Let’s find out. Here are the US advertising revenue figures published by the Newspaper Association of America (NAA). You can see the full data sets online here.
US Advertising Trends 2000-2007 (Source:NAA)
As you can see for the period 2000-2007 Direct Mail had an even bigger market share of the Advertising Spend in the US than it did in Australia. It had already passed newspaper advertising revenues earlier in the decade.
What’s more it was growing more rapidly than the Internet over the same period.
From the period 1997-2007 Internet Advertising Revenues in the US grew by just $10.5 Billion. Direct Mail Revenues grew by $26 Billion to $60.2 Billion. That is why I believe the fall in long term Newspaper revenues can be linked more closely to the rise of Direct Mail than to the rise of the Internet.
So how about TV? Is the internet responsible for the decline in TV advertising revenues?
Well as we can see in the chart Pay TV also displayed much stronger growth than the internet over the same period. This would suggest any fall in TV revenues can be attributed primarily to the growth in Subscription TV and not to the growth in the Internet.
People aren’t switching off the TV to go online they are switching off the TV to watch Subscription TV.
So clearly the internet isn’t the giant killer it frequently claims itself to be.
I suspect the reality is the Internet hasn’t taken significant market share off any of the old media. What it has done has fuelled new growth in the US advertising market by creating a niche interactive advertising platform that appears to be more attune to the needs of the SME market than mainstream media (e.g. TV, Radio and Magazines). Perhaps the only comparative media successfully targeting SME’s is the Yellow Pages and Business Directories.
The DIY search engine, social media and banner advertising platforms are after all more attune to the needs of the SME market than corporate media buyers.
The question is: How big will this niche market become and is it sustainable?
What interests me moving forward is the impact that mobile advertising will have on Internet advertising revenues.
The Morgan Stanley’s Mobile Internet Report released last year indicated that Advertising accounts for 40% of the revenues on the internet but only 5% of revenues on the Mobile Web in Japan. So the Japanese experience suggest that mobile advertising may not be the growth market the industry is looking for.
However if mobile advertising does take off it will do so because it is much more effective than the internet at search engine, social media and location based advertising. This suggests mobile will take market share from the online sector rather than the other media outlets. After all why would you spend the money online if the mobile phone is a more effective advertising platform?
I guess this is why Google is busy buying mobile advertising networks and trying to turn web traffic into mobile customers.
Telenow.net
April 25, 2010
Google breaks AdMob even by 2014; makes a $6B killing by 2020: Mobile Advertising says a report by Telenow.net. In light of recent due diligence by FCC on this acquisition this hs special significance. Do you support this acquisition?
Read the full report @ http://telenow.net/Google-Admob-acquisition-FCC-mobile-advertising
Perry Rush
January 16, 2011
You say that “if mobile advertising does take off it will do so because it is much more effective than the internet at search engine, social media and location based advertising”. However for me the biggest obstacle of mobile browsing is the size of the mobile phone’s screen. It’s just too small that I prefer to do the search on my laptop, check out photos of products and stuff.
Perry Rush
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