Digital milestone

Digital milestone

If you take a close look at the SMI data for November, you will see that a small but very symbolic milestone was reached. For the first time, monthly digital advertising spend overtook that of newspapers.

This won’t be a surprise to anyone, but given that digital revenues were half that of print in April 2010, it is evident that this has happened very quickly. While it shows a shift away from what we consider “old media” channels, it doesn’t necessarily mean that the money is going to totally new places. Companies such as Fairfax and News still get a large portion of the digital revenue, regardless of what the naysayers will have us believe. It is easy to be critical of these companies, but both have made concerted efforts to change their business models to meet changing market dynamics.

The next milestone in the growth of digital will be when revenues exceed those delivered by television. This is still a long way off as digital revenues account for about 30% of their TV counterparts, according to the same SMI data. But smart TVs are already here, and with the NBN on its way, the next structural shift is on the horizon. As anyone who has Apple TV on a superfast broadband plan will tell you, this will revolutionise the way we consume TV. The thought of waiting to tune in to Packed to the Rafters at 8:30pm on a Tuesday night will seem as archaic as, say, waiting for tomorrow to read today’s news.

Video on demand has been discussed for a long time, but will soon become a reality for all Australians. This fundamentally changes the distribution rules for content developers, and therefore the distributors of it. Historically, TV Networks have fought each other for the very best content and the revenue that goes with it. But in a new model their competitors become everyone from YouTube to the AFL and, ironically, the likes of old media companies like News and Fairfax. Very quickly revenue will start to shift towards a long tail of video suppliers.

We certainly have a long way to go before we hit this milestone, but in the meantime it will be interesting to see how the TV networks react. Let’s hope they follow News and Fairfax’s lead in trying to deal with the structural change that is coming their way.

Ian Perrin is CEO of ZenithOptimedia

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