Mass media at the tipping point
But the day is coming -- and it may be closer than you think. Only institutional inertia -- the fear of change and, significantly, the fear of making the wrong change -- has kept advertising revenues as stable as they have been to date.
Shrinking ad budgets, dissatisfaction with the expense and accountability of traditional mass media, and rising confidence in the interactive media are steering marketers away from the assumptions and conventions that historically have governed their behavior.
Generations of marketers resigned themselves to the inherent inefficiency of one-size-fits-all advertising best described by John Wanamaker in 1886, when he said "I know 50% of my advertising is wasted but I don't know which half." One hundred years later, the Internet and other interactive media have made the answer, and the alternatives, abundantly clear.
Sophisticated marketers now know they have to allocate ever-larger portions of their budgets to media that can be targeted, efficiently purchased and measured. The issues for them are not whether to do so but where, when and how much. As their confidence and competenece grows, the velocity of change will accelerate.
Half of senior marketing executives already plan to spend less on newspaper advertising this year than they did a year ago, according to a new survey by the Association of National Advertisers, a trade group representing 8,000 companies buying $100 billion a year in marketing communications. The poll found more than a fifth of the advertisers planned to put some of their print dollars into other media. Significantly, three-quarters of the marketers will shift their former print dollars to online.
Television advertisers are alarmed by declining viewership, as well as Accenture's projections that 40% of U.S. households will own digital video recorders within four years and that nearly three-quarters of DVR users zap most commercials into oblivion. iPods and other mobile media threaten the radio business by giving consumers extreme personal choice, including the ability to program endless hours of customized, commercial-free fare.
Marketers also know the mass media are a mismatch when it comes to reaching younger consumers. As discussed here previously, young people, who on average spend more than 8.5 hours a day on media, devote a piddling 43 minutes to print.
Although they love music, tech-savvy young people are increasingly likely to pick and choose among MP3s and podcasts, instead of listening to the radio. Although they spend appalling amounts of time watching TV, a growing number of young people take control of the experience by clicking past commercials on multi-channel TV, renting DVDs or even making their own movies.
Until approximately 10 years ago, newspapers, television and radio were not merely the best thing available to advertisers, but, practically speaking, the only thing. Not any more.
In the five years ending in 2004, the market share of the three principal mass media (illustrated below) fell at the same time that total U.S. advertising spending rose 19% to $201.6 billion. Newspaper share is down 18.8%, broadcast TV is off 15.2% and radio is down 5.6%, according to Universal McCann, the ad agency. The shares of the targetable media, by contrast, have grown by 2.4% for direct mail, 79% for cable TV and 204% for the Internet.
Markets, as J.P. Morgan wryly observed, tend to fluctuate and the advertising market is no exception. It is possible, therefore, that the data in any comparatively short period are affected by fad, fancy or atypical economic forces.
But I believe we are at or near a point of profound market disruption, which is not being adequately detected by the analysts who continue to package such prosaic projections as future want-ad demand and the seasonal pricing of prime-time spots.
The cascading confluence of events suggests the mass media model is riding a roller-coaster that is headed inexorably down. And the G-forces are accelerating.