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Earlier this week, an article entitled "Internet Ad Spend Creeping up on TV" appeared on ClickZ.
"Internet advertising revenue is growing at a faster clip than television advertising, which could slowly begin losing its global share of revenue in 2007, according to the latest ad spend predictions from ZenithOptimedia."
It also went on to say:
"TV is expected to gain 0.2 percent of share in 2006, while Internet will add 0.3 percent. The turning point for TV could come in 2007, when it is expected to lose 0.1 percent of share, while Internet spending gains by 0.3 percent."
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All of this is likely and I would not be surprised if the Internet actually gained more and television lost more than was sited in the report. The reason is simple enough: television is a mass medium whose effectiveness is diminishing each year while the Internet is a targeted medium whose growth is almost assured.
I am looking at a different story, however, one that is missed when reading the clinical statistics of the ZenithOptimedia report. It takes a little digging to see it coming.
Digital media is changing television dramatically and TV is in the process of breaking up into two distinct camps. I would expect that in the next few years we will be talking about the two as separate advertising mediums as well. In one: the traditional 30-second commercials that are inserted into linear network streams. This is what everyone visualizes when television advertising is mentioned today.
In the other camp, new non-linear inventories will be created by video on demand (VOD) and internet protocol television (IPTV). What is interesting is that, instead of being a mass medium like traditional television, it will have more of the characteristics of the highly targeted Internet. It would not surprise me to see VOD advertising grow from almost nothing today to $19 billion by the end of the decade. (read this analysis). Don’t believe me? Then read Bob Garfield’s Chaos Scenario in AdAge. Or Accenture's recent report predicting that ad-skipping on traditional television could cost linear television $27 billion over the next five years.
When this much money is at stake, well-positioned companies will rise up and capitalize on the opportunity. Some names are obvious: Comcast and Time Warner. Some large companies might join the list: SBC and Verizon. But many new ones will also emerge since the Internet itself will make that possible.
That means that it is possible a VOD advertising medium to pass up the Internet inside of 7 years. That is an idea that I find fascinating. It also is a story that should be rich in venture capital and new start ups. Basically, I am predicting another round of wild rides that is every bit as significant as the Internet story has been so far.
If you are interested in this topic, I will continue to post the news and opinions that will chronicle this change.
