Digitization's Reach: The Transformation of Advertising Revenue
Jan 24, 2012
And advertising money shifts to digital, surpassing print for the first time in the US - a sign of traditional companies needing to adapt.
According to a study by E-Marketer, 2012 will mark the surpassing of online advertising over print for the first time in the United States. The phenomenon had already occurred in England in 2006 (a smaller market, more mature in terms of the Internet, more homogeneous and more consolidated) and confirms the predictions that have been made for a few years. The growth of online spending by agencies in the US increased 23%, while print has been practically stagnant for years. And the next target of digital is TV, which should succumb, it seems, before the end of the decade.
The predictions of the E-Marketer study follow the aggressive growth of online in recent years. The movement was expected and should intensify over the next few years since, in addition to print, TV is also losing ground to digital media (Americans started to spend more time on the Internet than watching TV in 2008). The switch was not faster because of the influence of print media with agencies and the resistance of the agencies themselves to try to mess with a market they already knew and dominated.
The two graphs show how TV and print advertising has been stagnant over the years and how the projection suggests that they will continue like this. This stagnation is due to the fact that TV is already a saturated market and, barring new technological discoveries, it has nowhere to grow. The advertising market, however, has a growth forecast of about 6%, if considered globally. In Brazil, which is a less mature market and has a much larger communication company than the others (and which expands its power through its political influence), the migration of advertising money tends to be slower than in the US and Great Britain.
This movement is the umpteenth symptom of how traditional companies need to revolutionize their processes. Until now, the aversion to changes always occurred because the large advertising revenues scared newspapers and magazines from not being able to compensate for the lost revenues in print with the new ones online. Now, with the revenue changing medium, there is nowhere else to run. Even so, like the frog that doesn't jump from the pot with boiling water, everything indicates that traditional companies will let their situations worsen much before promoting more drastic changes (ranging from newsrooms to commercial departments, especially through the executive instances that hold the highest salaries). At least it won't be for lack of a signal.