Legacy Media Take Note: If You Can’t Beat Digital, Join In

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Total U.S. advertising media revenues (including promotional products) totaled more than $224 billion in 2014. Or maybe it was only $141 billion. Or perhaps as much as $396 billion, as one media expert calculates. It depends on which analyst you put your faith in.

One thing is sure, though: If you can liken the media industry to a symphony orchestra, there are a few new sections that are making some cheerful sounds while some of the traditional players are hitting too many sour notes.

So why do ad revenues appear to be inconsistent? Leo Kivijarv, Ph.D., senior vice president of research at PQ Media in Stamford, Connecticut, explains:

“Since the recession, PQ Media has seen a major shift in how the media industry metrics are being reported due to a myriad of factors that simultaneously put the media industry into the perfect storm.”

He goes on to explain that “third-party providers specializing in certain media platforms also cut back coverage of declining media, such as Simba Information on Yellow Pages and SNL Kagan on print platforms, as well as turnover in the research departments of leading trade associations, which lead their organizations to rethink their strategies on how to report the data.” [For more analysis of contemporary media trends from Dr. Kivijarv see PPB’s exclusive interview online with this story at http://pubs.ppai.org].

Despite the revenue boosts from digital advertising platforms, last year’s performance numbers were unremarkable, and many media analysts such as Michael Goodman at Strategy Analytics in Boston, say not to expect to see a banner year until 2016 because of the U.S. presidential election and the summer Olympics.

If the so-called “below the line” media—such as sampling and couponing but also some promotional product usage—expect to make 2015 special, they need to anticipate that “marketers will shift below-the-line budgets to media partners that are most able and willing to develop and implement promotional, marketing and brand-centric programs, and support results-based measurement tools,” says Jack Myers, chairman of MyersBizNet Inc.

Digital may currently be the big story, but it does have its limitations. A recent Advertising Age article cites Google research that indicates 56 percent of digital ads are never seen. On the other hand, Google reports that 91 percent of YouTube video ads are seen. And who owns YouTube? Google.

Consumer sales promotion, an advertising category dominated by couponing, remains the most popular method for branding. But in terms of ad revenue, the new industry leader—not surprisingly—is internet advertising, which rose nearly 16 percent in 2014 to $49.5 billion. A subset of internet is mobile (phone) advertising, which saw a whopping 76 percent hike in ad revenues last year. BIA/Kelsey, a Chantilly, Virginia, consultant for local media, predicts mobile advertising will be the fourth largest medium by 2019. We suspect a lot sooner.

The figures in the chart below reflect 2013 and 2014 ad revenue for 16 media. Only print ad revenues are shown for customary print media like newspapers and magazines. However, the paradigm for these media is changing as declining media adopt digital components and other promising revenue streams. The business magazine category provides an example. B2B ad revenues climbed more than three percent to $27.6 billion in 2014. But of that figure, print ad billings accounted for only $6.8 billion. Other income producers within B2B advertising were digital, data and information services, and by far the biggest, events, at $12.2 billion.

 Expenditures For Selected Media And Methods

Media/Methods 2013 (000) 2014 (000) Percent Of Change
Couponing* $130,108,000 $122,561,000 -5.8%
Internet Advertising $42,780,000 $49,500,000 15.7%
Broadcast TV $47,879,352 $49,094,786 2.5%
Direct Mail $44,800,000 $46,009,600 2.7%
Cable TV $26,124,872 $27,901,367 6.8%
Promotional Products $19,826,874 $20,042,229 1.09%
Experiential/Event Marketing $20,061,000 $19,289,000 -3.8%
Radio Advertising $17,649,000 $17,509,000 -0.8%
Newspapers $17,300,000 $16,700,000 -3.5%
Point-of-Purchase Advertising $12,000,000 $12,000,000 0.0%
Consumer Magazines§ $14,587,000 $14,222,000 -2.5%
Mobile (phone) Advertising** $7,100,000 $12,500,000 76.1%
Out-of Home (Billboards) $6,923,000 $7,000,000 1.1%
Business Magazines§ $7,000,000 $6,800,000 -2.9%
Product Placement (Film, TV) *** $5,240,720 $6,010,000 14.7%
Yellow Pages $6,337,000 $5,450,000 -14.0%

*Total category is Consumer Sales Promotion, of which Couponing is a major component.

**A subset of Internet Advertising.

*** A major segment of the Branded Entertainment industry, which overall generated $34.53 billion in the U.S. during 2014, a 7.3% gain.

§ Reflects print ads only; does not include any digital ad components of magazines.

Expenditures for selected advertising media and promotional methods were compiled for Promotional Products Association International by Richard Alan Nelson, PhD, University of Nevada-Las Vegas; and Rick Ebel, Glenrich Business Studies, Corvallis, Oregon. Sources include American Business Media/Business Information Network, BIA/Kelsey, Fluent Magazine, Folio Magazine, Interactive Advertising Association, Kantar Media, MyersBizNet Inc., Newspaper Association of America, Outdoor Advertising Association of America, Point-of-Purchase Advertising International, PQ Media, Radio Advertising Bureau, Strategy Analytics, and the Winterberry Group.

Dr. Richard Nelson, RnelsonLV@gmail.com, is adjunct professor of integrated marketing communications at the Hank Greenspun School of Journalism and Media Studies at the University of Nevada-Las Vegas. Rick Ebel, glenrichbiz@gmail.com, is the former marketing communications director of PPAI and now principal of Glenrich Business Studies, a business writing and research firm in Corvallis, Oregon.

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