Traditional Media Outlets Can Wave Advertising Dollars Goodbye

| About: News Corporation (NWS)

Television is old media and, as such, it is rapidly losing relevance to people’s lives. It lacks interactivity, connectivity and non linearity so it is doomed by its technical inferiority. And this is reflected in the behavior of the viewers who are deserting the sinking ship in droves for the greener pastures of the internet and video gaming.

The latest news is that in the UK online advertising spend is now greater than TV advertising spend. In the first 6 months of this year total advertising spend, in the recession, fell by 16%. So it is amazing that in the same period online advertising rose by 4.6%. This is a massive performance and reflects the fact that many marketeers are now realizing that they have to follow their customers.

Rupert Murdoch is being hung out to dry in all this. He has not moved sufficiently from old to new media, so is hugely exposed to the switch in advertising spend. Earlier this year he proposed charging for online news access in an attempt to recover lost revenues. The problem with this idea is that unless every news provider does the same he will just lose his audience. And in the age of the blog the number of news providers is just about infinite, so this will never happen.

Ironically this is happening just as there is an explosion of video on the internet, but served up in a completely different way to commercial television.