Online Ad Spending to Overtake Print by 2011 -- Study

Online advertising sales will overtake print advertising by 2011, according to Veronis Suhler Stevenson's widely-watched annual study published Tuesday. VSS forecasts annual online advertising growth of more than 21%, reaching $62 billion in 2011, vs. print advertising's forecasted $60B. TV ad revenues, it says, will still hold the top spot at a predicted $80B in 2011. "The path of online advertising and newspaper advertising is a continuation of what we’ve been observing for many years, but it is finally getting to the point where the lines will cross," said VSS's James Rutherfurd. The study notes that in 2007, the amount of time spent reading online will overtake time spent reading newspapers for the first time. Overall media use was down 0.5% in 2006 to 3,530/hrs per person, while workplace media usage jumped 3.2% to 260/hrs per employee per year. “Knowledge and information industries drive the US economy, meaning that information is a critical tool,” Rutherfurd said. "Companies are prepared to pay a lot of money to get that information."

Sources: Financial Times
Commentary: A Look At ValueClick's Future • 11 Advertising Stocks That You Might Be Tempted to Buy • Is Internet Advertising Really Worth Billions?
Stocks/ETFs to watch: GOOG, YHOO, MSFT, TWX, AQNT, VCLK
Related: VSS website

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Comments

[Derrick She...:]

Those numbers are promising for those of us in the online advertising arena, but are almost twice the predictions of eMarketer, who is estimating online ad spend to hit about 36.5B by 2011:

www.emarketer.com/Arti...

2007 Aug 07 08:36 AM

[George R:]

Advertising's new world order

I read somewhere recently that it's a battle between Google and Microsoft to determine who will be the next great advertising company in this country. Get serious ... who is buying this garbage?

I have been in and around the advertising business for my entire life. In fact, I am a third generation graphic arts designer ... only my specialty is digital. My grandfather started making a living in the ad industry in 1918, at the age of 19. His son followed. Both of my brothers and my sister have spent most of their life in advertising as well. My nephew is now attending one of the most prestigious advertising graduate degree programs in the world ... and is knocking them dead. Even my 16-year-old daughter has the knack.

The advertising industry demands perfection ... and vision. It tries to strike the perfect balance between super creative people, media experts, business people and account executives. While it sometimes stretches the norm and produces an ad like the infamous Apple attack on IBM, or the new GoDaddy models trying to host your web site accounts, it always plays within the rules. If it doesn't, you, the consumers, will let them know. You don't see laws being violated every single day by these agencies ... whether they relate to smoking prohibitions, pornography, blatant racial prejudice, or generally offensive materials of any sort. You make a mistake like Don Imus and "pow", you're taken off the air. Your advertisers dump you. And you certainly don't steal other people's work. Words ... images ... music. The industry has for the most part learned how to protect its own.

Social responsibility, respect for individual creative skills, and copyright protection have become a way of life in this industry. And now targeting advertising can be delivered to us on the device of our choice (mobile or static) and exactly when we might want to see, or hear, it. How exciting?

But it's not all about the bucks, folks. Advertising requires a degree of class ... sophistication ... social responsibility ... and an understanding of what is visually appealing and what is not. How many flashing, hoping, beeping, or honking pop up ads can someone watch before the device ends up in the bottom of the lake in a fit of rage, anyway?

What advertisers in their right mind are looking to recruit Michael Vick these days ... and we won't know the certainty of that case for many months to come. Even the slightest hint of cruelty, or lawlessness, can set a concerned advertiser, and its clients, into an uproar. The established rule has always been to avoid controversy at all costs. Let the journalists do their job on that front ... not the ad agencies.

The technology industry is entirely different. It thrives on controversy. Whether it's Microsoft stealing its ideas for Windows from Apple, or Apple stealing its interfaces and designs from HP, they are all roughly the same. It's always been that way. Try to get away with anything you can until the government authorities threaten to shut you down ... or, worst yet, put you behind bars. And if you accumulate enough cash money in the process, you can even fend off the government if you choose.

I know. I went to work for IBM in the mid-70's. Almost got disinherited by my "advertising" family in the process, but there I went anyway. We weren't taught creativity much at all in those days. It was more FUD than anything else. For those of you new to the industry, that's Fear, Uncertainty, and Doubt. "If you don't pay three times as much for this IBM system you are likely to lose all of your data ... and then your wife ... and eventually all of your children." IBM finally met its match in the 80's and took a dive from grace. They fell asleep at the wheel. I call it "we're #1 syndrome".

Then Microsoft took over. Predatory business practices ruled the roost. "Bundle this or we'll squash you. License us your ideas for pennies or we'll steal them anyway. Antitrust issues be damned. We are much better pitch men then you folks will ever be." Never had a company make so much money so quickly. "Hey, this controversy stuff isn't all that bad, now, is it?"

Then came the 90's. The decade started off with a strong rumor that a guy named McAfee had invented a cure for the computer virus (Michelangelo) that many thought he invented in the first place. And both the disease and cure spread like wildfire. When I saw him being interviewed by Bryant Gumbel on the Today Show I knew we were in for big trouble. The technology industry has never been the same. These software engineers are sure smart, but should they really be allowed to operate outside the law of the land? I don't think so.

By the end of the 90's, the Internet had taken hold. And every two-bit pirate want-a-be in the world was now an official publisher. You could go public by selling air, but stealing other people's property, selling polluted air, and then recruiting an audience to your party, or new community as they called it, was much more exciting. Business ethics be damned. The advertising industry was supposed to attend and sponsor the feast as well, but few quality firms participated at this early stage. Something didn't smell right. Tell me again why "eyeballs" are more important than "profits"?, a few from the old school would quietly whisper their concerns for fear of being heard and considered to be behind the times. No riches were reserved for dinosaurs in this new game.

I found it almost too sad to watch as many of our modern day business "heroes", like GE Chairman, Jack Welsh, and NBC Chairman and CEO, Bob Wright, got snookered by some of these new Internet visionaries, and convinced their advertisers to tag along. They weren't about to miss out on this new "zero gravity" wave ... whatever the heck that meant anyway.

So now the dust is finally settling and Web 2.0 has brought about a new world order. Power to the people. Controversy brings eyeballs and is sought after now, not avoided. Social networking is hot, buying goods via auctions over the Internet is in vogue, and user supplied content is virtually uncensored ... all of our norms are starting to change. And the software engineers and scientists out at Google have finally figured out how to dupe Madison Avenue, not just Wall Street, out of its money ... let alone the poor small business out there on Main Street!

Google refuses to follow the standards of objective and straightforward journalism and guess what ... journalism has started to die. Google unilaterally decides to digitize every single book they can get their hands on around the world without the copyright owners' permission ... and guess what ... the book publishing industry turns into a steep downward cycle ... if not a tail spin. Newspapers are all selling out, if not giving up. Google pays $1.65 billion for a start up company called YouTube, that, by and large, uses stolen property to attract its customers. Technology companies agree to censor content in China while the Chinese government applauds the fact that its piracy rate is now only slightly above the 80% level. Kids get thrown out of fraternities if they are found actually paying for music or movies they download online ... let alone using e-mail. These are no longer socially acceptable practices ... or hip. Obnoxious and intrusive advertising smears all of our online lives. Who produces these pop-up and banner ads anyway? The whole advertising industry has caved into the "science" of it all ... and it's supposed to strike a delicate balance between both science and art. Always has.

Hey, I'm not against progress. I love these search engines and what they can do. Used fairly, they can really enhance our lives. But I don't want to be exposed to stolen property every time I turn around. Are there really 147,645 companies out there giving away original content that is part of the "public domain" as Google claims? I don't think so. I'm aware that I, too, have potential liability even as an innocent user of this digital "stuff" I download online when the property is stolen. I just want to hear the truth. Who owns the content on your website anyway? Never had to worry about his sort of thing before. Responsible advertisers would provide me with a shield. I just like being told when I'm about to get hoodwinked. "Bend over ... we realize that there's no water in the shower, but our engineers are working on that one as well." Semantic water.

Go ahead, technology companies. Take all of the money. You might as well before another country like Brazil, Russia, India or China (the so-called emerging BRICs) starts to dominate the game.

But please don't call yourself an advertising company. You're a delivery medium. Stick to your knitting. We've had to solve enough problems over the years ... dealing with our own unique blend of greenhairs and greenbacks ... on our own!

Long live the power of the honest pitch! Wake up advertising companies ... we need you!

George P. Riddick, III
[e-mail]

2007 Aug 07 01:42 PM

[Derrick She...:]

George,

Interesting rant, however so-highly inaccurate I don't even know where to begin. Sounds like you're in the boat of the old-school; taking the seat on board the titanic, if you will. The ships going down, my friend.

Google is not an "advertising company." The are a technology company that provides a ad-platform for "advertisers" or search marketers to cost-effectively distribute their clients brands across the internet in highly targeted channels.

It sounds like if you have a very disgruntled view of advertising and technology in general. That's all I can really respond to.

2007 Aug 07 02:17 PM

[dembums97:]

Dear No Name:

George hit the nail on the head. A thief is a thief is a thief. OK maybe Google and its soldier Youtube don't directly steal, they just profit from aiding and abetting the thieves. I beleive it is still illegal to fence stolen goods or drive the getaway car. Of course you don't care as long as you don't pay (that you can see). Why is it any more legal to steal music online than to take the CD out of the store? Oh thats right - you are unlikely to be caught. So its OK to streal if yopu can get away with it? It about time that the army of thieves being trained by tech teurns on its masters and finds ways to take their software and services without paying, then rights management would no longer be some evil empire scheme. But I suppose you hate those sensors at stores that make noise when you try to run out the door with merchandise, no?
In favor of Artist being paid for their work.

2007 Aug 07 02:32 PM