Offline Advertising Still Rules

Marketing Sherpa has a fascinating report out on online versus offline advertising spending in 2006.  It turns out that old school advertising is still way ahead of this new internet thing.

Print newspapers and magazines have been taking a beating from the Internet and blogs, but they are still way ahead of all online spending in advertising revenue.  Spending on newspaper advertisements was $30 billion - 4 times the spending on paid search advertising.  Magazine ads were at $23 billion.  That's almost 6 times the spending on all online, non-search advertising.  .

One thing that might skew the numbers is that advertising costs so much less on the Internet.  Direct mail is the greatest expenditure at $59 billion.  But the online equivalent - email marketing - is virtually free. Thus even if there is nearly as much email marketing, it won't show up in the expenditure figures.  Another example of this asymmetry is Craigslist, which is eliminating the entire classifieds industry by making postings free.

While some might view this as a bucket of cold water poured on the Web 2.0 hype, I see this as a huge opportunity.   More and more content is going online, but advertising is not keeping up.  This is despite the fact that advertising online can be far more targetted and effective than offline.  Google, for example, can often get higher than $1,000 per CPM on it's more competitive search terms.  There is still a huge opportunity for companies in the space of analytics, ad targetting, and ad distribution.