Re: How much advertising is there?

["adam hodgkin" <adam.hodgkin@gmail.com>]

On the other hand advertising is getting much, much smarter and 
Google is at the leading edge of that. Web-based 
subscription-only businesses are on the whole getting less smart 
-- since it seems that publishers and aggregators can only offer 
an *aggregation model* for (not very efficient) access management 
to subscriptions.

If consolidation is the only game the subscription publishers can 
offer, these access models will become increasingly ungainly and 
will inevitably lose market share to open access models which can 
leverage the value of a database of intentions across a domain of 
highly differentiated content. The global advertising markets are 
already vastly bigger than the markets for paid information 
services and there is a tendency for paid information services to 
slide to an Open Access model if that is a way of enlarging the 
scope for advertising reach. The Elsevier/Oncology and NYT moves 
of the last two weeks are both signs of that.....

As to the size of the advertising market relative to that for 
information or content subscription services. The globabl 
advertising and promotion markets are measured in the low 
trillions $USD, and the total markets for electronic and print 
subscription information services (STM, financial and legal) is 
tiny in comparison.

I would suggest that there is still quite a lot to play for in 
the growth of global advertising markets.

adam


On 9/21/07, Joseph J. Esposito <espositoj@gmail.com> wrote:
> The recent announcement by the New York Times concerning the 
> termination of its Times Select premium subscription service 
> has deservedly attracted a great deal of attention, on this 
> list and all over the blogosphere and "mainstream media."  The 
> Times may or may not be successful with its new strategy (my 
> own view is that it was the right decision, but the Times's 
> future is by no means assured), but of course not all media 
> organizations have the brand and cultural centrality of the 
> Times; the Times thus is no model for anyone.  What I wonder 
> about is where all the advertising revenue is going to come 
> from to support all these media businesses, whether they are 
> the Times, Elsevier's new ad-supported oncology site, or any of 
> the two dozen new Silicon Valley social networking start-ups I 
> stumbled upon in just the past month (owners of pets, parents 
> of young children, human potential activists, financial 
> planners, etc., etc.), not to mention such academic publishing 
> services as Scholarly Exchange.
>
> So we step into the laboratory and ask this question:  How much 
> must the world's economy have to grow in order to support all 
> these media businesses? A media business aggregates audiences, 
> which in turn are sold to advertisers.  The advertisers have 
> their own products and services to sell (and not all of them 
> are media products, thank god).  If they can't sell their 
> products, the advertising dries up and the media businesses 
> scale back or disappear.
>
> Let's say a company budgets 10 percent of total revenue to 
> advertising. Thus, with sales of $10 million, the company 
> spends $1 million on advertising.  For every dollar thus spent 
> on advertising, the economy must grow by ten times that amount. 
> How many shirts, stents, time share condos, cars, and toilet 
> seat covers do we need?
>
> The market isn't there for all this advertising.  The world's 
> resources are not there to create the forecast volume of goods 
> and services to satisfy the demand created by the advertising. 
> We will run out of fossil fuel trying, and then have virtually 
> no economy left to advertise anything.
>
> The notion that the sale of advertising alone somehow can 
> support the full range of information businesses is crazy.  It 
> may work for the Times or South Park, and Elsevier has a shot 
> with its new portal, but the fate of most advertising-supported 
> businesses is oblivion.  Only the strong, the huge, and the 
> totally distinctive survive.  B-level players need not apply.
>
> Joe Esposito