Making the case for traditional media advertising is no longer easy, given the fervor about game-changing interactive platforms teaming with targeted user information. In less than a decade, they will
be the status quo.
The proliferation of new media--from mobile phone, satellite radio and DVR subscriptions to digital cable, satellite and telco TV--has shaken the foundation of
conventional ad-supported platforms. So far, they have not collectively grabbed sufficient revenues and major advertiser support to make broadcasting and print venues overly nervous. In fact, the
intangible promise of emerging advertising options overshadows the tangible sobering facts.
The total U.S. population spends more hours per year watching television (a collective 466.5
billion) than all other media combined (including consumer Internet, search, radio, consumer magazines and newspapers). Conventional TV popularity is 90 times that of online video--which is growing at
a compounded annual rate of 39% over the next five years, according to Magna Global. Of course, Internet search advertising is growing double-digit, but it's barely 10% of all annual ad-supported
media spending in the country.
While that is little reason for television, radio and newspapers to celebrate, it suggests there is adequate time for their constructive, even lucrative
digital transformation, according to Magna Global senior vice president, director industry analyst Bruce Wieser.
Wieser convincingly came to traditional media's plight last
week--ironically during a presentation on emerging media advertising at the annual UBS Media Conference. His message and supporting facts were simple and worth repeating: Although alternative new ad
options are taking their share of the spotlight, traditional media still has a lot going in its favor. The continuing shift in ad dollars will be made by Madison Avenue in response to tech-empowered
consumers. The most powerful prevailing truth is that advertising will follow consumers wherever they go.
Even at this nascent stage of interactive market development, print and radio
generally remain more portable, while TV and radio are generally more accessible and free, and traditional media typically encompasses far more content and higher-resolution video than the Internet
and other rival interactive media outlets, Wieser observed.
The prospects for online media substitution of general print, radio and television are limited by various drawbacks related to
traditional media, both technical and psychological in nature.
Large advertisers must shift their focus from reach and frequency to consumer behavior. All media infrastructure must be
improved, and all organizations must be redesigned to accommodate the new dynamics of interactive marketing. Above all, a standardized infrastructure and a new system of standards must be fashioned to
address several key concerns, including the use of uniform metrics, a smooth buying process, the use of robust user data, and the ability to match a critical mass of unduplicated and unique reach,
"Six-week flights can't be changed to 90-day commitments," Wieser said, referring to the contrasting basis on which television and Internet ad time generally is sold. "If
(advertisers) are moving money from one place to another (they) have to justify it with comparable metrics." The bottom line: traditional media must stop working relatively well enough before
advertisers will venture en masse to new ground.
So far, smaller businesses and advertisers (representing a $48 billion market) have been the biggest beneficiaries and drivers of emerging
media, in which search has allowed them to connect with and explore new markets. In turn, search has been driven by the growth of e-commerce and consumers being more comfortable with securely shopping
online. Large advertiser use of online and interactive platform targeting and measurability of users has been thus far disappointed, Wieser said.
There has been a general lack of
integration between brand activity and sales data. In addition, few advertisers control the consumer retail experience; their sales, product and brand functions are not coordinated enough. Few of the
larger advertisers are undertaking the rigorous testing required to assess the impact of new and old media. The measurability afforded by emerging media "is great, but few (advertisers) do anything
with the data," he noted. The use of emerging media generally is reserved for niche-focused brands or niche-focused marketing objectives; reaching consumers across multiple touchpoints and
experimenting as advertisers construct new business models.
UBS media strategist Matthieu Coppet said that advertisers' increased use of non-media marketing (such as interactive direct
response) also is diverting resources from measured ad spending, although the rapidly increasing supply of ad impressions will further fragment the integrated media market. This non-advertising
marketing spending is growing materially faster than advertising expenditures globally--a trend that will continue for the foreseeable future. At some point, the premium pricing commanded by targeted
and accountability-based interactive media could lead to a "de-rating of non-targeted advertising value." In other words, disruption in CPM/CPA pricing, valuation and inventory is inevitable.
The need to drill down into the changing dynamics of audience reach, frequency and behavior is critical in order to recognize the phases of shifting value between old and new media platforms.
For instance, TV networks' 18-49 demographic, while stagnant, can still maintain a reach of more than 90%. However, the targeted demographics rendered by interactive platforms can be more valuable per
user, as in the case of the professional adults ages 18 to 35.
Although television consumption has increased among virtually every demographic--and constitutes more of a reach than any
other media-- online and interactive platforms have vastly significant implications for all advertising and media consumption over the next decade, Wieser said.
When emerging media
revenues and support on Madison Avenue finally reach maturity, it may not come at the expense of traditional media. More ad and marketing dollars simply may be more fragmented, or spent in more places
on the media spectrum. The trick will be to prevent digital interactivity from working against television, radio and print--as it has for the music industry. Already, these emerging markets and the
Internet are driving global advertising and will represent 70% of overall estimated 2008 incremental growth, the analysts said. It is a good start to creating more value, rather than displacing or