Online Ad Spending Is Up - No Kidding?

Is it really any shock to hear that Internet advertising is up again this year?

For the 8th consecutive year, the number of dollars spent on Internet advertising has again gone up. In fact, the amount of money that advertisers spent on Internet related ads was the leading increase with 18.9% more than any other media category increase according to Nielsen. The next closest thing to the Internet was national magazines with only a 7.6% increase.

Newspaper advertising has shown a steady decline year after year and in a post about the impact of the Internet on newspapers I wrote almost a year ago, I asked the question; "will we see the death of a media in our generation?" Again, there was a decline in newsprint ad revenue which equaled over 7.5% which is up from last year's 5% decrease.

The one big surprise for me in 2007 was the increased dollars that are being spent on outdoor advertising. Normally when I hear outdoor I immediately think of traditional billboards. Now there are these fancy new-fangled digital billboards that have the capability of switching out the message very quickly to accommodate sales or whatever may be an immediate and time sensitive call to action. I have noticed that companies are also spending more money on things like vehicle wraps. From city buses to company cars, this too can be considered outdoor advertising.

According to Forrester Research, online spending is expected to hit $204 Billion, this year. Yes I said billion. The 3 big "C's" are going to continue to dominate the online market; clothes, computers and cars. The 3 of those combined will account for over 1/3 of all online sales or $70 billion.

Here's another interesting tid-bit from the recent surveys. Free shipping, a big draw in past is garnering less interest on both the consumer and the retailer levels. With the increase in ad AND consumer spending, we may see free shipping go bye bye for a while. However, I do think that it will surface frequently. After all the .99 cents or 99 dollars on almost all consumer goods has never gone away.

One last fact about demographics and online behavior and then I will leave you to your day.

"The casual shopper goes online to look for the best price, leveraging the transparency of the Internet to save money. However, more affluent customers appreciate the convenience of shopping online and are not necessarily looking for the best deal. Retailers would be wise to recognize there are significant opportunities within both audiences and should market to them accordingly." Via Forrester

Yeah, I still think this Internet thing is a fad. You'll have to pry my CB radio from my cold dead hands.

 

The Impact Of The Internet On Newspaper Advertising

How the Internet has hurt newspaper sales and advertising revenue continues to pepper the press. Back in May I wrote an article about the decline in newspaper advertising dollars and again just a few weeks ago I referenced the falling percentages of newspaper advertising revenue in a post called "Rate Card Woes."

A very interesting study was released this month from Harvard. Funded by a grant from the Carnegie Corporation, this new report contained information that describes the increase in website traffic for major brand newspapers and other major online news sources. The report also studies small to mid-sized city newspaper websites. Findings indicate that online news seekers are neglecting the local newspaper websites in favor of major newspaper and television websites.

Nationally known newspaper Web sites such as the New York Times, Washington Post, and USA Today are attracting a larger audience. On average large newspaper site traffic increased by 10 percent over the past year. In comparison Web sites of most other newspapers of large, medium and small cities are losing their audiences. This isn't the most interesting finding though. The biggest traffic gains are being seen by non-traditional news sources. It was found that Google, Yahoo, AOL, and MSN had significant increases in traffic over the past year with social media sites and news aggregators seeing an 800% gain in site traffic.

The study also found that the Internet is a bigger threat to local news organizations because it decreases the influence of geography on user's choice of a news source.

For me, the biggest surprise in the report were the findings for commercial radio station web traffic. Large commercial radio station saw a huge increase in web traffic and mid-size radio station saw a slight increase during the term of the study.

At the bottom of the heap was national and local public radio with their stats plummeting sharply over the last year. NPR alone lost 20% or 400,000 of their unique visitor from April 2006 to April 2007.

Brand name, large market and local television websites all saw increase traffic from people seeking new during the study.

So what does this study tell us?

• First and foremost - People are seeking news on the internet
• People are seeking news on large, brand name websites
• People are getting their news from non-traditional and social media outlets

Does this mean that people are caring less about local news? Not at all. You can get your local news from an aggregated feed on Yahoo Local News can't you?

The most significant quote from the study:

"The Internet is redistributing the news audience in ways that is threatening some
traditional news organizations. Local newspapers have been the outlets that are most at risk, and they are likely to remain so. If our trend analysis is borne out, many newspapers are going to have difficulty even holding onto their online readers. Brand-name newspapers’ sites, as well as some others are growing, but a significant proportion of newspaper sites are stagnant or losing visitors. This development was perhaps inevitable. The problem of newspapers is compounded by the fact that they cannot succeed simply by replacing their hard-copy readers with online readers. On a person-by-person basis, the sale of hard-copy newspapers is vastly more profitable than drawing people to the paper’s website. It is estimated that a newspaper needs to attract two or three dozen online readers to make up for—in terms of advertising revenue—the loss of a single hard-copy reader. When people go to the Internet for news, they can just as easily navigate to a source outside their community as one within it, bypassing a local site in favor of a known site elsewhere. Therein is a primary reason why brand-name news organizations, like CNN and the New York Times, have large Web audiences."

That being said, could it be possible that we will witness the death of a media in our generation?
I still have a few 8 track tapes, I think.


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Rate Card Woes.

David Honig, WebProNews contributor, made one the best statements I have read in a long time.

Referring to the big decline in newsprint advertising, he says; "Do not weep for the rate card, for it has enjoyed a long and prosperous life, arbitrarily plundering from advertisers without providing any meaningful value."

I have been saying this for years and it is now becoming painful to everyone including the big boys.

"The Tribune Company, owner of the Los Angeles Times and Chicago Tribune, posted a 5% drop in advertising revenue in their first quarter of 2007. Gannet Company Inc., owner of USA Today, and the New York Times Company both posted a 3% drop in national advertising revenue. This is all according to the most recent quarterly reports filed with the SEC."

Long live the ink and pulp.