Advertising booms (but not if you’re a newspaper)

When the recession came along, advertising expenditure plummeted. The worrying question for the ad agencies was if this was a temporary state of affairs, or the sign of something deeper. Would marketing money return to all media, or just a few? The answers are becoming clearer.

According to a report in The Economist advertising is still leaving newspapers, particularly regional ones. It is returning only slowly to magazines. Billboards are faring better. But the biggest winner is television—in most countries the main advertising medium.

Early in 2009 it looked as though ITV might go bust. It is is now much healthier: its advertising revenues shot up by 18% in the first half of this year. At CBS, an American broadcast network, turnover from ads rose from $4 billion to $4.5 billion in the same period. Shares in both companies have more than tripled from last year’s lows, although they are still well below pre-recession peaks. “Usually advertising lags other economic trends,” says one commercial broadcaster. “This time it led, in both directions.” A rebound effect is at work: car dealers and banks that stopped advertising in 2008 have decided they cannot stay out of the market for ever. But why is TV the big winner?

The article argues that many newspaper readers have moved online, where they are worth less to advertisers. Not so TV viewers. In the first quarter of this year the average American spent 158 hours per month in front of the box, according to Nielsen, a research firm. That was two hours more than a year earlier. By comparison, he spent just three hours watching video online and three-and-a-half hours watching it on his mobile phone. And that is in the most technologically advanced markets. Elsewhere TV dwarfs other media ‘platforms’. Most estimates suggest less than 30% of Chinese regularly use the internet, whereas 93% watch TV. In Brazil, TV advertising was worth 15 times as much as internet advertising last year.

These days the internet now competes fiercely for the kind of advertising that was traditionally on the radio, in newspapers and in many magazines. Campaigns to persuade people to consider one product over another, or actually to go out and buy something, are well-suited to digital outfits, with their superior ability to track and segment audiences. Google can hit customers when they seem to show an interest in products. Such marketing is also measurable, which appeals to firms when budgets are tight.

Now many companies (including Tutor2u) are experimenting with social networks. Pages dedicated to products have multiplied, with some achieving almost television-like scale. Disney’s “Toy Story” film franchise has 5.6m “likes” on Facebook. Expect to hear more about this trend in future – and of more pain for newspapers, especially regional ones.