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Ad Forecast: Online to Trump TV by 2017

A new report suggests the Web will eclipse TV advertising--and sooner than you think. Is your business ready for the big shift?
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TV has long been the big power in advertising, with more money going into television ads than any other medium. But that may change in the near future, according to market research firm Mintel. As reported by Media Life, Mintel estimates that online ad revenue will pass those of TV in 2017.

A Sea Change

Given how rapidly online ad spending eclipsed that on newspaper ads, if Mintel is correct, this is a sea change in how companies will plan their marketing spending. Not long ago, online was for most established companies a supplement. TV was a medium that could deliver big audiences and a response that marketers liked. Everyone wanted to be on TV, which explains the plethora of middle-of-the-night infomercials and cheesy local commercials starring business owners who never should have decided to become their own spokespeople.

To know why they did so, aside from some dose of ego, you follow the money. Ultimately, companies spend where they find their marketing dollars to provide the highest return on investment. If the money swings fully to online (and given the relatively low cost of online ads, the volume of marketing will dwarf TV at that point), it will be because that's where the customers are. And that doesn't even count the potential impact of mobile advertising.

In an interview with Media Life, Mintel senior analyst for technology and media Billy Hulkower says that the change is one of demographics and technology. In general, younger households with higher incomes use digital video recording to bypass ads. So, the most desired market segments are largely not seeing the ads. That means advertisers have to find other ways to reach them.

There's another reason that Hulkower didn't appear to say explicitly, but that is important. People--especially younger ones--are changing the ways they watch video. More of them go to a computer and stream programming, whether from YouTube or a service like Netflix or Hulu. TV programming will increasingly be seen online, or through an Internet-connected device like a specialty set-top box, such as an Apple TV or Roku, or through another type of box, like a Blu-ray player, that is Net-aware.

What It Means

The switch will mean big changes in society, and in marketing. Old assumptions about the best way to reach consumers, or that online is only good for click-through campaigns and not brand marketing, will go to the wayside. Marketers will have to learn how to do effective campaigns of all kinds, and that will mean reevaluating old formulas. For example, image branding will likely need a different form. (Look at the Old Spice Man video campaign which did start as television commercials but found its own shape online.)

Successful entrepreneurs, according to Hulkower, can't wait until 2017 to catch on. Now is the time to learn and experiment. When the big change actually happens, it will be too late.

Last updated: Aug 31, 2012

ERIK SHERMAN | Columnist

Erik Sherman's work has appeared in such publications as The Wall Street Journal, The New York Times Magazine, and Fortune. He also blogs for CBS MoneyWatch.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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