Online ad revenue now exceeds that of magazines

This must be Ad Age week. Advertising Age today has a story on Merrill Lynch's report that Online ad revenue now exceeds that of magazines. Needless to say, the magazine publishers insist it is no big deal:

Assuming the forecast is correct, magazines will become the first big medium to watch the Web pass by -- unless you count phone books, which are also projected to fall behind in 2006. Yet magazine publishers insist that's not bad news, but rather an opportunity for those among their ranks that have already started the shift to being digital savvy, media-neutral purveyors of content.

"The people who report on media like to think it's really significant," said Nina Link, president-CEO, Magazine Publishers of America, of the tipping point. "I don't. It just says there are more opportunities to reach consumers and make powerful partnerships. The powerful brands and media are going to thrive."

I agree with the sentiment that powerful brands and publishers will thrive. But the Magazine Publishers of America are whistling past the graveyard regarding the shift in revenue; it is a very big deal. Why? Because on-line advertising is less expensive than print advertising per thousand impressions. Therefore, by the time online advertising revenue has surpassed print, the number of online impressions being sold is factors of two to five higher.

And don't think this is all small change. Blackfriars most recent research showed that on average, US companies plan to spend an average of 10% of their marketing budgets on online advertising this year. Big advertisers like Absolute Vodka, Ford, and GM already plan more than 20% of their marketing budgets online. And given the trend of moving more ad dollars online, that has to be hurting the print business.

No this isn't the end of magazines. But given the expense of print magazine production and distribution, it also doesn't suggest that magazine publishing is a great growth area either. Just as Blackfriars has predicted with newspapers, magazines will need strong brands, clear niches, and laser-sharp marketing to thrive. And those that don't have those attributes are likely to see their advertising lifeblood dry up. They won't be whistling past the graveyard -- they'll be in it.

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