The Battle for Digital Ad Dollars

September 25, 2012

The fastest growing segment of the advertising pie is lumped into a category we now call “digital.” According to the latest report from the Internet Advertising Bureau and PWC U.S., “Internet” advertising revenues alone were $8.4 billion for the first quarter of 2012. That was a 15% increase over the first quarter of 2011.

Many different media want to increase their slice of this large and growing revenue pie. The question is, who has the advantage in this relatively new advertising space?

We think it’s important to look at some history in order to help us figure out the future.

• From the time the printing press was invented, printed content ruled. Other than speaking on a stage somewhere, it was the only way to communicate the content of the day. Newspapers owned and distributed a large portion of the content that existed before the invention of electronic media.
• When the first licensed radio stations came on the air, much of the initial content was directly from the newspaper, sometimes even read verbatim. After all, the first radio companies were sometimes owned by the newspaper publishers. Then someone figured out that good radio content didn’t have to be that way. They developed radio shows, and that content was the winner. No one continued to read the newspaper on the radio anymore.
• Then TV came along, and the first thing they did was put radio shows on television. In the beginning, viewers would see a person standing behind a microphone reading the script of the show, maybe with a sound effects person in the background. Then someone figured out that good television content didn’t have to be that way. They created sets and once the equipment allowed for it, they went on location and the shows became something entirely new. That content became the winner and no one continued to read scripts in front of the camera anymore.
• Fast forward 50 years and the Internet came along. So what happens? Newspapers put their printed content on the Internet. Radio stations put their audio content on the Internet. TV stations (once broadband came along) put their TV content on the Internet. Just as in the past, that content will not end up surviving in this new medium against the new competition. The winners will embrace the fact that the Internet is a full-on two-way street. Content needs to be created that takes advantage of that new interactive capability. It’s not much of a stretch to predict that the most interactive content will end up being the winning content.

The beauty is that existing electronic media companies have a huge advantage over the digital pure-play operators. They have talent and content that can be repurposed, leveraging that expense over multiple media distribution platforms. They also have something that no pure-play ever starts with – an existing audience to engage with on all of these new media platforms.

It’s a lot of change to manage and we wish you the best of luck as you and your teams race to figure out the ideal content to provide on the multimedia, interactive platforms of the future.

-Marc Greenspan, Partner

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