BUSINESS BLOGS
BUSINESS BLOGS
category: business
04 Jan 2008
related tags: Internet & Web | Video | M&A | Search Wars | TV Networks |

Every time I think I am being bullish on Web and online video growth rates, something comes along that makes me realize I am actually being conservative.  Case in point:

THE U.K. NEXT YEAR WILL become the first major economy in which the Internet overtakes television as the No. 1 advertising medium, according to a new forecast from WPP’s GroupM unit. The new prediction follows a report released last month by GroupM, the world’s largest buyer of media, which estimated that the Internet would become the dominant ad medium in Sweden during 2008, and that the U.K and Denmark were “likely to be the next in line.” GroupM now forecasts that the U.K. will likely pass that mark by the end of 2008 when the Internet will account for 24.8% of British ad spending, just behind a projected 26.0% hare for television.

The forecast assumes Internet ad spending in the U.K. will grow 30.8% during 2008 to $6.7 billion vs. a 1.0% rate of growth for television, which will climb to about $7.0 billion. The GroupM analysis assumes online ad spending would need to climb 6% or more during 2009 to overtake the market’s television advertising volume.

Last month, GroupM issued a report predicting that the Internet would reach a double-digit share of worldwide ad spending for the first time in 2008. The report estimated that search would comprise between 65% and 70% of measured online ad spending in 2008, up from 50% in 2005.

This is pretty impressive and actually in line with two analysis I did:

When will Web Advertising Surpass TV

When will Online Video Advertising Surpass Search Advertising

I could be wrong, but I think TV advertising is going to get crushed sooner and faster than print advertising did because what is digital has a higher beta.  In other words, the multiplier effect is stronger…  Bear in mind that my growth rate for search is lower than what many studies predict, many have search growing to $40B by the time I have video growing to cross $30B… but the point is: online is where the action is.

One reason why online will be far bigger than we imagine is that the digital media bug has caught on with traditional media, so pretty soon, calling anything old or new media, traditional or digital will be pretty non-descriptive.  In fact, as traditional media continues to buy more and more assets online and leverage these with their networks of people, sales channels, etc., expect more and more money to be funneled online.

Indeed, some of the offline units will shrink, but media companies have a simple choice: accept this inevitable outcome and thrive over time, or fight it and die.

The Web is a bastion of efficiency and all it does to the media world is remove a lot of waste and excessive layers.