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The Real Story of Online Advertising Spending

  |  January 27, 2012   |  Comments

Marketers must face the fact that media types have begun flowing into each other in such amazing ways that it's hard to figure out if you're online or offline.

I used to have this great line that I would trot out at conferences.

This was back when I was an industry analyst for Jupiter Research (now a part of Forrester). I would give the forecasts for spending in various segments of advertising. This was in the early 2000s, so online advertising was still a relatively small segment of the overall market, especially alongside broadcast and print. Radio was already starting to fall off at this point, and online was small but growing.

In fact, we had this sound bite that we would use to help get some extra attention and love for the money being spent on online advertising. We would say that online advertising was the "fastest growing segment of the market."

I would always follow up that statement with a picture of one of my kids, who were just babies at the time. I would say "…and this is Eliot. He's the fastest growing member of the Stein family. But we don't trust him with the car keys just yet."

I know. ROFL and all that.

The point that I wanted to make was that, yes, online ad spending was growing fast, but that's because it was on such a small base. TV spending had been growing for 40 years, so naturally we would expect year-on-year growth to be a small percentage. Whereas on the web, we were getting new outlets and opportunities daily. This was even before the real social media revolution took off and when precise target was still in a nascent stage.

And now, we see news from eMarketer that online advertising is about to cross an important threshold: online ad spending will beat all print ad spending for the first time this year.

This is a huge wake-up call for all of us who…spend too much time thinking that numbers actually tell the whole story. Because the whole idea of splitting advertising spending out by category is becoming a clunky and distracting way of looking at the market. In fact, it misses the big idea behind advertising, which is that media types have begun flowing into each other in such amazing ways that it's hard to figure out if you're online or offline, leaning forward or back.

Catching up to Consumers

Another stat that we used to love but is now nearly worthless is "amount of time spent online." I do know that it's true that the "Digital Divide" exists, and there are large numbers of people who don't have full-time access to the Internet. That is a social issue being addressed in other channels.

For the marketer, though, we are looking into a consumer group who has massively integrated their media experience. In the article about the eMarketer study, the lead analyst is quoted as saying that "advertisers' comfort level with integrated marketing is greater than ever."

Well, good for us. Too bad that consumers have been comfortable watching sitcoms on their laptop, streaming live sports to their phones, and listening to radio on their computer for a long time already. Soon enough we will be tweeting from our TVs. You're getting comfortable with integration? About time!

Which is precisely why the idea of adding up these numbers and comparing them to one another, as though they were box scores, is so distracting. When we talk about advertising money going to "print" or "digital," we are looking solely at the format of the piece in which the ad is placed. We hold a piece of paper in our hands and call it print.

But that's far from how the publishers are thinking of their products. This too has taken a long time, but we increasingly see media owners big and small reconsidering the fundamental business they are in, and getting away from that final format. ESPN used to be in the business of running a cable channel. Today it's in the business of keeping you deep inside sports. The New York Times used to be the newspaper of record. Now it's the deepest and most trusted source of news and information (except if you are in a red state. If so, The New York Times is a biased rag and only Fox News is to be trusted).

The company that owns the company I work for (Hearst) has deep investments in both print and digital. I don't feel like I am shilling for the company when I say that it is clear that it's interested in connecting people to its content through every channel possible. The company lives in a post-channel world.

This is where the future lies. While it's interesting to watch the numbers stack up, one channel against the other to see who wins, it obscures what's really happening in the media world. I said that in the early 2000s we were amazed at the rapid pace of development in the online world. Then it was all about what new site was popping up. The fact is that pace continues. The difference today is that the channels we use have filled up to the point of bursting. Or rather, are overflowing into one another.

And that is the real story.

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ABOUT THE AUTHOR

Gary Stein

Gary Stein is SVP, strategy and planning in iCrossing's San Francisco office. He has been working in marketing for more than a decade. Gary lives in San Francisco with his family. Follow him on Twitter: @garyst3in. The opinions expressed in Gary's columns are his alone.

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