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The Internet is migrating towards the television market and will be completely integrated in 10 years.
Advertising's Bright Future in Digital Media’s New World Order
By Olayinka Arowolo MBA
With the sale of Bob Johnson’s BET to Viacom, current day market share for African American companies in media (TV newspaper, magazines) is less than 6 billion in a 300 billion dollar market. Given the evolving market place for digital media and the migration of everyday activity towards online capabilities, are there any African American owned companies that are investing in internet service applications in order to capture market share in the new world order of digital media. There should be, but what is the status of the advertising market and what is the potential for advertising as the digital media takeover evolves?
For the past 60 years advertisers to make consumers aware of their products have used conventional newspapers. Consumer product companies started placing ads in mid 19th century and mass media advertising has been about making connections through product branding. The newspaper has served as a primary source of product information and generated billions as a result of revenue from advertising. In today’s market Internet companies with strong online advertising business models have taken over were the newspapers left off. The Internet has taken over the role of disseminating information creating a true paradigm shift since the advent of television 50 years ago.
The urge to advertise is an enormous economic force. However advertising spending commitments for network TV fall schedule fell slightly for the concluded up front sales period. Sales of magazine ad pages are similar to 1998 figures even though the economy has grown 30% since then. Newspaper advertising is almost phased out and the Internet is expected to attract $279 billion from national advertisers this year alone, modest but up 15% from 2004. “ Offline” media companies (newspapers and magazines) are redoubling their online efforts and moving their services online. Universal McCann forecaster Robert Coen projects that U.S. advertisers will spend 440 billion in the next 10 years on advertising online and a reasonable chunk of that pie will go to Internet companies that provide the best most transparent online branding tools.
The paradigm is shifting to search algorithms and text based ads embedded in your email. Google and its proprietary language of pure profit have seen net revenues of a billion dollars in 2004 and 1.38 billion as of June 2005. Google currently commands a mind numbing 297.62 dollars a share, which is 213% more than General Motors, which actually sells cars. Google does not face the buggy - whip manufacturer problem and does not actually produce a physical product. What it does provide is unique and valuable non the less. Yahoo a multimedia Internet company is also positioning itself to provide online branding tools for marketers so they can attract a percentage of their 14 million plus visitors a day. The paradigm shift is unkind to incumbents and tech gurus everywhere are coming up with net-based applications and services that will provide them access to the lucrative advertising market.
The Internet is migrating towards the television market and will be completely integrated in 10 years. SBC and Microsoft are pioneering Internet television and companies like Verizon are spending a billion dollars a month on their fiber to the premises (FTTP) program. This is designed to provide consumers with the capability to access video on the Internet on demand via a broadband like connection with fiber cable.
The next ten years will provide a bevy of Internet applications, which will allow more functionality online. As a result Americans will spend more time online and advertisers will be looking to spend their commercial dollars on Internet companies. The ubiquitous digital divide is not limited to the Internet advertising market share and African American entrepreneurs should do more investing in anticipation.
Olayinka Arowolo is president of Atlanta-based Aroviz Online and Associates, LLC. Aroviz is a provider of video mail and audition automation software platforms.
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