Hottest Ad Medium in a Down Economy? Cable, Not The Net.

The trumpets are out, from the Interactive Advertising Bureau. For the fifth year in a row, Internet advertising hit record highs.
Written by Tom Steinert-Threlkeld, Contributor

The trumpets are out, from the Interactive Advertising Bureau. For the fifth year in a row, Internet advertising hit record highs. The growth rate for 2008 was 10.6%. This was the sole ad medium (out of 17 tracked) to record a double-digit gain for the year.

But if you look at the tail end of the year, when the credit crunch hit and an economic tsunami hit the world, advertisers put on the brakes. Internet advertising growth fell to 2.6%.

What was the only medium to not just grow, but maintain its growth?

Cable TV.


Now, you might say cable has some inherent advantages, since a lot of advertising gets sold in the "upfront" season, where discounts are given for committing to long and big runs of commercials by big advertisers. But prices are holding up in the so-called scatter market, as well, where ads are literally bought on the spot.

And what evidence is there from the Internet itself about the drawing power of the cable medium?

The growth in video-related advertising, online.

The one segment of Internet advertising that actually doubled last year was digital video, from $324 million in 2007 to $724 million in 2008, according to the IAB.

Now, that leaves a long way to go (or a lot of opportunity to grow) for video advertising on the Internet to catch up with cable.

But it was interesting to listen to the outset of the IAB's presentation on the Internet's year. Sherrill Mane, the IAB's senior vice president of industry services, who cited the Internet's "opportunities to grow as a branding medium."

This is rather interesting, since the distinguishing factor about the Internet that has accelerated its growth as an advertising medium is its ability to directly connect an ad to a result (like a sale). This makes the Internet the iconic performance medium.

Indeed, search advertising -- which is the flagship form of performance-related marketing on the Web -- keeps taking a greater share of the pie. Roughly 45% of Internet ad revenue last year came from search, as this trend chart from PricewaterhouseCoopers shows.

The main "branding" part of the Web -- display banners -- is basically flat. Except for digital video, rich media advertising is going nowhere. Classifieds are down. And sponsorships have fallen to the floor.

What the IAB wants advertisers to do is put more of their ad dollars into the kind of brand promotion that you see on cable. Powerful visuals that drive you to purchase cars or electronics or clothes. In the Internet case, the idea is to drive the viewer to then ... do a search. To "blur" the two, Mane said.

"It's very clear from various trends in the marketplace, particularly when you hook at the blurring of branding and performance,'' she said, "that there's tremendous upside for the Internet to establish itself even more strongly in this economy as a branding medium."

Like cable.

Branding and performance advertising are "not mutually exclusive,'' PwC partner David Silverman would say during the presentation. But he was quick to also say "there's clearly a performance-based shift" going on, given how advertisers in a weak economy are "looking to be as efficient as possible with dollars."

Says here the Internet should put its foot to the metal on performance. Because cable has the upper hand -- for now -- on branding.

And you can bet that when the 2009 Cable Show opens up Wednesday in Washington, D.C., we'll be hearing a lot about the Canoe project and how the cable industry as whole is finally going to knock heads with the Internet on interactive advertising -- and performance.

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