That media is in one of its most dramatic periods of transformation is nothing new. Monday, though, marked the official beginning of the internet’s reign over print as a report shows that 2010 online ad spending will exceed print ad revenues for the first time.
According to market research firm eMarketer, 2010 online advertising revenues will reach $25.8 billion, 13.9% over 2009’s ad spending. Advertisers will spend a total of $22.8 billion on print newspaper ads for the year, falling 8.2%. Online ad spending is expected to top $40 billion by 2014, growing at double digit rates for more than three years. “This is the tipping point,” said Geoff Ramsey, CEO of eMarketer.
“Online ads, especially search ads, are increasingly seen by many marketers as a more reliable bet than print ads, which are often difficult to tie to a measurable financial result,” explained Ramsey. Their report shows that total ad spending in the U.S. will grow 3% in 2010 to $168.5 billion. Print newspaper ad spending, which fell 8.2% to $22.8 billion, is expected to continue its decline in 2011, forecasted to fall another 6%.
Media companies have been recovering from a brutal recession; belt tightening led to lower ad spending and decreased consumption. Another report released on Monday, by Advertising Age, shows that the U.S. media business recovered in 2010, with revenue for top firms gaining 6.1% during the first half of the year, compared to a 3.8% loss for 2009.
The report shows that amongst the top 100 media companies in the U.S., dubbed the Media 100, hiring has recovered, adding 4,600 jobs during the first half of 2010. The Great Recession took its toll on the media industry, with 14 of the Media 100 going through bankruptcy reorganization in 2009 and 2010, “with creditors trading debt for equity.” The last three of those, filing in November 2010, were American Media (National Enquirer, Shape, Star), Local Insight Media Holdings (a yellow-pages publisher), and Metro-Goldwyn-Mayer (MGM, the movie studio billionaire Carl Icahn wanted to merge with Lions Gate Entertainment).
Media companies have been struggling with the transition from print to online, as falling circulation isn’t off-set by growing online ad revenues. The New York Times and the McClatchy Company, two of the biggest newspaper companies, beat expectations with their third quarter earnings but fueled concern over their capacity to shovel in ad dollars. Stock in the New York Times spiked on rumors that Mexican billionaire Carlos Slim Helu would add to his stake in the company, a rumor the billionaire’s spokesman denied.
On the flip-side are companies that focus on online advertising. Yahoo doubled its earnings in the third quarter of 2010 while Google destroyed expectations, posting profits for $2.2 billion, essentially all generated from its ad services. The advent of tablet computers, along with behavioral and targeted advertising, will provide a good opportunity for content producers and advertisers to synergize from the creative destruction caused by the internet. (See Quiet before the Storm: Intel and AMD Dominate the Chip Industry Ahead of Tablet Showdown).