Digital Media Surge Poised To Spark Traditional Media Growth

A study published by the merchant bank Veronis Suhler Stevenson last month reinforced a trend that the advertising industry has been watching for some time. While business-to-business magazine media spending was set to grow a modest 2.7 percent in 2005, and between 3.1 and 3.8 percent over the next four years, e-media spending was set to increase a brisk 26.5 percent in 2005.

While it still accounts for a far smaller share of business-to-business spending than magazines (8.4 percent to 47.7 percent, respectively), the report noted that "we continue to expect e-media to continue to be the fastest-growing sub-segment in 2005 and throughout the forecast period."

Taken in tandem with recent deals that have seen United Business Media recently purchasing the Internet-based publishing and analysis firm Light Reading, Inc. and media platform TechOnLine, Rupert Murdoch's News Corp. purchase of Scout Media, and Gannett's purchase of the rich media technology company PointRoll, many industry figures are debating ways in which to speed the convergence in advertising opportunities between the two.



"Madison Avenue is finally taking online advertising seriously, and it's becoming something that every agency has to be very good at," said Tolman Geffs, managing director at Jordan, Edmiston, a New York firm that specializes in middle-market merger and acquisition advisory services to the media and information industries. "After years of talk about integrated marketing, you are finally seeing some real action, and it only comes when agencies have fear that they are going to start losing clients."

Jordan, Edmiston represented PointRoll, Light Reading Inc., and Informex in their negotiations with the traditional media entities that eventually subsumed them.

Interestingly, however, traditional media outlets are looking at their online outlets as more of a complementary--rather than competitive--advertising opportunity, say industry figures.

"The newspapers are not seeing a huge drop in circulation," says Melinda Gibson, director of new-media business development at the Newspaper Association of America. "Most people who read online newspapers do not do so at the expense of print--they either never subscribed or still do both, and so they serve different purposes."

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