Guest Post: Could the End Be Near For Digital?

I typically kick off the annual Local Online Advertising Conference in New York each spring with an eye-popping revelation about local media discovered amidst the research. A few years ago, I showed how local media companies might be growing their digital revenues nicely, but in reality were hemorrhaging market share to Google and Facebook. Last year I showed that local print and broadcast media selling digital products were raking in about $12 billion in supplemental, high-margin revenue.

When I take the stage March 12, however, there might be a bit more whiplash than usual.

The latest research shows that the end of digital is near.

Before you go looking for that “Post This to Social Media” button, consider this:  It’s not the end that many in the industry have been praying for, and it spells a passel of trouble for those who continue to waste time debating whether print media is better than digital.

A few facts are in order from a survey of 2,068 local newspaper advertisers conducted last summer. The results show:

  • They rated the effectiveness of digital advertising the same as newspaper advertising.
  • 74% are being offered digital products by their newspaper reps, and of those who are, 81% buy.
  • Two-thirds said they planned to increase their digital spending, while 10% said they planned to increase their newspaper spending.

So, yeah, the end is near, but it’s not going to be a return to the past by any means. What we’re soon likely to see is an end to more than two decades of growth in the part of “digital media” that’s been most damaging to print and broadcast companies: the migration of ad dollars.  In the past 10 years, locally spent digital advertising has shown a 22.7% Compound Annual Growth Rate.  In the past two years, it’s plummeted. And within three, it’s likely to go negative, albeit slightly.

Make no mistake.  It’s not a nadir; it’s a zenith. Digital advertising already accounts for more than half of all dollars spent on local advertising. At $60 billion, it’s twice as much as local businesses spend on newspapers, TV, and radio advertising combined.

And I didn’t say it was collapsing.  It’s flattening.

When things stop growing, expect all hell to break lose.  What we’ll face in 2021 is the beginning of yet another New World Order for media. It will be the first time in 25 years that digital advertising hasn’t grown. (It even grew during the Great Recession, while everything else plummeted). Competition for local ad dollars among existing companies like Google, Facebook, Bing, and Oath will become even more fierce. Other entrants will grow and flex their tentacles into the local business community.  They include Apple, Amazon, IBM’s Watson, and perhaps–as marketing guru Rishad Tobaccowala posits–big marketing companies out of China, such as Baidu, 10Cent, and Alibaba.  (See Tobaccowala’s video interview.)

It will be a very strange world indeed, with grave challenges to local media companies who’ve forgotten that they can’t survive without serving the needs of local advertisers.

I’m looking forward to hearing insights on where it’s all headed.  Tobaccowala, the key strategist at Publicis Groupe, has some particularly poignant observations about local media, which he’ll be sharing as a conference keynoter. We’ll also hear from Jim Moroney, who’s been rolling the dice in Dallas and getting a 30% market share of the “addressable digital advertising” in that market.  That’s about five times what the average newspaper company gets across all U.S. markets. We’ve been so impressed at Borrell Associates with what his team is doing that we’ve invited four of his key executives to conduct an afternoon workshop at #LOAC2018.

What role might digital ad fraud have in this impending flattening?  I suspect it has some role, but not much. I’ve asked Randall Rothenberg, CEO of the IAB, to shed more light on that issue when he keynotes Day 2 of the conference.

I hope you can make it.  To check out who else is coming, check out this impressive attendee list.

Borrell’s 9th Annual Local Online Advertising Conference (#LOAC2018) is March 12-13 at the Grand Hyatt New York.  For information, visit borrellassociates.com.

Like & Share E&P:
RSS
Follow by Email
Facebook
Facebook
Google+
https://www.editorandpublisher.com/news/guest-post-could-the-end-be-near-for-digital/
LinkedIn

Leave a Reply

Your email address will not be published. Required fields are marked *