Traditional Media Continue to Lose Share

Tech site Red Herring says the traditional media continues to lose out in advertising revenue.

In another clear sign that times are changing for the advertising industry, a new report said that Internet advertising revenues in the United States in 2005 totaled $12.5 billion, an all-time, single-year record.

The report, released Thursday by the Interactive Advertising Bureau and PricewaterhouseCoopers, said the 2005 total represents a 30 percent increase over 2004. Revenue in the fourth quarter of 2005 was $3.6 billion, a 34 percent boost from the same period in 2004.

“Interactive advertising continues to experience tremendous growth as marketers experience its overall effectiveness in building brands and delivering online and offline sales,” said Greg Stuart, chief executive of the Interactive Advertising Bureau.

“We are confident that this growth trend will continue as more marketers find interactive to be an imperative,” he added. “Additional platforms, including broadband video, gaming, IPTV, and others, continue to emerge as real opportunities.”

Key word searches on search engines continue to be the largest source of ad revenue.

Keyword search drew the most ads, posting revenues of $5.1 billion, or 41 percent of the overall total. Classifieds was second with $2.1 billion, while email was third with $251 million.

More advertisers are slashing their TV budgets as they believe they are not getting a bang for their buck.

There is much greater accountability in direct and brand marketing campaigns on the Internet, he said.

A recent survey by Forrester Research found that advertisers are slashing their TV ad budgets and increasing the amount of money they are spending on online advertising. They are also losing confidence in the audience metrics of traditional TV.

Ninety-seven percent of advertisers told Forrester that the TV industry will need new audience metrics, other than traditional program ratings for the advertiser, to truly measure the reach and effectiveness of their ads.

The practice of setting TV ad rates during "sweeps week" is the epitome of old media. During these crucial days, the best programming gets on the air, leaving the rest of the year to more homely fare.