In 2011, more money was spent on online advertising than on cable TV advertising…including local and network cable.
Yup, you heard right: according to the IAB and PricewaterhouseCoopers, more companies spent their ad dollars online than on cable.
Even more surprising was that with a total spend of almost $32 billion, online is now only $7 billion away from matching the approximately $39 billion spent on broadcast TV in 2011:
- Broadcast: $38.5 billion
- Internet: $31.7 billion
- Cable: $30 billion
- Newspapers: $20.7 billion
- Magazines: $18 billion
- Radio: $15.2 billion
- Out-of-home: $6.5 billion
- Video games: $1 billion
- Cinema: $0.7 billion
These are pretty shocking figures, especially when you consider that we’re still in an age where “digital” is seen by the advertising industry as something “other.” You know what I mean: there’s “traditional” advertising and there’s “digital.”
Folks, I think it’s time we put the distinction to bed.
Of course, people have been predicting the death of traditional advertising for a long time now (me included), but digital’s not going to “kill” “traditional” advertising: it’s going to eat it whole.
Why? Because when you examine the features and elements of all the other media listed above, the one thing that stands out about Internet advertising is that it can do absolutely everything all the other media can do, only better.
With TV we’ve just got video. With radio we’ve got audio. With newspapers and magazines we’ve got text and pictures. Out-of-home is, of course, its own special case (as are video games and cinema advertising).
Online can combine all those things and, with the ongoing convergence of web content with televisions (along with the rapidly-increasing size of monitors and the decreasing cost of those monitors), can do it on a big screen, too. In effect, rather than having to advertise across a number of different media we’re moving to the point of having just one medium to worry about (with the exception of out-of-home).
Still doubtful that this is going to happen? Let’s take a look at the most recent audience numbers for each (as a percentage of U.S. population):
- Broadcast: 99 percent
- Internet: 80 percent
- Cable: 91 percent
- Newspapers: 56 percent (including e-editions)
- Magazines: 80 percent
- Radio: 93 percent
- Out-of-home: 100 percent (estimated)
- Video games: 72 percent (including online games)
- Cinema: 73 percent
Yes, there’s still a 19 percent gap between Internet and broadcast when it comes to audience numbers, but if you consider that over 37 percent of people in the U.S. have smartphones capable of going online, that gap’s probably even narrower than it seems.
If you look at cost, things start to look even bleaker for the TV folks. It’s fairly common these days to get decent Internet access for around $50 per month (depending on carrier, plan, speed, etc.) while the average cable TV bill weighs in at a whopping $71. Even worse, some experts estimate that your cable bill may balloon to over $200 per month by 2020. Considering these numbers, not cutting the cord starts to look downright economically idiotic…especially when between Hulu and Netflix (around $30 to $40/month combined) you can get just about everything cable gets you as long as you’re willing to supplement with some pay-per-view from providers like Apple and Amazon.
For consumers the choice is pretty clear: one day you’ll have one pipe carrying all your information and entertainment…and it ain’t going to be TV. Sure, the cable carriers will continue to resist with pricing tricks, bandwidth caps, and revenue-producing gimmicks like the so-called “sports tax,” but eventually they’re all just going to be commodity carriers of data.
As for advertisers…well, you’ll follow the audiences, for sure. But it’s not just audience-viewing habit changes that are driving more advertisers online: it’s the pressure of the marketplace that’s really moving things online. Lean economic times have trained us all to seek greater accountability and improved ROI…something that digital marketing has excelled at since the beginning. In fact, if 82 percent of TV spots generate negative ROI (as Accenture claims), it’s a wonder why anyone is spending money on TV anymore. When was the last time your clients (or your boss) told you that they didn’t care how much something cost or how well it worked? I thought so.
One final thing to consider when you watch the battles today between cable providers, networks, content providers, and others in the various information/entertainment industries who’ve seen digital media disrupting their business models over the past couple of decades is this: these battles are all temporary. If you look to businesses that have pretty much made the transition over to digital, you can see what’s coming. While the music business is making loud noises about file sharing and DRM, the fact of the matter is that the CD (or any other physical medium) isn’t coming back.
The problem that the music business (and the video business too, for that matter) has had is that it was confused about what it sold. It thought it sold plastic discs when what it really sold was the information on those discs (the music). Once the information was liberated from its distribution mechanism (physical stores selling plastic discs), all bets were off. Ditto for the video business.
What we’re seeing now (and the reason that we’re seeing so much resistance to it) is the same process happening to all the other information and entertainment media. Possibly the biggest revolution the Internet has wrought isn’t all the stuff we normally think of (email, social media, etc.). Instead, the real revolution is that it’s provided a way to separate information from the medium that carries it. Who needs a hunk of paper on their doorstep when you can get the same information with the click of a mouse? Who needs to buy hunks of plastic when you can listen or see what you want when you want it? And who needs a one-function box taking up space in their living room when you can get what it used to provide you whenever and whereever you want?
Media philosopher Marshall McLuhan once famously said that “The medium is the message.” That’s no longer true. As we move toward one medium for all content, today the message is the message…and we get to choose how we want to experience it.
Jason John is Chief Marketing Officer, Digital for Publishers Clearing House, a role in which he is responsible for the development and execution of overall ... read more
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