Wednesday, June 11, 2008

Follow the $$$$$

We have seen the birth of a totally new medium in our lifetime. Now it is fascinating to many of us to watch it grow, morph, and evolve into something much more powerful than we could have ever imagined. A little over a decade ago, I'd say 90% of us had little idea of what the Internet was, let alone what its potential would be. I remember thinking, "How are they going to make money on this thing?" See, it has to make money or it won't be a factor, right?

(That was especially true of Google. There were no ads on the main page! No banners! How were these goofy nerds planning on making money with this thing? Shows what a visionary I was!)

Now, it appears the Internet is poised to become the second largest advertising medium (read: "money maker") of them all, second only to that vast, all-encompassing category called "direct marketing." A recent article in MediaPost, an ad industry trade mag, says:

"According to a recently released study by IDC, the U.S. Internet Advertising 2008-2012 Forecast and Analysis, overall Internet advertising revenue will double from $25.5 billion in 2007 to $51.1 billion in 2012. During the forecast period, Internet advertising will grow about eight times as fast as advertising at large. The Internet will go from the number 5 medium all the way to the number 2 medium in just 5 years, says the report, making it bigger than newspapers, bigger than cable TV, bigger even than broadcast TV, and second only to direct marketing.

"Video advertising will be the principal disruptor of Internet advertising during this time, as its revenue grows sevenfold from $0.5 billion in 2007 to $3.8 billion in 2012 at a compound annual growth rate of 49.4%. Brand advertisers will shift significant amounts of money into video commercials, primarily from broadcast television and to a lesser extent from cable television.
Karsten Weide, program director, Digital Media and Entertainment, says 'What will (help) drive this trend is that consumers are starting to realize that, as opposed to TV, Internet video lets them watch what they want, when they want, and increasingly, where they want.'"

One point I think the article misses is that a considerable amount of that "video advertising" will be delivered by -- you guessed it -- the Internet. And that along with some other signs I see lead me to believe this estimate of Internet ad growth is very, very spectacular as it is already!

Not bad for a 12-year old!

1 comment:

Len Anderson said...

Good subject, Don, but the Internet is only the latest manifestation of communications. Both my father and father-in-law were born in the year 1900, three years before the brothers Wright made the first heavier-than-air flight, a year before G. Marconi sent a simple letter S across the North Atlantic. The both lived long enough to see the first humans set foot on the Moon, live on television, brought there by heavier-than-air rocketships.

Back some 55 years ago, I got my first introduction to Big Time HF ('shortwave' to civilians) radio introduction, all teleprinter and voice, all over the Pacific, all at the mercy of the ionosphere and its ability to 'bounce' HF radio waves. The only pictures sent were the old Facsimile still images. The communications satellite was still just a dream. There was no such thing as fiber-optic cable and ordinary wire cable under the oceans were iffy on their reliability. Transistors had been invented but reliable production was not yet perfected. Everything required vacuum tubes to DO anything in electronics.

Now we have the solid-state era leaving adolescence, have digital television (or will on February next year), personal computers that have more memory, more speed than any mainframe computer of the 1970s, cellular telephones that work almost anywhere in an urban area, small computers in every auto, GPS to find our way anywhere, Magnetic-Resonance Imaging to see inside the human body without X-Rays (thanks to microwave frequencies and electronics), all sorts of conveniences that make life much more fun to experience.

The Internet was an outgrowth of the now-almost-obsolete BBS. Since the Internet went public in 1991 we've seen a continuing growth in DIFFERENT uses of it, not just in advertising but in sales and commerce. I can buy a book through Amazon paying everything through a credit card using secure encryption, even tracking its delivery by the shipping service records. I did the same thing with my entire amateur radio station equipment for AF6AY. I've done the same with medical prescriptions; my doctor faxing his authorization over a telephone line. Once I discovered where my one-time high school steady date was located, we got re-acquainted through Instant Messenging over AOL through the Internet. We became husband and wife after that re-introduction. :-)

Advertising? Yes, we had that long ago in many and varied forms well before the PC existed, well before there was anything like the ARPANET that would precede the Internet. As long as we embrace capitalism, we will always have some form of advertising.

Having been IN the electronics industry for a half century, I've always been delighted and astounded (continually) by all the advancements that have improved everyone's life in such a short time. I've LOVED it as well as lived a part of it. Advertising? Well, it was to be expected... :-)

Len Anderson