The Number Is Up

Michael Hedges October 5, 2009 Follow on Twitter

Ad spending drives the media world. Media buyers have, it would seem, all the leverage on rates if not content. They play a numbers game. But they may find that others can play that game, too.

Actually, down goes the ad spending forecast for 2009, said media buyer Carat. Worldwide they expect a 9.8% decline in spending over 2008. Six months ago they forecast but a 4.8% drop.

“These significant revisions are not unexpected in the context of the recent volatility of the market, and represent a cautious attitude towards (ad spending) this year, most significantly in the US and Europe,” said Aegis Media CEO Jerry Buhlmann. Carat is a division of Aegis.

Of the big ad markets, Carat lowered significantly spending forecasts for the UK, the US, Italy, Germany and Russia; France and Spain less so. In Scandinavia and Eastern Europe revised forecasts show drops pushing 20%. Ad spending may grow in Asia and South America.

Oh, next year - 2010  - will be just as tough. Carat forecasts a generous 1% ad spending growth over 2009. Recovery will begin late in 2010, visibly registering in 2011. But what else will change in six quarters?

For the printed media – newspapers and magazines – it’s chilling. Ad spending with magazines will be 17.1% down in 2009 from last year, newspapers down 16.7%. Television and cinema ad spending will “hold up best, reflecting the relative popularity of cinema and home entertainment in the downturn.”

As to be expected, online advertising will be the only media sector to see growth globally; 1%. In Asia and Central and Eastern Europe online advertising will continue to zip along with double digit growth, less in Western Europe and much less in the US. The advertising has shifted.

Crowing loudly earlier last week the Internet Advertising Bureau (IAB) revealed that online advertising has overtaken television in the UK during the first half of this year. The report, prepared with PriceWaterhouseCoopers (PWC) and the World Advertising Research Center (WARC), showed online advertising taking a record 23.5% of UK advertising, besting TV’s 21.7%. The UK, they say, is the first country where more money is spent on online ads than TV. Total ad spending in the UK fell 16.1% while online ad spending rose 4.6%. Newspaper classified ad spending dropped 37.3%, print display advertising dropping 20.4%.

The results are, said IAB’s statement, “a significant restructure of marketing budgets as advertisers follow their audiences online and look to the internet for even more measurable and accountable methods.” Search advertising accounts for 59.8% of online ad spending – which includes everything from email to banners. This makes Google a bigger ad vehicle in the UK than ITV or any of the newspapers.

Media buyers and advertisers hold up “measurable and accountable” as the be all and end all of their trade. And they continue to look for absolutes, without resorting to surveys and panels. To date only the vast datasets from internet service providers of every page viewed, every click-through and, when privacy law allows, user details give media buyers their dream. With hundreds of millions of Web pages viewed compared with comparable data from other media ad buyers have enormous leverage in lowering the true currency for advertising – cost per thousand (CPM). Television CPM’s are generally double internet CPM’s. Newspaper CPM’s are even higher…so far.

Of course, every media content provider has gone to the Web. It is, most agree, the place to be. People like it. People use it. Mobile phone applications are next, also very “measurable and accountable.”

Advertisers and media buyers continue to rally support for single-source measurement. The argument has been around for decades. Technology and the Web are bringing it closer.

American measurement company Arbitron has tried to sell single-source media data; each time something gets in the way. Last week (October 1), the company announced yet another initiative to bring cross-media measurement to the media buyers. Arbitron has invested huge amounts of time, talent and money in passive electronic measurement for radio. Now it says the same technology can do more. French measurement service Médiamétrie announced a similar exploratory venture earlier this year. The objective, of course, is equalizing all media platforms.

Going to the Web – with its gigantic reach – hasn’t financially benefited most media content providers. The “pie” can’t go higher, to paraphrase a famous former US politician. Cheap search ad rates rule the day.

“We are the ones who are to blame,” said Daily Mirror Associate Editor Matt Kelly, “for allowing ourselves to be talked into letting search engine optimization become the be-all and end-all of website design, for the short-term bragging rights of monthly unique visitors, an absurd metric that values one random visit from one random Google News visitor.” Kelly spoke at a recent WAN-IFRA conference. He suggested newspapers – an idea that can be broadly applied – “concentrate on what is unique and special about our content and worry less about disseminating it to the widest possible audience.”

Most, if not all, media content providers are studying for-fee revenue models to augment, if not replace, advertising. Web integration with two-way communication between users and providers offers quite elegant technical solutions. The long-term effect could be stunning. If, as Matt Kelly suggests, media content providers find leverage in “what is unique and special” the advertising people will need to be the ones adapting to a world beyond CPM.

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