What’s the Future for Media Advertising?

Film4I’m glad I’m not in the advertising business. We think telecom is undergoing big changes, but the advertising firms that represent large clients must be struggling to know where to find the eyeballs to view their ads. The public’s traditional viewing habits are changing quickly and dramatically across all forms of media.

Not many years ago ad revenues were spread across TV, radio, and print and the big companies had a pretty good idea who was seeing their ads by demographic. But the way that people view all forms of media is changing so rapidly that it’s a lot harder to know who is seeing your ads.

Consider the following statistics comparing how people spend their time viewing different media versus how advertising dollars were spent. Both sets of numbers are from 2014 and come from Business Insider.

‘                            % of Time Spent         % of Advertising Dollars

Digital                         46.3%                                28.2%

Television                   36.6%                                38.1%

Radio                          11.8%                                  8.6%

Print                             3.5%                                 17.6%

Digital includes the web, cellphones, and all forms of digital advertising.

These percentages show a interesting picture of how people are spending their time and I think this is the first time I have ever seen this expressed in a side-by-side comparison across all forms of media. It’s obvious that people prefer digital media and spend nearly half of their media time there.

The problem that advertisers have is that there are still huge amounts of change happening within each category. For example, it looks on the surface that the amount of advertising spent on television is about right according to the eyeball time purchased. But consider the following facts:

  • The demographics for television are changing dramatically and rapidly. For example, the percentage of households of 18–24 year olds that buy a cable subscription dropped 7 total percentage points (or 12% overall) just last year.
  • The percentage of people who watch TV on a time-delayed basis is up dramatically and over 40% of TV watching is now done on a delayed basis (using a DVR or video on demand), and these viewers largely skip the commercials.

This means that the demographic for those who watch television is aging rapidly, and even many of those who watch are doing so on a time-delayed basis and skipping the ads. This has to be a huge concern for advertisers.

But there are equal issues with web advertising. One of the fastest growing categories of web apps is for ad blocking, meaning that a huge number of people are now blocking ads from showing up on the pages loaded by their browsers/devices. Studies have shown that people are capable of ignoring web advertising compared to advertising on television or the radio. They can and do read news articles or other content without looking at or clicking on any of the ads.

And so an advertiser has a very tough choice to make. They can place ads on television with its rapidly-aging demographic and quickly-decreasing percentage of people who see the ads, or they can advertise on the web where people either block the ads or become good at ignoring them.

This is all evidence that technology has given the average person the ability to skip ads if they so choose. I know I have largely wiped ads out of my life. I can’t recall having watched an ad on television this year and I very rarely click on web ads. I used to be a voracious reader of magazines and I have not looked at a magazine this year. I read a local paper every day but I cannot name even one company that advertises in that paper. The one place where ads still get to me is on the radio that I always have on when I’m driving.

The problem with my behavior (and everybody else that ignores ads) is that advertising is what pays for a lot of the content we enjoy. If advertisers eventually bow to reality and cut back on TV and web advertising then a lot of the content we like will not be produced. It’s a real dilemma not only for the advertisers, but also for the television networks and web sites that rely on advertising to fund their content.

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