Thursday, 14 March 2013

It's not new money

As Internet advertising growth continues to significantly outpace that of other media, I've always agreed with the view that it is not new money. Instead, for the most part, the advertising budgets fueling the online growth are the same advertising budgets that invest in print, radio and television. So how is it that two very influential reports can claim that ALL advertising mediums have room for growth?

Of course as our economy grows, advertising budgets typically follow but Corante lays out in a very insightful article that it all can't grow at the pace predicted - we have too many advertising vehicles and not enough gas to fuel them all.

Even in the best of times, our economy grows about 4% annually and a 70 year trend tells us that advertising growth has never outpaced the economy as a whole. So how can companies like Morgan Stanley and Forrester make predictions for advertising spend through 2010 that will significantly outpace our economy?

Corante quotes Morgan Stanley's report that traditional media will grow 4.3% and Forrester's report forecasting Internet advertising to grow 50% year-over-year through 2010. Add those numbers up and you significant outpace economic growth in a big way. So how can that be? Will this evolution in advertising buck a 70 year trend? Doubtful. Unfortunately this isn't the Special Olympics - they can't all be winners. This is cut-throat capitalism at its best - some of these advertising vehicles are destined to run out of gas.


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