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Advertising Shift

AdvertisingThe Wall Street Journal reported that the Internet is poised to overtake newspapers as the second-largest U.S. advertising medium surpassed only by television. This should not come as a big surprise to any of us as we all know that print advertising has been in a nose down dive. We can see it in the thinness of magazines and the consolidations or ceased operations of newspapers.
Price Waterhouse Coopers has released a study showing that the online ad business will grow to $34.4 billion in 2014 from $24.2 billion in 2009 and that print advertising revenue dropped an extraordinary 28.6% in 2009 to $24.82 billion. The online numbers do not include mobile advertising which, although still small, is growing rapidly.
The report is especially bullish on the growth of advertising in video and and online TV fueled by the fact that two-thirds of U.S. households now have broadband Internet service. The other key factor is that today’s TV advertising  is limited in how many ads it can run since it is all in broadcast mode — we all see the same ads. With online video and TV each viewer can receive unique advertising based on their preferences. This allows the producer of the content to charge premium rates to the advertisers. Needless to say there are numerous privacy issues around this that are just beginning to surface. We will be hearing much more about that subject moving forward.
The mobile advertising market is also poised for growth as wireless networks are upgraded and more smart phones such as the iPhone and Android models hit the market. Mobile advertising in North America is predicted to quadruple from $414 million in 2009 to $1.6 billion in 2014, according to the PwC report.
Does all this mean that newspapers are dead? No. They are just moving to the Internet. A recent study by Comscore showed that 57% of Internet users in May said they had looked at a newspaper web site. During the month 124 million people looked at 5.4 billion pages for an average of 43 pages per visitor. Seems people who read newspapers online do a lot of reading and that is why advertisers are willing to pay nearly triple the average Internet ad rate for placements on newspaper sites.
Another significant trend is that more “local” news is moving to the Net thanks to efforts such as AOL’s Patch. AOL says that Patch has all the news covered — “No matter what’s going on in your community””. Patch is using local bloggers and journalists to report on news, businesses, events, photos and videos from “around town”. Needless to say this presents yet another opportunity for targeted advertising.

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