While new-media/technology business plans and elevator pitches have forever salivated about how television was a $70 billion market ripe for disruption, actually television advertising cracked the $70 billion mark for the first time in 2011, up 5% from 2010. That’s right, folks: TV advertising is getting bigger, with no sign of slowing down. The reality is that the hyper-fragmentation of audiences is making television’s mass media appeal more enticing to advertisers. After all, as a wise man once told me: “Targeting is overrated; everyone buys soap.”
Considering that the Internet’s main promises are targeting and tracking, that’s a bad omen. In fact, you can almost argue -- no matter how reluctantly -- that the Internet, social media, tablets etc., are helping television grow. I watch more TV today than I have in the past ten years, even though I may occasionally have multiple screens on when I do. Indeed, according to Nielsen, "45% of tablet owners watch TV and use their tablet together at least once a day. A whopping 69% say they do so at least several times a week and only 12% say they never do this," writes Frederic Lardinois in TechCrunch.
In other words, while we’ve certainly seen a shift of consumer mindshare from print, radio, and yes, television to the Internet, the jury isn’t only out on whether the Web helps or hurts television, as of now, the jury has rendered its verdict: the Web is definitely helping.
There’s no doubt that growth rates favor the Internet. Online video advertising in the U.S. grew from $1.4 billion in 2010 to $1.8 billion in 2011 -- a more than respectable 29% annual growth rate. Total online advertising in the U.S. grew 22%, to $31 billion. Meanwhile, TV advertising grew 5% to $70 billion. But therein lies the problem: my company’s revenues grew 75%, but the absolute number remains rather light, so getting over-excited about growth rates alone is disingenuous, doing a disservice to everyone hoping for the pie to grow to the point where it can feed everyone.
That applies equally to content producers and distributors, albeit in different ways. It’s pretty clear that distribution is a winner-take-all sweepstakes (or rather, top two or three). But it’s almost more daunting for producers as a whole at a time when cheap technology and “filterless” distribution lead to a democratization of publishing.
The bottom line is that the online video pie’s not growing fast enough. This column has highlighted the reasons for that underwhelming trajectory: overreliance of in-banner ad distribution; lack of good content with meaningful distribution; the difference between what users watch, distributors feature and marketers want to associate with; lack of funding for content; massive oversupply of ad inventory pummeling prices, etc.
If you reread that list, it sounds very contradictory. But what the Web lacks and was/is television’s ace, perhaps, is programming. After all, the reason why you both have a lack of good content with meaningful distribution AND an oversupply of ad inventory pummeling prices is specifically due to the difference between what users watch, distributors feature and marketers want to associate with. Only if you program the content better do you create the kind of economics and environment that will make advertising work online. Of course, given the democratic nature of the Web, that might be impossible.
In March, for example, the number of video ads doubled annually to 8 billion -- thanks in no small part to YouTube -- but viewers are pleading “no mas, no mas” as is. This is why so many in the ecosystem hope that branded content will emerge as a viable form of advertising, but that will only occur if the content and advertising are balanced by the viewer’s standard.
Very timely post, I agree about needing content! I had an unexpected hiatus in cable service due to equipment issues by AT&T so did a week "trying" to watch online video. In fact, I wrote a blog post for it ("10 Things I Learned About My Forced Exile to Online Video") on the local AAF website:
The web at its core is an information resource. The Google gang has funded independent film producing agencies with 100 million dollars in hopes of creating web tv programming via YouTube.
So far, I've yet to see any blockbusters break through the clutter.
Informative entertainment (Infotainment) and Educational entertainment (Edutainment) hold the greatest promise online.
This type of programming can attract and deliver what the specific viewers want and incorporate the product pitch seamlessly within the production.
Once the experts in their fields realize this, they can begin using the web with its maximum ability to target and deliver what the viewers want, when they want it!
COO at www.ncs.tv
Online videos produced by organic Internet performers are doing just fine, thanks Little movies made by tech firms like Google or ad agencies do not. Entertainers make entertainment. That's why 5 years ago we started HITVIEWS to put brands and brand messaging inside video customers watch, engage and love. Stop trying to make this so hard. It's not.
Good piece Ashkan. I know I for one can argue without any reluctance that the internet is helping TV grow.
The internet is foundational (in my world of sports news) to providing both distribution efficiency and centralization of local content to traditional broadcast TV networks that are desperate for it but lack resources nowadays to get it. It has helped traditional TV programming become better (localized), cost effective and even now revenue generating. Internet for news = quality content (zero to low acquisition cost) and revenue generating both traditionally and digitally.
I for one believe the internet can solve the fundamental problems facing both traditional broadcast TV and Print Media...