Technology | Media | Telecommunications

Friday, April 23, 2010

Advertising Apocalypse: from Mad Men to Sad Men

The shift to digital marketing practices, and a move away from traditional advertising, has taken its toll on legacy media companies. In hindsight, the economic crisis hit the U.S. advertising market much harder than expected, with overall revenue dropping from $77 billion in 2008 to $67 billion in 2009.

New York Madison Avenue's traditional ad executive ranks have gone from upbeat Mad Men, to down-and-out Sad Men. The glory days are clearly over, as the industry transformation continues.

According to the latest market study by Yankee Group, contained in a report entitled "2009 Advertising Forecast Update: Less TV, More Internet," the lion's share of the decline was due to TV advertising, which plummeted from $52 billion in 2008 to just $41 billion in 2009.

"The 2008-2009 recession drove down the value of everything -- from home prices to TV advertising revenue," said Carl Howe, director at Yankee Group and author of the new report.

As consumers have become worried about the economy, they've reduced the amount of time they spend on media to less than 12 hours a day, down from nearly 14 hours in 2008. This shift in behavior has caused ad revenues to drop significantly.

Other findings from the Yankee Group study include:

- TV and video watching decreased a full hour per day. Consumers spend a total of 3 hours and 17 minutes watching TV, DVDs, videos and pre-recorded programs.

- TV's loss was the Internet's gain. While time spent online decreased by 40 minutes per day from 2008 to 2009, consumers still spend more time online -- 4 hours and 13 minutes daily -- than with any other medium. Internet advertising revenue increased from $24 billion in 2008 to nearly $26 billion in 2009.

- Mobile is the only category that gained time. Consumers spent 40 minutes per day talking on mobile phones in 2009, up 12 percent from 2008. Mobile Internet use grew 36 percent, to 11 minutes a day, and texting grew 55 percent, to 27 minutes a day.