Jul 162006

Update article: Networks in crises – from the Australian about the tsunami about to hit Oz shores, a region entrenched in the old advertising model…

original post…
Two articles about the fraught changes in advertising caught my attention this week that reinforced many things that I had been talking about during a major curriculum review at the Australian Film and TV School, namely the decline of traditional broadcast TV ad models to such an extent that budgets for film and TV across the board are going to drop considerably. I know that I and many other thousands have blogged about this over the past year or so but I think as we are at the tipping point, and there are a few who still hopefully believe the balance may go back the other way perhaps time to re-blog. This first item from the Sydney Morning Herald (Meet the Always on Generation) talks about the always on generation and includes some useful statistics about the transfer of advertising models, as well as generation y and tech habits (which I will not cover).

Internet advertising has also seen exponential growth as advertisers go online. The Australian online advertising market grew nearly 50 per cent last year, with $605 million in revenue. The figure is expected to increase significantly to more than $1.5 billion by 2009, according to a report by research group Frost & Sullivan.
The report attributed “the online industry’s growth to the rapid migration of eyeballs from traditional media to the internet and the increase in online media consumption across all demographics; strong uptake of broadband by Australian households; the evolution of wireless technologies such as 3G, which allows for digital advertising across both online (large screen) and mobile (small screen); and an increase in online spend by major advertisers and agencies”. (snip)
According to Bob Peters, young men are the hardest market to reach as they watch less television than young women. Online gaming sites are enormously popular with this group; for example IGN Entertainment, which has sites such as ign.com, and gamespy.com, says it averages 15 to 20 million unique users a month, 91 per cent of them male, with an average age of 22.
Brand communications specialist Neal Latto says that, while gaming offers a lot of exposure to advertisers, the younger generation of gamers are “pretty cynical” about product placement in games.

That last line must cause ad agencies blood to run cold as they see decline in TV ad sales but the potential saviour online gamers being pretty sensitive (as in my earlier posts) to ads in their ‘worlds’. One can therefore see the real ad battleground as being the variants around Google ad words and as much top and tail short form ads inside online video content as possible. This was echoed earlier in the Hollywood Reporter article TV in Trouble without Revamped Internet Strategy – which says that everyone agrees that the crude measurement system of broadcast TV means there is no turning back to that model as advertisers insist on measurement now as well as the younger generations cycnism about advertising generally:

Already, the only way advertisers can connect with large numbers of key male consumers ages 18-35 is by following them to the many media platforms and devices they are using: downloading and playing video games, movies and music, and interacting with peers on social networking sites. The fact that television does not widely have the process or technological infrastructure to go there is sending shock waves through an advertising community that always has relied on mainstream media for neatly packaged mass audience sales bundles.

There has been much said about the need to follow consumers around their media platforms and I have talked about it at great length to commercial free to air broadcasters who perhaps saw it as a nice strategy but unworkable. They must think more at a personalised level across platforms they currently have interests in – it is an absolute must do if they are to survive the decade. The report talks about the internet ad spend around search in the US almost doubling over the past year yet against this the ‘heritage’ media broadcasters sit and do nothing or dip their toes into a raging torrent of change:

By comparison, broadcast and even cable television overall are in stagnant to declining ad spending modes that should surprise no one.

In recent years, most of the larger media company owners of these traditional properties have arrogantly ignored warnings to reinvent their system of measuring, pricing and selling advertising before it is consumed by the new interactive mantra. “The $61 billion consumers are expected to spend on new media products from iPods to DVRs will seriously erode what remains of broadcast network viewing and advertising strength,” I wrote in this column early last year. (snip) internal consultant Tim Hanlon observed: “Given fragmentation of media — the global media companies can no longer be relied upon to aggregate consumer behavior in mass market hits.” Their consensus: There is a dire need for the immediate construction of a fully interactive, universal television advertising infrastructure overlay that will bridge so-called new and old media and, more importantly, advertisers and consumers. Without it, television is destined to only flagellate, not thrive, in this new-media world.”

I can only imagine the commercial broadcasters are holding on simply because of the massive profits they still make against investment and of course we will see a decline in the quality of programming as they buy even cheaper and load even more ads until the bubble simply – deflates. When that will be no one knows, but I suspect it will not be a dot com blowout rather a slow, invisible leak followed by a pull over to the side of the road when they realise their tyres are flat. At the moment they dont seem to have any spares in the boot.

Posted by Gary Hayes ©2006