This continues the long-term shift to digital media that was already in evidence before the economic downturn; it was simply accelerated by recessionary pressures.
Total digital ad revenue jumped 17% to a record-breaking $6.4 billion in the third quarter, according to the latest quarterly survey by the Interactive Advertising Bureau and PricewaterhouseCoopers. In addition to being the biggest quarter ever in dollar terms, this is also the biggest year-over-year percentage increase since the first quarter of 2008, when it increased 18.2%.
The growth was attributed to increasing demand across all digital ad categories, including search, display, video and mobile.
These strong third-quarter results come on the heels of a 7.5% increase in the first quarter and a 13.9% increase in the second quarter of 2010, also per the IAB.
While industry statistics are still being compiled, it's clear that most traditional media are not faring nearly as well.
Averaging the third-quarter results of major newspaper publishers (including the New York Times Co., Gannett, McClatchy, the Washington Post Co., A.H. Belo, E.W. Scripps, and Media General), total newspaper ad revenues declined about 3.7% in the last quarter. That follows declines of 9.7% in the first quarter and 5.5% in the second quarter, according to the Newspaper Association of America.
A third-quarter loss would make it the 17th quarter of straight declines for the newspaper business. The industry's decline over the last couple of years has been dramatic: Total revenues of $12.4 billion in the first half of 2010 are down 47.3% from $23.5 billion in the first half of 2006.
The recovery in consumer magazines has also been distinctly lackluster, with total ad pages edging up 3.6% in the third quarter, following a 9.4% drop in the first quarter and a 1% increase in the second quarter, according to the Publishers Information Bureau.
These modest increases are not nearly enough to make up for ground lost over the last couple of years. In the first nine months of 2010, total ad pages came to 118,717, per the PIB -- down 31.6% from 173,501 in the first nine months of 2006.
Radio is doing somewhat better. Third-quarter results from a number of big radio broadcast groups (Clear Channel, CBS Radio, Cumulus, Emmis, and Entercom) suggest that total radio ad revenues increased about 5% last quarter. That follows a 6% increase in the first quarter and a 6% increase in the second quarter, according to the Radio Advertising Bureau.
But local ad revenues -- long the mainstay of broadcast radio -- appear to be stagnating, with a mere 3% increase in the first half of 2010 to $5.5 billion, per the RAB. And total revenues of $8.2 billion in the first half are still down about 21% from the 2007 level of $10.4 billion.
The disparities between online advertising and these traditional media are especially stark in light of overall ad spending trends. Over the 19 quarters from the beginning of 2006 to the third quarter of this year, online advertising growth rates matched or exceeded overall ad spending growth rates in all but one quarter (the third quarter of 2009), or about 95% of the time.
Radio has matched or exceeded overall ad-spending growth rates in just five quarters over the same period, or 26% of the time. Magazine ad pages managed to match or exceed the overall growth rate twice, in the first quarter of 2007 and the third quarter of this year, or 11% of the time. Newspapers have failed to match or exceed the overall growth rate even once in this period.