Internet ad spending to swamp radio's this year; dead trees media already swamped

More signs that bode ill for legacy media: radio and newspapers appeared last week.

Spending for Internet ads will pass radio advertising for the very first time this year. Newspaper ad revenues took a precipitous dive during the same period.

According to a report by eMarketer senior analyst Ben Macklin on Forbes.com, radio ad spending in the US will increase 1.5% in 2007, to $20.4 billion, behind online ad spending of $21.7 billion. Internet ad spending is up 22% from 2006. 

In his report, Macklin points to a bright side- that over the next few years radio station web sites and online audio advertising "will be the principal drivers for radio advertising growth.”

But, he says, radio and the Internet complement rather than compete with each other. "Advertisers should not abandon radio in favor of the web but combine the two media to take advantage of the unique attributes of each."

Terrestrial radio companies like Clear Channel Communications, and Cox Radio, says Macklin, still have huge audiences, but people are spending less time listening to radio than they are surfing the Web or watching TV.

"In addition, only 17% of U.S. consumers consider radio the 'most' essential medium, down from 26% five years ago, according to a study released earlier this year by Arbitron and Edison Media Research."

The choice between radio and non-radio online ads won't be, an either-or proposition for many advertisers, Macklin said. He pointed to studies showing that consumers often listen to the radio while consuming other media and that a mix of terrestrial radio and online ads can be far more effective than online ads alone.

"There are many synergies between radio and the Internet and, for the most part, they complement rather than compete with each other,'' he said. "Advertisers should not abandon radio in favor of the Web but combine the two media to take advantage of the unique attributes of each."

This might be good news for radio marketers in the long term. But Macklin doubts these new opportunities will kick-start the radio industry out of its doldrums.

Meanwhile, the beleaguered newspaper industry is going to hell even faster.

The prolonged decline they've suffered actually accelerated in the second quarter ending June 30.

While newspaper ads are is still the largest piece of overall U.S. advertising spending, advertisers are steadily shifting money out of print and onto the 'Net as people increasingly go online for information and entertainment.

Newspaper ad revenue totaled $11.3 billion, down 8.6% from the same period last year, marking the fourth consecutive quarterly decline, following a 4.8% fall in the first quarter and drops of 1.5% and 2.2%, respectively, in the third and fourth quarters of 2006.

Comments

[sparky]

Not surprising...as I have commented before, the internets have opened up a whole new world of radio for me and I listen to everything from the BBC to stations in NYC and Canada.
I really miss those wonderful in-depth stories I used to get to read in the sunday papers...they have been harder and harder to find among all the stories that use only one or two of the "5 W's" of article writing.
So I pick and choose national and international newspapers from the links at CommonDreams.org to get different viewpoints and quality of reporting.

[joanie]

Damn. I sold my Avenue A thinking no one would tolerate ads on the internet.

Story of my life in the stock market. Stick with real estate, joanie.

Saw Sicko at the Crest earlier. Awesome. Michael Moore is a genius. Pure and simple.

[mark]

I am missing soomething here Bla'M; you say newpaper ads are the largest chunk of the ad pie, yet you say radio is twice this, and surely TV must be a bit higher - which is correct?

Newspapers are dying a slow death- declining readership, slowest to end user with news, and not least websites like craigslist are pure inhaled plutonium to them. The internet made my business possible - no way I could do it by radio or TV, and the trade rags are hideously expensive for the amount of exposure.

[Andrew]

All the talk of synergies and complimenting mediums seems convuluted. You can't read blogs while you drive and old people don't know how to use the internet and don't have the fortitude to cancel their news paper subscription if they did, so what will happen is usage of newspapers and radio will continue to drop until the potential losses are realized, then it will plateau.

Newspapers should be worried because the old people of today will be gone tomorrow and radio should be worried because satellite radio will continue to expand, and local companies that need to advertise to local listeners will call the satelite operator headquarters on the east coast to place their ad in the proper zone. It's a lot more efficient that way, it has to happen. The redundancy of the current radio paradigm can't last in the face of cheaper, higher quality alternatives.

[sparky]

Andrew, my 80 year old mother would slap you upside the head for assuming she doesn't know how to use the internet...lots of seniors are very active users of blogs, email, chat rooms and just plain old surfing. There has been a whole new section of MySpace and Facebook created for seniors.

Podcasting and the ability to play your MP3 player through the car radio also makes for even more choices while driving.

Newspapers should be worried because of the quality of their product and the same with local radio.

[chucks]

We still find that local radio gives the best bang for our advertising dollar. Being a local mom and pop operation, we can target our budget directly to our potential customers.
Newspapers are to expensive, combined with decreasing readership. A little newspaper is ok to reach the few people who are dumb enough to subscribe to them, but advertising on local radio to stations that attract our kind of buyer is still the best.
I do not know what the future holds. Beyond maintaining a quality web site, the internet does not yet appeal to us.

[Andrew]

Radio advertising should always be effective, you catch people who aren't doing anything else and uninspired to change the dial, but from a production standpoint it seems costly and redundant to have hundreds of country music stations all duplicating eachothers efforts when the product is identical. I think cheap or free satelite radio with commercials and some localized content will take down a lot of radio stations.