Something's gotta give. The traditional 30-second spot is becoming more expensive every year, with record fees being paid during the Super Bowl and American Idol. Yet, TV's reach and effectiveness is decreasing. Was TV such an amazing deal in previous years that it still makes sense nowadays to budget huge sums for television advertising anyway?
According to a survey by the Association of National Advertisers, 78% of advertisers say that TV advertising has become less effective during the past two years. They largely blame video-on-demand and Tivo for this, which obviously has an impact. But so does the fragmentation of television and the Internet. Think "micro"... micro-communities, micro-advertising, etc.
It's just common sense. When there were 3 major broadcast networks, a few local channels, and that was it... well of course mass advertising was going to work. But there will never be a MASH moment again. It's VERY rare that a single event brings the entire nation together (and when it does, it's usually some sort of tragic event during which you wouldn't want to advertise.) There is so much choice now, which is great for consumers but not so great for traditional advertisers.
A new way of thinking is required. And it's starting. The leading edge is jumping on the bandwagon and it's just a matter of time before everyone else starts to catch up.
User-generated online media (all that "Interactivism" stuff we talk about) is growing extremely rapidly. Ad spending on blogs, podcasts and RSS feeds grew nearly 200% from 2004 to 2005 and is projected to grow another 145% in 2006. Research done by PQ Media suggests that the root causes are audience fragmentation, the ineffectiveness of traditional advertising, and the desire to reach the 18 - 34 market. Among the paper’s findings:
- Blog advertising comprised over 81% or $16.6 million of total spending on user-generated online media in 2005, but blog ads will comprise only 40%, or $300.4 million in 2010
- Podcast advertising is rapidly growing. In 2005, such advertising accounted for only $3.1 million in spending but is expected to grow to $327 million by 2010, which would make it larger than blog advertising.
- Spending on RSS advertising is currently tiny ($650,000 in 2005) but is expected to grow to nearly $130 million by 2010.
- Total spending on user-generated online media is forecast to grow at a compound annual rate of 106% from 2005 to 2010, reaching $757 million by then.