The Advertising Association released its latest adspend predictions yesterday and warned traditional media owners that the threat from technology would be felt imminently. Although overall increases in spend are expected, the breakdown of expenditure for different media is set to undergo its most radical change. Newspapers, in particular, are thought to be at threat from the emergence of the internet. Regional, and to a lesser extent national newspapers take much of their revenue from classified advertising. The internet is ideally suited to holding large quantities of classified ads, whilst allowing the user to quickly search out exactly what they are looking for. Accordingly, a number of regional newspaper publishers last year struck an alliance to form the Fish4 network of online classified databases in order to project their revenue source.
A breakdown of total UK adspend figures from the AA shows that only magazines and regional papers have seen a declining share of revenue for the last couple of years. Regional press’ share has fallen from 19.2% at the beginning of the ’90s to 16.3% last year. Business magazines also rely heavily on classified ads – particularly recruitment advertising – for revenue. Business and professional mags’ share of UK adspend has fallen from 8.9% to 7.8% over the last ten years.
“The advertising industry is at a crossroads, facing more fundamental change than at any time in the past fifty years,” according to Andrew Brown, director general of the AA. Whilst the net may take a chunk out of classified revenue, audience fragmentation created by new technology may also have an impact on the television marketplace. The AA says that a considerable proportion of TV revenue arises from its success as a mass medium. If fragmentation were to deter certain kinds of advertisers from using the medium, revenue losses could follow.
The worries of advertisers and media owners over the emergence of digital video recorders, which allow the ads to be easily skipped, have been well documented recently. Television currently takes a 28.2% share of UK advertising, a proportion which grew slightly last year but is lower than in the mid ’90s. Whilst press and television – the major media – are being warned by the AA to brace themselves for the effect of technology, the minor media – outdoor, cinema and radio – are predicted to show the highest and most stable growth of ad revenue. All three have been steadily increasing their share of UK adspend over the last decade, with radio showing a 1.6% points growth since 1990 to take 3.4% in 1999.
