Nov 062006
 
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Are we already past the tipping point? Google’s ad revenues in the UK overtake that of Channel 4s. If that isn’t enough, 16-24 year olds in the UK are watching 7 hours TV less a week than the average.

THe Tipping Point

I am not sure why traditional broadcasters still say that the web is there to support and enhance dominant TV and Radio output. At what point do they sit up and listen. I have been running another LAMP lab in Tasmania and I was surprised when project teams still talk about a big call-to-action for viewers as ‘getting on TV’. This is nostalgia for pre 1995 when mass media was the Goggle box. But now mass media is the Google box. If you dont measure it in falling TV numbers (and no it will never die, just fade out to background radiation) then how about measuring in hard cash, advertising revenues. A couple of articles point out that advertising revenues in the UK for Google are bigger than the TV advertising revenues for on of the biggest commercial channels Channel 4. More importantly at the current growth rate within two years online advertising in the UK will be bigger than the main cFTA (Commercial Free to Air) consortium of ITV who rake in 1.7 billion GBP.

The BBC Article “Who is watching the viewers” suggests that the 5% of total ad revenues that Google picks up in the UK (�900m) is not really that significant. Given that it is more than Channel 4’s total ad income, C4 CEO Andy Duncan in his Reuters interview (covered here in the Age) thinks differently

“(This) reinforces that significant structural change has been going on and will continue to go on,” Duncan said in reference to the UK advertising market. “Some broadcasters have been very slow to realise this. The industry as a whole is frankly rather backward looking and is perhaps underestimating the scale of change that is going on and the pace of change.”

My friend Will Cooper of Informitv reports also on Lord Currie of Ofcom in the UK with some cautionary words for those still doubting the quickening pace.

He said the �on-demand� delivery of services is becoming a reality for younger consumers. They expect to watch television programmes and listen to radio stations which interest them, rather than just accept what is on at the time…this generation will be parents with young children �for whom broadcast television will have ceased to be the lead medium. As broadcast television overtook radio, then newspapers, so internet-delivered video content will overtake broadcast television,� he said. �Advertising will follow suit, causing shifts in traditional business models.�

OK 60% of online ad revenues are based around search and many think that makes it in some way invalid. A bit like those in the 80s who said people would not want to walk around with a telephone or music system attached to them. What this is about is personalization. Relevant ads, based on your interest at that moment, recommended product and not scatter gun irrelevance. I have a personal issue with the irritation and annoyance of TV ads to the point at every break I HAVE to turn the sound down now. Why should I be subjected to 5-10 minutes of ‘noise’, that has no meaning to me. This is a dinosaur about to topple over. The way TV is holding on to its old models, not investing in innovative new web models (and no sticking a bunch of video on the web with embedded ads is NOT innovative) and generally burying its head in the sand reminds me of Al Gore’s ‘frog piece’ from his recent filmed ‘keynote’ presentation (aka as ‘An Inconveniant Truth’).

If a frog jumps into a pot of boiling water, it jumps right out again, because it senses the danger. But the very same frog if it jumps into a pot of luke warm water that is slowly brought to a boil, will just sit there and it won’t move. It will just sit there even as the temperature continues to go up and up. It will stay there until.. until.. it is rescued. It is important to rescue the frog. The point is this: Our collective nervous system is like that frog’s nervous system. It takes a sudden jolt sometimes before we become aware of a danger. If it seems gradual, even it is really adapting quickly, we are capable of just sitting there and not reacting.

OK so the media ad pot may not be boiling just yet, but there are bubbles forming on the bottom. The question is what happens when online ad revenues are bigger than commercial free to air TV. Are the broadcasters sitting in hot water, waiting to be rescued. How will the quality of TV suffer in the meantime? Also will the money dry up so quickly that investment in alternatives are left too late? Again from Reuters, Andy Duncan…

…said he expects the TV advertising market to fall by 6 to 7 percent for 2007, and broadcasters needed to put an emphasis on quality programming to prevent viewers from drifting to other forms of media. The Internet Advertising Bureau (IAB UK) said last month that online advertising spending in Britain had jumped 40 percent in the first half of 2006 compared with a year ago, taking a market share of 10.5 percent.

But that comes back to my point again. At what point will ad revenue fall off mean that there is just no money to invest in new form programming, more immersive ‘game-like’ services, experimenting with inventive cross-media services and creating more than, value-add web services. I think that being complacent and waiting for the Commercial Free To Air ad drought before any kind of ‘meaningful’ action is a very dangerous game and back to the metaphor, like global warming, we are already past the tipping point.
Posted by Gary Hayes © 2006

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