Commentary

Despite Digital Hype, Advertisers Lag Customers

Fajen’s Law of Diminishing Returns: Did you ever notice that the return trip back to where you started always appears to take less time than the journey to get there in the first place?

Economic proof of the law: After the Great Depression of 1929, it took 25 years for the stock market to recover to its high, just prior to the crash.  After the recent Great Recession of 2998/2009, it took only five years to recover and return to previous levels.  Five times faster!

Jobs bounced back from the Depression after 15 years to previous levels, mostly due to World War Two.  Right now, five years after the recession, jobs are roughly half way back. And we are pulling out of wars.  The way back the second time around (the return) is easier, despite our impatience.

Pacing Digital TV

It took 50 years for television to consume the nearly 4 ½ hours each day of the average person’s time since its commercial inception around 1950. It has taken digital media, less than 20 years to reach that level and surpass TV in personal consumption. So digital’s earlier acceptance and acceleration has surpassed television, growing at a rate two and a half times faster.

Digital’s ascendancy could partially be due to its involvement in the workplace, as well as its entertainment value, especially with the plethora of digital devices.  But we are all smarter today in the ways of the world.  A few years ago in the isolated and mostly poverty stricken town of Labuanbajo, Indonesia, I watched a native fisherman play video games on his I Phone.  He didn’t own a TV.

While digital’s personal usage ascent has outpaced televisions’ historically, advertiser investment has not, at least not yet.  From infancy it took 10 years for TV to garner 25% of advertising spend.  Digital media took 15 years to reach that plateau.  Half again as long.

TV took 25 years from infancy to reach a 35%+ share of ad spend —that’s roughly where it still is now. At the current rate of growth, digital will take about 30 years to overtake TV in share of media spend.  Of course, another digital invention could spur more immediate and rapid growth and change that trend line.

Right now, though, despite all the hoopla in the trades, at conferences and in conversation about digital media, advertiser acceptance has not kept pace with consumer acceptance.  Digital now occupies second place in share of ad spend in the U.S., outpacing print for the first time in 2012, but it has not grown at the same rate that TV did 60 years ago.  Why? 

Maybe the pudding doesn’t have enough proof.  In the age of Big Data, we want to measure or prove everything.  Accountability rules!  Digital metrics abound, but they are not really compatible with those of other media.  In some ways they are more advanced, like directly being able to relate sales measures and other outcomes to specific media metrics.  In other ways, they are not as sophisticated, like digging to the depths of consumer motivations.

We believe that before digital media overtake television in share of ad spending, the two will become inseparable.  Invention disruption and advances in data analytics will merge the two media into so many platforms that the they could easily become indistinguishable from one another.  It’s already happening with “Smart TV.”  By then Big Data will become even bigger along with our appetites for media and metrics.

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2 comments about "Despite Digital Hype, Advertisers Lag Customers ".
  1. Paula Lynn from Who Else Unlimited , March 5, 2014 at 8:38 a.m.
    This is one of the most logical articles about this topic. How many people have been chasing their holy grails about it ?
  2. John Grono from GAP Research , March 5, 2014 at 7:10 p.m.
    Well in Australia you can add 'digital' to 'television' as all TV is digital. I prefer to call the medium 'interactive', and therein lies part of your answer.