Advertising's shift away from TV, radio, and Internet banners

[Media's attention cycle; click for larger image]




Today's Wall Street Journal notes that in 2006, advertising spending for the top 50 US advertisers on measured media dropped 1.5%, while advertising spending overall grew 4.1%, according to a report from TNS Media.

While some of the decline may reflect overall cutbacks in ad spending by big marketers, it likely signals that big companies such as Procter & Gamble are reallocating some of their ad budgets to new Internet ad venues which aren't measured by TNS -- such as paid-search advertising, social networking and online video.

Not surprisingly, the report showed that growth in ad spending on traditional media, particularly newspapers and radio, continued to slow dramatically while spending on Internet display ads is accelerating. But it also highlighted a significant slowdown in ad growth among cable channels, after several years of robust increases.

An important methodology note is that this report is only about the top 50 advertisers, so the long tail of the other 7 million businesses in the US is largely unrepresented here. Blackfriars marketing sizing data for 2006 (which tries to represent all US businesses) showed significant growth in non-traditional marketing of all types, accounting for 7% of all marketing budgets, and Web site and Internet media -- the media TNS classifies as "unmeasured" -- was 6% of marketing budgets. Heck, even Microsoft is noticing that online piracy of software is actually a form of marketing for it. So Blackfriars agrees that businesses are allocating dollars to media forms that don't fall into nice, tidy categories. The big challenge is figuring out which businesses and which categories.

But I think the bigger question here is how well traditional, advertising-supported business models are going to stand up over the next five to ten years. According to the Project for Excellence in Journalism, news journalism is already being forced to reinvent its business model because of audience fragmentation and the subsequent collapse of advertising revenues. Cable TV may see similar drop-offs in advertising support as the tyranny of too much content dilutes its audiences as well. I know I have become addicted to watching my favorite TV shows without commercials via TiVO and iTunes, even when I have to pay for those services. My limited free time is worth more to me than the $1.99 I have to pay to watch a TV show without commercials.

We're now at the end of a 50-year media cycle where exploding content and shrinking consumer attention will destroy many business models for media and advertising. When we reach the end of such a cycle, business brands look for new ways to promote themselves. Fifty years ago, advertisers fled radio to establish branded content on TV. Now businesses are moving away from traditional media to new branded Internet properties like YouTube and podcasts on iTunes. No one should expect that the money won't move with them.

Update: CNNMoney weighs in with a similar view on the same advertising topic with The death of the 30-second TV commercial.

Technorati Tags: Advertising, Analysis, Attention Economy, Blackfriars, iTunes, Journalism, Media, TiVO