Here’s a surprising counter to those Mary Meeker-ish assertions that digital media doesn’t get its fair share of ad budgets, relative to the time consumers spend using media. But keep in
mind that the counter-argument comes from a source that doesn’t buy into the original premise in the first place.
“While we have long quibbled with the notion that time with media
should equate to [ad] spending on media, it is worth noting that by our estimates, total spending on TV advertising amounted to $63 billion in 2013. Meanwhile, total spending on digital advertising
amounted to $43 billion,” Brian Wieser wrote in a report to Wall Street investors this morning. Wieser, who is an analyst at Pivotal Research Group, and used to be the head of forecasting
at Interpublic’s Magna Global unit, knows something about how and why advertisers allocate their ad budgets on media. His main point is that based on the most recent estimates from Nielsen,
“digital” is actually reaping a disproportionate share of advertising relative to consumer usage.
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By Wieser’s estimate, digital ad spending currently represents 68% of
TV’s total, but is generating only 35% of consumer time spent. “If time did equate to money,” he writes, “either too much is being spent on Internet advertising or too
little is being spent on TV.”
But as already noted, Wieser says he doesn’t accept that premise, and instead recommends that a “more accurate” way of thinking about ad
spending is that it's always a “function of ‘least-bad’" alternatives for a given marketer.
In this scenario, Wieser says demand for digital media is often driven by
long-tail marketers -- small businesses and e-commerce marketers -- that view the Internet as delivering an effective ROI. Large mainstream consumer brands, by contrast, remain more focused on
“engagement-based” and “awareness-based” goals that are unlikely to be surpassed by TV’s “perceived effectiveness in this regard, but also because of the relatively
broader use of the medium and ease with which reach and frequency may be accomplished on TV.”
In other words, the allocation of advertising budgets is not a simple, one-size-fits-all
logic. Different advertisers use their allocation of media differently, and much of the growth of digital ad spending is a function of brands that likely may not have used TV much, if at all, in the
first place. The bottom line is that the sum total of all those allocations currently gives a disproportionate weight toward digital, not TV.