The Changing Landscape for Advertisers
When it comes to technology it seems like everyday we focus on big-screen this, or big-screen that, but today, thanks to Microsoft, I want to take a look at the small screen in your den or the tiny screen in your pocket.
Earlier this week, Microsoft's Mich Matthews said the majority of the company's estimated $950 million advertising budget would shift from traditional outlets like broadcast and print and migrate to the digital world instead. That's a big deal.
Yes it's true Microsoft isn't even in the top 10 of the nation's biggest advertisers, but this kind of stamp of approval from one of the biggest names in tech could do quite a bit to turbo-charge the already high-rev world of online advertising.
Cantor Fitzgerald for one says online advertising should swell from $30 billion this year to $60 billion by the year 2010.
"You have massive shifts of media consumption in favor of the internet, away from television, away from newspapers, away from magazines. The internet is now the number one media used at work, number two at home, advertisers need to follow consumers and consumer eyeballs, and those eyeballs are increasingly showing up on the web and advertisers have to follow them," says Derek Brown, the firm's analyst.
So while that poses awesome opportunities for the likes of Yahoo ,
Google , IAC/Interactive and any other large website attracting the eyeballs, it's not such good news for traditional broadcasters and print media that are scrambling now to come up with effective web strategies to offset the advertising slide. That's why we're seeing aggressive moves in the space from the likes of CNBC parent GE , Viacom's CBS, News Corp.'s Fox and everyone else. Not to mention what large publishers are trying to do, both in partnering with Yahoo and Google, and developing online strategies of their own.
"What we are seeing is the growth in internet advertising is very, very strong," says Terry McGraw, Chairman and CEO of McGraw-Hill . "It is that way for us with BusinessWeek.com and I think you will see that continue and i think you will see the current print advertising growth rates pretty flat."
As for Microsoft, the company says 3% of its ad budget already goes to so-called experimental marketing efforts like RSS. Look for more ads in video games, on cell phones and other more non-traditional media.
"Microsoft can use their technology in a way that is richer, and more experiential to consumers," says Marissa Gluck, managing partner at Radar Research. "So when it was just banner advertising all over the place, it wasn't that compelling to consumers. I think Microsoft now sees online advertising as a compelling media to market to consumers."
The weird thing will be whether the trend leads to Microsoft writing checks to its nemesis Google or whether it ignores the net's biggest name in favor of another online advertiser.
Either way, the landscape is changing, and maybe with the Microsoft pronouncement, changing faster than both online and traditional media outlets had anticipated.
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