Friday, December 5, 2008

A Permanent Shift Between Old Media and New Media

While advertising spend is generally affected by a recession, the new digital economy is surprisingly holding up. Web companies are offering cheaper and more accountable ways for local companies to advertise to a local audience. These web companies are thriving at a time when the longtime dominators of that market - newspapers, radio stations and television outlets - are reeling from the stagnating economy. The radio industry which for long time was an affordable medium for local advertising, continues a downward slide in Ad sales For the second year running, it will have experienced negative growth by tripling station revenue losses to -7 percent, according to the estimates of BIA Advisory Services. Radio’s future relies heavily on its ability to embrace new media and mobile technologies and local advertisers. CitySearch for example is an international website but it offers the ability to search locally for restaurants, theatre etc. Citysearch CEO, Jay Herrati said the local online market has been growing at 17% to 20% annually, and he expects that to increase as advertisers become more comfortable with the complexities of digital media. Local advertisers are also turning to Google Inc.'s AdSense service, which can place their text ads on Web sites that specifically cater to their target audience. The cost to advertise online can be as little as $25 per month. Budgets are spent on a pay-for-performance basis. Only when a user clicks on that Ad, is the merchant charged roughly 25 cents per click. And never before has it been so easy to track consumer behavior and recognize trends. MySpace Ads (just launched in beta) offers this minimum pricing and can target your Ads by social network groups – not exactly local advertising, but yet another way for affordable and highly targeted advertising in an increasing digital age. Traditional media companies in print and broadcast have struggled for years with the rise of the Internet. Their future is viewed as increasingly uncertain as they have been unable to renew growth prospects with revenue generated online. The economic situation could actually be creating a permanent shift between old media and new media. Under increasing pressure to cut costs, retailers and small businesses are discovering the value of the Internet as a marketing tool for reaching a highly targeted audience while closely tracking their return on investment. On average, 60% of people now check out product reviews and pricing online before making a purchase. Businesses can no longer afford to not embrace digital advertising or be a part of the new digital world. Got a specific business question? Email me at businessissuestoday@gmail.com or comment on your experience.

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