tedstr

Media and Advertisers in Damage Control

A little bit too much chicken little here.

One needs to be careful not to group all these phenomena together. No doubt this will be a weak Q4. 2008 is already not where everyone wanted it, but then again, traditional media has been on that train for several years, even in a great economy and solid credit, on all platforms; TV, Newspaper, Magazines and Radio.

Your well written piece doesn't take into account the huge spreads in gross top line between all these businesses. A -10% decline for network TV is a loss of ~$2.0 Bil, a stunning number on top of at least the past two years of slow or declining business.

An internet increase of +9% would be + ~$1.5 Bil....slower than the ~+30% of recent years but still very very strong in any economy. Some PE compression due there but still nice businesses. Think Google at today's 2005 prices.

No doubt the loss of an auto brand (Chrysler?) will be devastating. Deflationary cycles have never been good for advertising and media as marketers put more money into price cutting and promotions and media loses its pricing power.

This time may be slightly worse, but declining commodity prices go straight to the bottom line of General MIlls and P&G and other Top 10 spenders and they will be looking to gain share from weaker competitors in any down turn and will spend ad $$ to get it.

Stay the course for the web and cable but watch out for newspapers and TV nets.

However Disney at a 10 PE is mind boggeling.

Why the Online Video Business Is a Joke

So complicated.

The simple reality is that TV advertising, that is the real big money in TV advertising, is all about brand and image. It is not about Google, lead generation, DR marketing (though there is some of that on the low end), targeting etc and the other parlour tricks of the web business. Video is about big time brand building.

When you are in that business you must have quality trusted environments and engaged users and reliable technology. Online video has none of that. Except for a few young demographic brands, the real money will not be playing with YouTube or any of the other user generated (READ: free and low cost) stuff.

Add to that that, video just doesn't fit well with the online experience. Online is forward leaning, TV is lean back. How many online video screens have you clicked away from because you just don't want to wait for the load up?

Add to that Google is not about branding. It's not in their DNA.

Online video will take a couple of billion away from traditional TV, enough to make them very nervous for the next few years, but ultimately it will be a side show.