Saturday, September 6, 2014

Digital Ad $ Grows, But At What Cost?

Digital ad revenue is expected to overtake ad revenue totals of any other type of media – radio, print, TV – by 2017, according to Magna Global, as reported by The New York Post.  TV has long been the leader in ad revenue but digital is on track to hit $72 billion and account for 38% of all ad dollars, bypassing TV’s $70.5 billion in just a few short years.  But what does this mean for the media industry?

It’s not a surprise that online ad revenue will rank No. 1 – only that it’s taking this long.  Think about how vast the digital world is – over a billion Web Sites and all that social media – YouTube, Facebook, Twitter, Pinterest, Instagram – and tons of blogs and podcasts and all of the big-traffic sites like and all of the sites of traditional media and all of the streaming content.  One would think online ads would be through the roof.  They aren’t.  Why?  Because of pricing.  The digital world isn’t getting the big bucks of old media.  Perhaps it will, once old media declines further, just as Amazon will raise prices once it further weakens its brick and mortar competition.

But what’s interesting about online media is that the profit margin for ad revenue should be greater than traditional media.  Whereas, say, Playboy or Cosmopolitan or The LATimes have to pay to print the ads – on top of acquisition cost, overhead cost, etc., other sites may not incur the same costs, though many incur costs for technology, employees, and in some cases, to obtain the rights to content.  So much of big digital runs on red ink and borrowed money but sites like FB or Twitter get positive buzz and their stock prices go up.

The bigger issue is two-fold.  First, as digital grows, will ad fees increase?  Second, is the ad pie growing overall or is digital merely siphoning money that would otherwise go to other media?

Digital advertising can come in many forms, and it can be segmented, measured, and priced accordingly.  But one wonders if people experience ads online in a way that leaves the same impression as ads in other mediums do.

For instance, if you are thumbing through the printed NY Times and come across a full-page ad, won’t that make more of an impression on you than if you see something listed to the side of a website?  Not only does that physical ad have a better chance of getting your attention, you assign it a higher value simply because you know such an ad costs a lot of money and makes a statement.  I don’t know of the equivalent online.

In any event, the ad dollars are up 20% since the lowest depths of the Great Recession and are back to where they were pre-recession – which still means more growth is to come.


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Brian Feinblum’s views, opinions, and ideas expressed in this blog are his alone and not that of his employer, Media Connect, the nation’s largest book promoter. You can follow him on Twitter @theprexpert and email him at He feels more important when discussed in the third-person. This is copyrighted by BookMarketingBuzzBlog © 2014

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