I have speculated that the recession might slow the movement of ad dollars from staid traditional media to more adventurous digital alternatives. Now I have found some agreement from the inside that advertisers added a dose of caution in their media choices to necessary budget cuts when the worst of the downturn took hold.
My source is Mike Leo, CEO of Operative, a leading vendor of work-flow and measurement systems and formerly head of a large digital ad agency. When he and I first spoke by phone in February 2008, business was booming. But all that changed in 2009.
“December, January and February were abysmal,” he told me by phone, “down 10 to 35 percent” for his clients. There was a sort of paralysis for a time. Not only were schedules being reduced but requests for proposals for future campaigns came to a halt.
In March and April, Leo continued, business picked up about 10 percent each month over the month before. “The shock and awe are over,” he said, but you would need to call an end date to the downturn to say when digital will fully recover its competitive momentum.
Leo offered two explanations for why digital did not, as enthusiasts had argued, take an even bigger share from traditional options like broadcast and newspapers as ad dollars got scarce. For one thing, he said, “it is easier logistically to stop an Internet spend” as many advertisers wished to do quickly.
However, “part of it is inertia. The first thing people cut is the cutting edge — people view it as experimental. It’s the same as people going to diners now to get comfort food; they do what’s safe.”
Longer term, Leo still sees the dynamic tilting digital’s way. Studies show 18- to 34-year-olds spending a third of their media time online, “but the spend is only 10 percent — that’s got to go up.”
As times improve, he sees fresh potential for local search and even local display ads to newspaper Web sites. But he is among those who believe many papers are still scrambling to assemble an effective sales force. As time goes on, advertisers will be demanding unified print and Web campaigns, “one proposal, one campaign, one sale, one invoice.” Big news organizations like The New York Times and Gannett can do that now, he said, but most mid-sized papers “are three to four years away.”
Leo is also among those who believe that “this is the breakthrough year for mobile: the iPhone will be the driver.” (My colleague Amy Gahran wrote the same in a Tidbits post earlier this week.)
That proposition draws some debate from analysts who say that even with an improved interface, iPhones are for talking, texting and searching and perhaps checking very brief news headlines. In their view, proponents are always saying mobile advertising is about to get here in a big way, but it never does.
In commentary on a generally optimistic forecast for digital growth earlier this month, Forrester Research’s Shar VanBoskirk wrote, “I remain very cynical about mobile… The reality is that today marketers are not embracing it as they are other emerging media, nor are the mechanics of how to use and measure mobile worked out to a degree that will convince mobile naysayers (like me) that it is worth all the effort.”
I’m an agnostic on forecasts about mobile or the more sweeping predictions about how much digital advertising will grow by 2014. But I think the stop and start again pattern Leo describes has everything to do with a central question about the future of newspapers and television. How much of the ad declines are cyclical and due to bounce back, how much is permanent loss of share? I’ll revisit the evidence in my next post.
