, data encryption and compression and email delivery have resulted in the ability to deliver sight and sound, with links to greater text or longer video.
The Internet can deliver advertising directly to the actual target consumer…you don’t have to pay for all the other people seeing or reading who actually aren’t your targets.
Of course advertising is migrating online. But the advertising model is changing as well. I think in the future there will be more permission advertising, or advertising by invitation. This will be a good thing for consumers, advertisers, manufacturers and retailers. Media outlets will have to adjust.
Yes, I think the U.S. is going in the same direction, and even the newspapers themselves are talking about their combined online and offline audience when they approach advertisers. As habits continue to shift toward online for consumption of current news and info, the advertisers will shift as well.
New media doesn’t completely destroy old media, but it does take market share, forcing old media to change. TV didn’t replace radio, but radio’s content certainly changed. Most newspapers still cling to the same content and presentation they’ve had for generations. And a lot of newspapers are boring, predictable, repetitious, and unimaginative. Often their content lends no special appeal.
Advertisers like media whose results can be proven at a reasonable cost. Most local newspapers’ ad prices are based on a monopoly model that yields great margins but incentivizes the advertisers to look for alternatives. So the readers are bored and the advertisers feel gypped: not a great formula for growth. Perhaps some newspaper owners, out of total desperation, will try investing in great investigative reporting, presenting unique stories, instead of the same tired wire service copy garnered at low cost and worth the price.
Here’s a handy test every newspaper owner can try: what content percentage of today’s newspaper, except for the names and dates, is the same as today’s newspaper a month ago? A year ago? Five years ago? Who does the most damage to newspapers: their owners or the internet?
Online ad spending in U.S. and Canada can’t follow the U.K. lead for a couple of reasons: The U.K. is a compact, high-density (population) country; genrally speaking, the U.K. has a far more efficient transportation system than we do over here. These two reasons help email shopping, hence ad spending, more popular at the other side of the Big Drink.
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Internet advertising will overtake newspaper advertising, it’s only a matter of time. As newspaper readership continues to decline and they move more of their content online, it only stands to reason it will continue to be a smaller % of total ad revenue. For local advertising dollars the other big competitors, direct-mail, radio, and cable all offer various advantages and disadvantages but just like newspapers, they too are going to feel the Internet squeeze. Both Google and Yahoo are in a race to develop sophisticated localized search engines and when these take hold in the marketplace, it will begin to dramatically alter how local ad dollars are spent. Newspapers are never going to go away, but in the face of stiff competition they are going to have to learn how to sell themselves as a targeted ad medium and not the local mass media they’ve relied on for years.
Online advertising and public relations will become increasingly more dominant with each passing year vs. newspapers and to only a lesser degree, TV. In order for newspapers to be a factor in the future they will need to radically change the way they attract advertisers with new methods designed to serve a different purpose not easily duplicated by the opportunities on the internet. To date, this has not occurred and newspaper advertising has shown little progression over the past five years or more. Today, online advertising more easily gets in front of more consumers for more of the attentive hours of each day, at work, home, at school, at the office, and now, even more-so on commuter trains and other mobile environments thanks to the growing number of people with broadband and wireless access. Television, on the other hand, will still have certain advantages, because TV is not going away, however, it will continue to lose advertising market share to online because it cannot compete with the efficiency, cost, or viral advantages of online.
Online advertising has at least three sustainable and tremendous competitive advantages over newspapers and print in general. First, the ability to segment and target the advertising. The Internet is all about segmentation, and advertisers can now place their content on portals or sites targeted to consumers at a level of distinction print can never match. Second, online advertising is flexible and leverageable, with the ability to alter content to meet slight, albeit important differences in consumer segment need profiles. It would be the equivalent of having a different set of features or lifestyle identifications show up in a print ad based on the exact preferences of the consumer reading it…not just assumptions based on zip codes. Third, online offers multi-media. Advances in Flash animation and streaming video, data encryption and compression and email delivery have resulted in the ability to deliver sight and sound, with links to greater text or longer video.
The Internet can deliver advertising directly to the actual target consumer…you don’t have to pay for all the other people seeing or reading who actually aren’t your targets.
Of course advertising is migrating online. But the advertising model is changing as well. I think in the future there will be more permission advertising, or advertising by invitation. This will be a good thing for consumers, advertisers, manufacturers and retailers. Media outlets will have to adjust.
Yes, I think the U.S. is going in the same direction, and even the newspapers themselves are talking about their combined online and offline audience when they approach advertisers. As habits continue to shift toward online for consumption of current news and info, the advertisers will shift as well.
New media doesn’t completely destroy old media, but it does take market share, forcing old media to change. TV didn’t replace radio, but radio’s content certainly changed. Most newspapers still cling to the same content and presentation they’ve had for generations. And a lot of newspapers are boring, predictable, repetitious, and unimaginative. Often their content lends no special appeal.
Advertisers like media whose results can be proven at a reasonable cost. Most local newspapers’ ad prices are based on a monopoly model that yields great margins but incentivizes the advertisers to look for alternatives. So the readers are bored and the advertisers feel gypped: not a great formula for growth. Perhaps some newspaper owners, out of total desperation, will try investing in great investigative reporting, presenting unique stories, instead of the same tired wire service copy garnered at low cost and worth the price.
Here’s a handy test every newspaper owner can try: what content percentage of today’s newspaper, except for the names and dates, is the same as today’s newspaper a month ago? A year ago? Five years ago? Who does the most damage to newspapers: their owners or the internet?
Online ad spending in U.S. and Canada can’t follow the U.K. lead for a couple of reasons: The U.K. is a compact, high-density (population) country; genrally speaking, the U.K. has a far more efficient transportation system than we do over here. These two reasons help email shopping, hence ad spending, more popular at the other side of the Big Drink.