Internet Inroads: People’s time with the Internet is up, but that hasn’t translated to ad dollars.

The media has been rife with reports in the past year about the burst of the famous — or infamous — Internet bubble. But a funny thing happened on the way to bankruptcy court. As Internet ad spending and Internet companies went into a tailspin, studies were showing that people might not be interested in clicking on banner ads, but they were spending more time online.

Thus, it’s time to take a closer look not only at Internet consumption itself, but how it is impacting other media. At least one thing is clear: with access to the Internet growing — from 50% in 1999 to 72% today, according to Arbitron — people are spending more time online and less on other media.

But how much less? And how does that impact ad spending on all media?

To answer these questions, one starts by examining the reams of data on media penetration. The numbers don’t always agree with one another, but they do form one important consensus: Internet consumption is beginning to have a significant impact on other media.

Recent data from Myers Group shows that the use of the Internet has grown recently, while other media has remained static. U.S. consumers spent 135 hours on the Internet in 2000 and 165 hours in 2001. The numbers for TV, magazines, newspapers, and radio remained about the same. While TV and radio hours were far higher than the Internet last year, newspaper and magazine hours were lower, suggesting that consumers now spend more time on the Net than they do with newspapers and magazines.

Data from Veronis Suhler says that Americans spent 46.7% of their media time with TV last year; 27.9% with radio; 4.2% with newspapers; 3.0% with magazines and 4.2% with the Internet. The Internet number is projected to grow to 5.3% by 2005; while TV and radio usage drops slightly in that scenario, newspapers and magazines drop more.

Data from the Newspaper Association of America confirms the slight dip in newspaper readership. In 2000, 55.1% of the U.S. population read a daily newspaper. Last year, 54.3% did. Sunday readership also dipped, from 65.1% to 63.7%.

Although radio numbers are holding steady according to some data, Arbitron numbers chart a decline. The company’s "Persons Using Radio" report shows listenership dipping slightly in most quarters over the past few years, with 15.1% of persons 12 and over listening to the radio at any given time last fall, compared with 16.3% in fall 1998. Bill Rose, vice president/general manager of Arbitron Webcast Services, attributes the 7% decline in radio listening to "the rise of the Net," citing growing Internet use numbers as the reason. (Although it’s worth noting that a recent Online Publishers Association study found that 16% of those surveyed listened to radio online during a typical seven-day week.)

But the use of other media is dipping faster than radio, according to an Arbitron/Edison Media Research survey, which found that 33% of respondents watch less TV because of the Internet, compared with 16% for radio. This can be attributed to the fact that radio is a daytime medium and TV is nighttime, when more people access the Internet, Rose says.

But the study cited above from the OPA shows that people who use the Internet at work consume it more than any other medium during the week, and consume other media less than those who don’t access the Internet at work. At-work users spent 34% of their weekday consumption time on the Internet as opposed to 30% for TV and 26% for radio. Their consumption of magazines and newspapers was also less than that of those who don’t use the Internet at work.

By comparison, TV was the medium of choice among non-work users at 44% of weekday media consumption time. The Internet came in second at 26%. Interestingly, radio consumption was less than that for at-work Internet users, at 18%, and there was only a 1% increase in magazine and newspaper consumption, at 7% and 5%, respectively. The Internet Ad Coffers Aren’t Full…Yet Despite the compelling picture of a medium more and more central to people’s lives — especially among the well-educated, high-income people advertisers crave — there’s one thing missing: a concurrent shift in ad spending to the Internet from other media.

According to Competitive Media Reporting, Internet spending totaled $2.5 billion in 2001, compared with a total of $94.3 billion across all the other media last year. Do the math. That translates into about 2.5% of all ad spending in the U.S. going to the Internet, a share that in no way reflects the amount of time people are spending online and away from other media.

A number of reasons could be cited for this: that the medium is still unproven as far as many traditional advertisers are concerned; that in a time of slashed budgets, any new medium is the first casualty and that advertisers "just don’t get it."

Thus, for the time being, you’ll see Internet publishing executives churning out lots of studies about the efficacy of online advertising, and pointing to one of the immutable in laws of media: that advertisers always follow consumers. "People are spending more time online, and advertising eventually follows the eyeballs," says Jim Spanfeller president/CEO of He compares the rise in Internet ad spending to that seen in cable TV, which grew quickly after the eyeballs showed up. "Since the share is changing, the advertising implications are clear," he says. "You need to consider the Net when it’s an appropriate vehicle to supplement the declines in other media. And if you want to reach consumers in the workplace, you should use the Net in addition to traditional media because workers spend more time online." That’s one way of saying that the eyes will — eventually — have it.

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