Ad Spend Trends

This chart is from a deck put together by Hal Varian, Google's Chief Economist

Ad spend trends

The thing that jumps out at you is the long and structural decline in newspaper ad revenue as a share of the total market. And that's why Hal put this slide in his deck.

But the thing that jumps out at me is the line called Internet. I don't know what that includes. It could just be display. It could be all Internet. I don't have time this morning to do the legwork to figure that out.

But what this chart says is that over that past decade Internet has gone from nothing to 5% of all the ad spend in the US.

That is the most bullish signal about investing in the Internet that I have seen this year. If you include audio over the Internet (what radio becomes) and video over the Internet (what TV and cable become) in the Internet line, then I bet Internet will someday be over two-thirds of the ad spend.

Time to get get out our checkbook and start making some more bets.

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#VC & Technology

Comments (Archived):

  1. Evan

    TV/Cable 25%Radio almost 15%Internet 5%Add that up and you get 50%, so in order to get 2/3 you’re going to need to not only pick off every single tv/radio dollar right now but also every single newspaper dollar (15%).

    1. fredwilson

      or create new categories

      1. Evan

        i’d be willing to bet you on 2/3 if we’re talking the next decade or two.

      2. LIAD


  2. Dan Ramsden

    The chart is a real eye opener, when you consider that direct mail has grown at a similar clip as online, and that even newspapers are still multiples ahead. On one hand this probably speaks to the challenges of targeting a widely dispersed global audience, while on the other hand the complex mess of networks and exchanges designed to address this challenge could be adding to the inefficiency. For the economic potential to be realized, the ad model has to be vastly simplified in my opinion.

  3. kidmercury

    IMHO there is still the issue of what advertising is. based on how many define it i could see the internet commoditize the ad market with value shifting to community-based ecommerce.

    1. fredwilson

      if you can bring me directly to a transaction, you can get that advertising? yesis is traditional advertising? maybe yes, maybe no

      1. kidmercury

        i wonder if it is trackable. that is why i like ecommerce, commercial transactions are easier to define and track IMHO. to this end i think we will see soc nets and platforms make more off ecommerce than ads.

      2. awaldstein

        Perfect…I like this definitionIf it is the link to a transaction, then it is advertising,”by intent”, as you can charge for that link, that referral, that connection.And whether this is opt-in, or not, the intent is the same as advertising=customer acquisition.This is going to get really interesting when it happens on the living room TV screen.

      3. COMRADITY

        if the payer is on the sell side of the transaction then it is advertising.If the payer is on the buy side of the transaction then it is retail merchandising.This is a key distinction which impacts the purpose of the business.Katherine Warman Kern@comradity

      4. kidmercury

        I wonder if it is trackable. That is why I like the ecommerce side of things, because I have more faith in the ability to define and track commercial tansactions than ads.

    2. nfold


  4. Deckerton

    Kidmercury is right. The real story is ad commoditization and how the internet shifts purchasing influence from the producers to consumers.

  5. Harry DeMott

    Now you are talking my language here. I believe the Internet category includes both search and display – it usually does when these data sets are shown.What you see here is the ascendancy of ROI based media and the destruction of inefficient reach media coupled with the shifting media habits of Americans.Direct mail is a pure ROI game. You measure it weekly – and if it doesn’t work – you stop – just like Google Ad Words.Internet advertising rises for the same reason.TV and Cable are interesting in that they are almost vestigial in their growth. For years – as Seth Godin writes so eloquently – interruption marketing did wonders for brands – and so it grew. While this was growing so was Americans proclivity to use the medium – so the $ reinforced themselves. Large screens, audio and video all add to the allure of the TV medium – and with DVR’s – people are actually watching more TV than ever – so TV remains sticky – the centerpiece of the media buying and planning cycle.As more and more of the media buyers and companies are run by “Internet age” people – this will likely change – or be forced to become much more ROI centric.You are certainly correct in that Internet advertising really just has 1 way to go – the issue is figuring out how to make it the most efficient it can be. Search is likely already there – but display is another story.

    1. fredwilson

      new models are emerging Harrybut the old models will work on the internet as well

  6. William Mougayar

    I was surprised that the Internet is only 5%. For many large consumer brands (and several B2B brands), the Internet/online represents a much larger share of the Ad budget. I know that for a fact, having been there. The macro-level picture is interesting to know, but you also have to also look at the segments within that macro-sphere which represent the trend setters in moving towards the Internet, because the rest will follow that trend.I would be interested in seeing Marketing budgets splits for the Fortune 1000 companies or even the SMB’s. SMB’s budgets are probably 90% biased towards the Internet & Online.

  7. Venkat

    5% puts a whole new spin on ‘growing from a small base’ 🙂 I am sure it shocked a lot of people who don’t have one foot in traditional advertising and therefore have poor calibration of how big Goliath really is.Here’s what interests me though: the line called “Internet” is probably rising slower than the definition of “Internet” itself is changing. The TV-internet collision that Google has accelerated means the yellow line is probably going to get redefined.The other thing that interests me is that a lot of advertising on the Web may not look like advertising at all, but something else (eg. social gaming on Facebook is really advertising, word of mouth stuff on twitter etc.). Up-sell/cross-sell in a permission-marketing model, content marketing… the basic, direct pitch may not be where the action ends up.

    1. fredwilson

      you are totally right that advertising itself will be redefinedsocial gaming is one waylead gen is anothersearch/CPC is anotherand we’ve just begun in my opinioni am really excited about the notion of promoted content as ads (ie promoted tweets)

      1. AlanPearlstein

        I couldn’t agree more. the face of online advertising is changing and will continue to change. I see content (merging content and advertising) and promotions (foursquare, gowalla) playing a big part in the evolution of online advertising. I believe the future of local advertising is in promotions vs advertising. The $25b local ad market (mostly yellow pages) isn’t moving to online versions of the yellow pages, its likely going to go to the local promotional co’s, from foursquare to groupon.

    2. Matt A. Myers

      I believe the overall money spent on advertising increase too. Small businesses and professionals who don’t have a large enough marketing budget to buy traditional ads will now be able to afford advertising online. And perhaps people who have advertising dollars but experienced less than adequate conversions can now spend that money because it’ll be spent for more targeted ads.

  8. Rick Bullotta

    Yes, but ironically TV and Cable grew by about the same percentage…let’s not forget that the relative shift in advertising spend is close to a zero sum game (or perhaps a declining overall game due to the lower cost of internet advertising), so we’re not talking about creating new value here, per se. I do agree, though, that there is an upside on Internet ad growth (as percentage of spend, not necessarily absolute $$$, but we’ll see…).It seems that all too many startups these days are focusing on spend-shifting markets, not new value creation.

    1. Jared McKiernan

      Very key point, I wonder if it might be that total ad spending across all markets is currently inflated by the increasingly high levels of consumer debt in this country? Companies may have been increasing ad with the effect helping to push consumers to buy more than they can afford, which going forward is not able to continue barring some unforeseen economic event.It seems unlikely to me that ad spending is causing positive ROI for a lot of the big ad buyers- GM (dealerships I think are the entities actually responsible for most of the ads) being the most obvious example as car commercials litter the airwaves yet I don’t know anyone that would select a car based on a TV commercial. GM not only has awful commercials, they have a ton of them.


    Meanwhile ad revenues have dropped from 40.6 % of the total market in 1975 to 17.2% in 2009… (chart)… (full press release)At 5% of 17.2% that puts internet advertising at less than 1% of the total market.This is why we believe a scalable business model is not advertising dependent but targets a share of the exponentially growing consumer purchases.And why we believe that respecting consumer interests trumps exploiting consumer information for advertising.Katherine Warman Kern@comradity

    1. fredwilson

      it depends on what your definition of advertising is

      1. COMRADITY

        Fred, I define advertising as $ paid by companies vs. paid for directly by consumers. Here’s as close as I can estimate how the Veronis vs. Google analyses compare. (Google provides no $, just percentages and indices) Veronis estimates the size of the advertising market to be $150.9 Billion, with newspapers at 5.2% or $7.85 Billion. Presumably, Google’s definition of the advertising market is smaller, because it pegs newspapers at about 12% according the above graph. Either way, the $ paid directly by consumers is an exponentially bigger target to aim for. Katherine Warman Kern@comradity

  10. Graham Clarke

    Thanks for the chart. Interesting indeed. There’s a lot of innovation coming along in the internet ad. Media convergence is our friend!Cheers,Graham

  11. Eric Leebow

    Great chart. There will always be something about Internet advertising in the future. What’s appealing is that it’s “green” in a way. You don’t have to place a huge billboard on the side of the road, and it’s not going to cost you as much to place the ad. Companies like VideoEgg, Pixazza, and Linkstorms to name a few are bringing digital and Internet advertising to a new level of engagement.The best problem to solve with Internet advertising is to make the viewer of the advertisement not feel as though they are being advertised to. I think that’s where we’re headed in some ways. In a recent talk from a well known entrepreneur mentioned that digital advertising with brands will be accepted by well known brands that we can relate to in real world on a personal level, and saw companies like social media (ie. sites like Twitter) in general to be better places for these brands to be portrayed. Certain brands will not work in the social media model advertising and user engagement. Also, with the rise of companies like Groupon, LivingSocial, Woot, etc. advertising comes in your inbox on a daily basis (ie. DailyCandy or Thrillist), and people are becoming more accustomed to wanting the promoted deals. Essentially, we live in ad centric world, and there are ads everywhere, it’s just a matter of how many ads are seen by the user, and what’s the level of engagement that matters.I think there’s a place for all kinds of advertising in the future, yet digital advertising will be the strongest. Even traditional advertising seems to be moving more digital, as you see flat screens that show advertising on them. There are a few companies that solely exist to distribute these digital flat screens to bars and restaurants. Some have even gone as far as wearing digital monitors on promotional models with vests. There’s a lot of potential for digital, and think of your new newspaper as everywhere.

    1. Morgan Warstler

      Eric I respectfully disagree.People may not “like” advertising, but what they hate is the idea of someone pretending they aren’t selling something.The entire concept of “conversational” marketing I believe ultimately is a big FAIL. Sure, yes monitor and respond on twitter when people complain, but the truth of what works on the web is the overnight success of a GROUPON. Meaning, online I think SEO is an exception rather than a rule, for most online advertising it is all about old school DR.At the big brand level, I still believe there’s another way coming based on far lower cost of willing traffic to million dollar sites – at a far lower CPC than SEM and Display can provide. Something much more like TV.We just aren’t there yet. But I’m working on it!

      1. Eric Leebow

        I see what you’re saying about pretending to sell. I don’t think people or sites are “pretending they aren’t selling something” as they are always selling something, and as a consumer you should know that. What they are doing is hiding it in a way, so that it fits in the scenery at times, and it’s similar to product placement. It works with well known brands more so than not so well known brands. Selling and advertising aren’t exactly the same, the company can advertise something, yet not be selling something. With coupon deals in email, they are definitely selling something. That’s very straight forward, here’s a discount, and this is the place to go. Then, there is the less straight forward advertising if that were a brand that was placed on a blog or a website somewhere with no call to action right away, yet you might know this brand and mouse over it, and something happens. Sometimes, nothing happens, it’s just placed in the design of a site, yet the best is when something happens. I disagree that conversational marketing is completely proven to not work, it always depends on the conversation. I think there is a longer process to sell with conversational marketing opposed to these coupon sites that just send you a coupon and you’re then sold within seconds of getting it.

        1. Rocky Agrawal

          agree that it definitely depends on the brand. we have a tendency to accept “selling” more if we are interested in it in the first place.i just followed a bunch of local businesses on twitter. one of them posted that last night they were having 1/2 off wine and live jazz until 10. were they selling something? absolutely. but because i signed up for it and am interested in the business, it didn’t come across as pushy or annoying.

          1. awaldstein

            Well stated…if you opt-in, then advertising becomes a service to you.Groupon et al are opt-in social buying. They are opt-in advertising. When you decide Groupon is annoying and Gilt is better, you opt-out and opt-in somewhere else.The exciting part of this (for consumer and brand) is that this is coming to our TVs on an opt-in basis.Basically when TV is digital, push advertising is for the most part…history.

          2. Rocky Agrawal

            i’m really curious to see how hulu’s experiment with asking people if ads are relevant plays out.there are a lot of advertisers that have zero interest in reaching me. but they do on tv. i provide zero value to pantene or tampax. my favorite example of this is the network news, which is at least 90% supported by drug companies due to its overall demos. (median age of viewers is 61.) in a broadcast model that makes sense. the ads also have the sad effect of telling younger viewers “this program really isn’t for you.”but if that same content is delivered online those drug ads could be replaced with ads relevant to a 25 year old male or whomever the current viewer is.

          3. awaldstein

            Exactly…if you opt-in for relevance then by definition push becomes pull from an advertising perspective.Will this happen completely…nope. Will it happen fast…not fast enough.But there is a catharsis seeing this old dream of ‘convergence’ start to materialize. And we benefit. And no-one will miss the cable companies or the networks…or the phone company for that matter.

          4. JLM

            I suspect the cable companies will become purveyors of more timely info (news, sports) and focused information as well as always enjoying the primary entertainment conduit (This Old House).As much as it is trendy to talk down about cable, I am on my knees praying for them during March Madness and college football season.Band of Brothers, Pacific, old, old, old westerns?

          5. awaldstein

            Maybe your right JLM.Although my bet is that content will become more available as this graph opens.. And honestly, I’m glad to pay for what I want to see. I just want more access, better search and more competition.I’ve always been annoyed by cable and the networks. I guess its trendy but I’ll be glad when the tables are turned a bit. Post college football season of course;)

          6. ShanaC

            And you wonder why I watch the daily show for news. It is a total turn off…

          7. Morgan Warstler

            My company actually rethinks the concept of advertising on TV as a “social” thing, but whaty we mean is “local” but it does it by encouraging brands towards coop version of advertising.Essentially, the brand “wraps” and pays for a good chunk of the local biz commercial.Think Sam Adams wrapping ads for local bars. The :30 ad is uploaded by indie bars that now carry two more taps of Sam. The “wrap” is just a Sam Adams logo int he corner and call out for some kind of SMS action.What’s cool is that this ad is trafficked as a Sam Adams ads in their national campaign buy, it’s just in a single cable zone or or two in a given DMA where this ads plays out when the rest of the country see the standard Sam ad instead.In this way, brands lever their ad dollars to actually gain ad space.

          8. awaldstein

            Thanks Morgan for sharing this info.To me, ‘social’ is beyond ‘local’ by definition but I understand what your company does now.Much thanks

          9. Morgan Warstler

            Well as another example: A gum/soda/etc brand can offer on-pack points that fans collect and enter online for their favorite local band. At each collection of X points, the band receives $Y in local TV advertising for whatever events they have coming up.Again you are dealing with a brand wrapper on a local upload with SMS response being trafficked as part of the brands normal TV campaign.Think Dog Food letting local Dog Parks promote themselves. Etc. Or we can capture your FB pic and URL and run it across bottom as fan of brand. You get idea.The point is that advertising itself towards good third party cause is something brands are expert at providing.

          10. awaldstein

            That clarifies it…thanks.Best place to look a bit deeper at what your company does is where?

          11. JLM

            Never lose sight of the fact that everyone likes a bargain. I have been experimenting with a group of semi-computer literate customers to some degree of bemused disaffection and frustation until we began to deliver discount coupons via the Internet and Twitter. Suddenly everyone can operate a computer. Go figure!

          12. awaldstein

            So true JLM.I’m building something similar for a client and digging deep into the discount social buying community space. Remarkable segment actually with some incredible numbers being chalked up by the top tier players.

          13. JLM

            Everybody loves a deal and nobody wants to think they paid “retail”.

          14. Matt A. Myers

            Maybe that’s how I can finally learn how to use this darn thing…..

          15. ShanaC

            You learn how to use the thing when the need arises.

          16. awaldstein

            JLMSome interesting data on GroupOn that I wanted to share as you mentioned you were doing something in this space.http://www.businessinsider….If this is correct, then this market is just getting started…I was thinking quite the opposite.An earlier post I did on the subject that might be of some interest…”The Groupon phenomenon: first generation social commerce that really works”

          17. JLM

            Yes, I think that GroupOn is a very interesting phenomenon.It has an almost craigslist homemade sense of unsophisticated local chumminess and touts the most weird crap but is very interesting.I also like the idea that you can see how many of the locals have bought a particular special.The fact that such a simple mish mash of stuff could drive a $1B valuation is extraordinary — either an insight into some truly wacky valuations or an insight into how fast the world is changing.

          18. awaldstein

            I think its the latter JLM.Two examples this morning jumped out at me:1. Disney Pixar selling movie tickets on their Facebook page so you can ping your friends and buy tickets together for a show and attend together. Brilliant use of social commerce. Simple. Social. Smart.…2.Diesel (in Spain) putting cams in dressing rooms so that teens (or anyone) can try on clothes and send a picture to their friends on their Facebook page and ask “How do I look?” Brilliant for the age group. Simple. Social. Smart.…I keep finding reasons to keep working as technology empowers more interesting ways to do business.

          19. Eric Leebow

            Certainly, some brands are better off steering far away from social media engagement. You know which brands those are, the ones that are pharmaceutical, toilet paper, and some others. Now, that doesn’t mean I’m not an advocate of conversational marketing. I think that it’s best when the brand can require a purchase before engaging in a conversation. The problem is that I can say I enjoy a brand or find it interesting on the Web, yet the real brand advocates are those who shoe up. If you’re going to wear that brand of shoe, eat that brand of whatever it may be, then there are ways to communicate with that brand. If a brand can allow for its customers to engage around the brand once the sale is over, and bring positive energy to a social conversation, then it’s doing what’s right for its brand.

      2. COMRADITY

        Hey Morgan, our platform would create demand for your service. Also, in the development phase, but I’d be interested in sharing roadmaps to see when they may intersect.

  12. Dan Lewis

    I find it fascinating that direct mail is gaining, and it looks like, gaining in parallel with the Internet. It makes a lot of sense from a b2b standpoint, especially as email becomes less-and-less viable for direct mail (too close to, if not outright, spam).

  13. Jan Renner

    Yet this year’s upfront TV and Cable market will be bigger than ever

    1. fredwilson

      you can see that in the chart

  14. Alex Murphy

    No question the fall off in the Newspaper’s share of voice is dramatic. What I see in this chart is that there are two things at work … 1. Targeting and 2. Market Creation.To date, the Internet is great at helping marketers target exactly who they want and then giving them the ability to measure a clear ROI. This is true in other mediums such as Direct Mail, which has also grown about 5% over the same time period as the Internet, so its not just the Internet that is working, but rather Marketers are becoming more sophisticated about how they measure the performance of their ad dollars.TV continues to be the primary method for creating a market. However, I believe that this will start to change with social spheres of influence becoming more and more intertwined from online to offline etc. It will be interesting to see how the growth rate of “Internet’s share” changes as more network based marketing products are developed that enable consumers to teach each other more fluidly about the products they are exposed to.

  15. Norbert Mayer-Wittmann

    Yea, that sounds right — and it’s not at all surprising to me.My guess is that this information has already been factored into market prices for some time now.I just posted a related “economy” themed article — if you’re interested, you can check it out here:…:) nmw

  16. Scott Carleton

    Very interesting chart.Does anyone know why radio tanked 6% right after 1979?

    1. Rick Bullotta

      Scott, 1979 was when ESPN launched and the cable industry was the “next big thing”.

    2. Rick Bullotta

      Actually, it just looks like another category was defined in 1979 (seems like, gasp, “yellow pages”)? Lies, damn lies, and charts. 😉

      1. Steven Libenson

        It is hard to see on my screen resolution, but it looks like the big drop from 1979 is for “Miscellaneous,” not “Radio.” Miscellaneous drops around 5-6% in 1980, the same year Yellow Pages data starts at around 5-6%. As implied by Rick’s comment, it looks like taking Yellow Pages out of Miscellaneous and giving it its own category explains the big drop.

    3. fredwilson

      i wondered the same thingit has to be a data issueno way did it go down in step function like that

      1. Scott Carleton

        Has to be. Cool that ESPN launched that year but an overnight steal of that proportion is just too much.

    4. Harry DeMott

      It is a glitch in the data. Having been a radio analyst for most of the 90’s – I’ve seem most of the data set in detail. Radio really only had 1 down year into this century – and that was in 91 – when we were having a recession – and it wasn’t down all that much. Otherwise, it chugged along through most of the latter part of the 20th century at GDP + 100 to 200 basis points. Not sure if it is on there – but the only huge drop in a major category occured when tobacco advertising was outlawed in billboards – and it was over 20% of their business (disappeared overnight)

      1. Scott Carleton

        Thanks for your insight Harry.

  17. Tom Allason

    personally, i just like that google are making use of excel graphs!

  18. David Fishman

    Makes sense that direct mail continues to grow … albeit slowly. It’s a proven form of advertising that is measurable. Which is why ecommerce + advertising will shift to the consumer driven demand side. Rather than just slinging banner ads, advertisers will be forced to create engaging experiences. This will allow advertisers and retailers to better understand consumer intent and behavior over time.

  19. Steven Kane

    agreedgotta LOVE that direct mail line though as wellplus ca change!

  20. David Binetti

    The thing that jumps out at me is direct mail. It is the only non-internet spend that is growing, appears to have the same first derivative as internet, and is the only curve that has experienced a sustained inflection.

    1. fredwilson

      i wonder about the long term effectiveness of direct mail

      1. David Binetti

        I think both trends (internet and mail) are a result of advancements in targeting (ie, database marketing.) If this hypothesis is true, then social plays like Facebook and Twitter will see the greatest gains moving forward, and direct mail will go away since it can’t compete on the cost curve.

        1. JLM

          The low hanging fruit with direct mail is the ease of entry and the low cost of entry.Take a look at You can design and drop a campaign for the cost of the printing and the cost of postage.The ability to design a direct mail piece on the computer is the big cost efficiency.Direct mail will likely be here for a long time yet.

      2. Rocky Agrawal

        absolutely. there’s less and less reason for people to go to their physical mailbox as most of what is personal in the mail is disappearing. letter writing has almost disappeared, bills are increasingly received electronically, even birthday/holiday cards have to a degree been replaced by facebook and email. direct mail exists because we’re exposed to it while we get other mail. if the other mail ceases to come, there’s no reason to open a of the challenges facing newspapers and other advertising media is that over the last 10-15 years, marketers have been able to build large databases of consumer behavior and reach out to them at negligible cost. e.g. the airlines i fly have extensive knowledge of my travel patterns and interests. they can reach me with a targeted message and track the response.supermarkets, which have long used direct mail, are doing it even better with direct email by using loyalty card data to highlight specific offers:

        1. ShanaC

          I’m actually sort of sad about the birthday cards, tell you the truth…

      3. Harry DeMott

        It is an aggregation of Groupon and Living Social and all the other electronic coupon services. The issue there is the ROI on the spend. If you go talk to Harte Hanks or Valassis or in-store versions of these like Catalina Marketing or News Corp’s promotions division – you will find that big brands like this sort of spending – as it is measurable – and geo targeted – and can reach older demos in a way that Groupon can’t currently. This class of marketing also reaches people at the point of purchase – or damn close to it – which marketers view as preferable. Long term – most mail is just spam – so you will have to be able to target finer and finer – and that is just so hard to do in a physical form. So much easier online.

        1. ShanaC

          Very true. I get practically no catalogs aimed at stuff my age. When was the last time I saw a lululemon catalog…never!

          1. awaldstein

            Hi ShanaAs a point of note…Lululemon sells strongly through their community. One of my favorite brands. They have folks doing yoga on the streets outside their stores, yoga gatherings, community word of mouth, welcome groups to people new in town.While their fit models are quite small, they do service all ages…and their clothes are fast becoming the urban health gear replacing or challenging the leading role that Patagonia held for years;)

          2. ShanaC

            I know- their core seems to be women my age who like word of mouth stuff And they did it through an anti-catalog approach. I think they realized that you aren’t going to reach people through blasting advertisements at them.

          3. awaldstein

            They are super smart and make great clothes.No real online community at all…so far.

      4. RichardF

        Direct email campaigns can be very successful.

      5. Morgan Warstler

        We as a class should be demanding the Post Office be privatized / Disbanded.We’d get A LOT more cake out of that play than trying to Net Neutralize cable. It’d pay far greater dividends and it isn’t rent seeking!

      6. JLM

        The phenomenon that is worth tracking is “postcards”. Sounds dopey to be sure, but take a look at your mail and see how much of the direct mail is glossy almost trophy quality postcards. These postcards have a pleasant tactile sensation and beg for retention. This is not an original thought, somebody who I know who is quite expert on this pointed it out to me and I followed his advice. I must get 10 good looking postcards a day.

        1. Matt A. Myers

          I get none. Perhaps very different in Canada and USA.

      7. ShanaC

        Because I get practically no real mail, I still look forward to getting catalogs. I can’t remember the last time I ordered something from a catalog though…maybe it was lands end when I was going to college (they have good quality sheets)…It’s definitely an area ripe for change. Or one where the catalog leads to the website. Something nice about looking at something tactile and then shopping at will…

  21. David Binetti

    The corollary between Direct Mail and Internet is that they can be targeted 1:1. The others all paint with much broader strokes.

  22. andyswan

    I find it amazing how much more “disruptive” TV was in its first decade than the internet in its first.Not sure I buy it…then again, I wasn’t around when the wonder-box first started bringing live entertainment into your home….

    1. ShanaC

      we’re much more highly mediated an d much more blase. I’m still amazed.

  23. Buffaloreynolds

    “We always did feel the same, we just saw it from a different point of view.” So says Bob Dylan and it applies here. In the early part of this decade the distinction between the bottle and the wine became murky. Is newspaper or internet? Is Pandora radio or internet or mobile? Is watching “It’s Always Sunny in Philadelphia” on Hulu internet or television?What does seem clear is that consumer behaviors that were just perfunctory– I get a Sunday paper because I’ve always gotten the paper, I watch a show live because that’s the only way I can see it… are dying or at least decaying. Things that are portable and can be time-shifted are thriving.It’s an exciting time to be in the game.

  24. Norbert Mayer-Wittmann

    For some reason, I can’t get the “reply” function to work O_OHere’s a reply @KidMercury:”advertising is any content for which I have negative demand”

    1. kidmercury

      by that definition, i think we will see the market for advertising decline, and get commoditized by group buying/community commerce stuff IMHO.

      1. ShanaC

        Part of the problem is- advertising is suppose to tell me about the stuff I don’t know I want, or haven’t realized about yet. Larger scheme of things- what is the difference between marketing, advertising, and pr- not much, just the portrayal of the message and how much “education” one gets as the recieving source.

        1. COMRADITY

          Unfortunately, most advertisers suspect that advertising’s effectiveness and thus efficiency to create new awareness has eroded due to low recall and mistrust.Internet advertising proves it.Many people here say that internet advertising is better than traditional advertising because its ROI is more measurable. Yes, an advertiser knows what percentage of impressions convert to a click and then a lead. BUT an advertiser also quantifies that most of those impressions are wasted.PR’s differences stand out in this context. It is “earned” not paid for. The journalist’s voice has more credibility than advertising (although the more PR is overused – and it is right now – the lower the journalist’s trust factor goes).The truth is that marketing is the “toolkit” not a tactic. Knowing which tool to use and when to use it is a lost skillset. Right now, most folks are throwing the newest, shiniest tools at the market and hoping something works.Katherine Warman Kern@comradity

          1. JLM

            The “toolkit” analogy is quite right from my perspective. I agree that the “shiney penny” is the one being used just now.It is undoubtedly helpful to stop and catalog all the tools that are available and to see the new tools as just that — a new tool in what may be a fairly full kitbag. Don’t let the other tools get rusty.The other thing that strikes me is the absence of a diversified communication strategy for the end product. It seems like the communication channel has almost become the strategy or marketing objective in and of itself — how many friends/fans do we have? — rather than being a conduit through which information pours and then effectiveness — sales data — can be evaluated.

          2. COMRADITY

            So true.There once was a universal, predictive new product model: awareness x trial x repeat x stay rate = market share. Sellers and Buyers of media and marketing tools used the same vocabulary. You could compare the effectiveness/efficiencies of different tools to achieve each of these objectives.But, the model wasn’t predictive for established brands.And now it doesn’t even work for new products. You simply can’t achieve the kind of awareness you need for this top down funnel to work efficiently. And a ton of money is wasted trying to do it.To us, it just makes sense to start at the other end of the funnel. More scalable, efficient.The industry was headed in that direction in the 1980’s, when marketers were investing heavily in segmentation studies to identify their core consumers. When it was realized that there was no media or marketing tools to act upon the research findings, research budgets and depts. were cut to nothing. Fortune 100 companies looked to global markets for growth.Now there is a medium which could be highly targeted.But money is aimed at replacing Mass Media and a share of Mass advertising revenues.Meanwhile, those “formerly known as advertisers” Fortune 50 marketers are putting more money into “custom media”, creating virtual community networks and content, hosting local community events, targeting the folks they want to listen to. And I do not use that word loosely. These companies realize that they need to listen more and talk less. They don’t consider it to be advertising.No one is publishing that “custom media” number. But I’d bet it is bigger than you’d expect.

          3. JLM

            Brilliant comment. Really. Thank you. I feel like I should drop a tuition check in the mail.The ability of a company to actually make a direct connection with its customers and to abstractly obtain order fulfillment seems to doom normal multi-tiered channels of distribution which are unfortunately nowhere as knowledgeable as to the product.The other day I had an obscure little problem with a series of A/C units that I literally have hundreds of installed in my company. I could not get the problem solved by the local mechanical contractor and wound up speaking directly w/ the manufacturing engineer who is in charge of product development who was able to solve the problem in a nanosecond or less.In addition, he was able to provide me with technical information, an updated manual and future access. I ended the conversation with his e-mail address and cell phone number. I asked him how often he has such a conversation and he said about 10 times a day.Funny thing about it is that I now want to do all my business with this company because of the accessibility of such support after the sale.

          4. COMRADITY

            Your experience is a perfect example of a point made by one of the advertising “giants” (not sure if it was leo burnett, Olgivy, Bernbach) that the most effective marketing tool is “door-to-door” sales, everything else sacrifices effectiveness for efficient scale.Oh yeah, and feel free to email your address and I’ll send an invoice for the tuition check!Cheers,K-

          5. JLM

            I will put it into beer or church, not sure which one just yet.

          6. COMRADITY

            Some think a tequila is a religious experience 🙂

          7. JLM

            OMG, are you suggesting it might not be so?Be gentle, I live in Texas.On Earth, as it is in Texas!

          8. COMRADITY

            Who knew?

          9. ShanaC

            It makes some tools very sharp, however, it still makes me wonder if we are working towards a world prone towards over-advertisement. I’m very curious what this chart will look like 20 years from now…

          10. COMRADITY

            Couldn’t agree more. Ultimately, consumers will pay for an alternative source that is clearly “independent”, authentic, and consumer centric. And those vehicles will command a premium from marketers who want to be accepted in that community. And frankly, marketers will be glad to shift the dollars they are spending on custom media and event promotion business because that really isn’t what they do best, is it?

          11. JLM

            You are quite right about that. The presence of independent and good reviews of products is amazing. Simply amazing.

          12. ShanaC

            you know, we’re worried about the corruptibility of those sources. Take washing machines. It is much easier to post fake reviews for washing machines than to pose fake book reviews, for how often do you buy a mashing machine…Consumers do hope for some sort of real independence. Which is how Good HouseKeeping and Consumer Reports got their start.

          13. COMRADITY

            The original “thinkers” behind democracy contemplated that an open society is vulnerable to corruption that is even harder to uncover.Isn’t this what we’re starting to realize about the internet?The internet is open, but not transparent. You can’t see or even know how information is being manipulated before you get it. (I think the cream used to rise to the top on Google – I’m not so sure now)In the physical marketplace the sales guy can’t get away with pretending he’s a customer in the aisle and then running behind the counter and put on a funny nose and glasses to take your money, right?Transparency is key to maintaining a level playing field in any marketplace. And I think this is the gaping hole and big opportunity on the internet today.

          14. JLM

            We are way past “over advertisement” to the point that the ability to “opt out” is almost a right. I have long since given up trying to drink from the fire hose. Having said that, this is the greatest time in my lifetime to find the stuff you really want, need and are curious about.I refinish antique wooden planes and regularly correspond w/ a guy in Australia who has taught and validated everything I have learned in over 25 years of this hobby. His pictures are worth about 90% of all of my experience.So, sometimes, the fire hose is a good fire hose.

          15. ShanaC

            I’m not sure that what you two are doing counts as advertisements. And sorting through all of this information is truthfully, exhausting (though you are right, worth it.)

    2. JLM

      I am having the same problem. I just right click my mouse and it comes up thereafter. Very annoying.

  25. sjcobrien

    Fred:In terms of making a bet, I’m a bit more dubious. That 5 percent, while growing, is spread much thinner given the number of start-ups trying to make their business model work around ads (of all the various definitions you mention). And while the other lines will likely get disrupted, and mashed together in various ways, I still wonder about the ability of any single player (outside Google and Facebook) to create a large enough base to make a living off of this.

  26. Norbert Mayer-Wittmann

    @KidMarcury:Sounds very reasonable to me — and I think e.g. J&J is doing precisely that with and/or CBS is doing precisely that with, and/or B.Diller w/, and/or Fred w/… — we are all “buying into” content that we value, and content that no one cares about will become more and more neglected. That is what that declining dark line has been saying all along.@Fred when I use reply + enter my reply, Disqus always gives an error message “please enter content” O_O

  27. Justin Herrick

    Very interesting. I like where this is going.

  28. chris dixon

    Agree, and the growth will be mostly in intent generation ads (vs intent harvesting), which at least now means mostly display ads.

    1. ShanaC

      I still think this leads to questions about what causes intent. We don’t know the entire funnel cycle of what causes someone to even start a search about say, sneakers. And without knowing that, how will someone create an ad?

  29. Norbert Mayer-Wittmann

    Interesting point @EricLeebowNote that most of what is listed as “newspaper”, “TV”, “radio”, “cable”, etc. are brands — and IMHO their future looks quite bleak (except for those which have begun to understand the Wisdom of the Language — which is *NOT* brands).An empty meaningless string of characters (which is — more or less — what brands are) is not something that most people will tend to be engaged with. IMHO, natural language is all that matters.

  30. Artur Adib

    These stats seem to paint a different picture, placing the Internet at a close #3:http://www.businessinsider….I don’t know which is right though.

    1. fredwilson

      yeah, i stated my concerns about the data in the post because it seems too low to me

  31. J.g. Erv

    Its more than ad spend, mobile + broadband is the combustion engine of 2009. See the comparisons here. There is a chart similar to the one in this post but pdf format at the top. I know the article is extremely long, but worth the read.

  32. mediatiger838

    I agree with that!

  33. Dan

    What’s striking in this chart is not the trend of any individual line but rather the fact that Google’s Chief Economist apparently created it using Microsoft Excel. Is it just me or does the color scheme look very much like MS Office and very un-Google?!?!Considering the buzz today about Google banning Windows internally, you would think they’d make a point of using Google Docs to create their external presentations.Dan

  34. John Schultheiss

    A couple comments: Internet ad spend – no matter how you define it – is only an indirect measure of impact. Internet advertising is more cost-effective, and more trackable than other forms of advertising, so it may cut into the competition disproportionately to the actual revenue it commands.Second point is that, just as tv->internet TV, and radio->internet radio, Yellow pages->a combination of things, including directory services tied to VOIP. So the ad share associated with the internet will likely be even higher as things unfold.And the third of my two points… TV took a decade to go from 0 – 15% of the national ad budget. Internet only moved up 5% in the same timeframe. Anyone care to speculate as to why?


      Time vs. Space.Time has a limited supply.Space has unlimited supply.Therefore, TV time grew exponentially in relative value.

    2. Matt A. Myers

      More chances to hit the same eyeballs so drops cost due to mass inventory available, and people online didn’t learn how to monetize things very well initially – except for porn. And perhaps traditional old businesses, slow giants, took longer to feel comfortable moving their dollars over?

  35. Darren Herman

    One of the slides we love to show clients is the minutes spent per medium and associated marketing spend – and that really illustrates how much digital has to catch up.I did however pen a post that also talks about a trend within marketing which is the collision of below the line mediums with above the line mediums: think you’d find this interesting.

    1. fredwilson

      great post, i left you a comment

      1. Darren Herman

        Thanks for stopping by Fred!

  36. ShanaC

    I still think we have to question what community based commerce is- one of the interesting things about this chart is (beyond newspapers) the overall saturation of advertising. Even if there is a kind of leveling off growth, there seems to be (light) growth in all fields (beyond internet and direct mail, which seem to be growing massively).This seems to be a point of just saturation. When you need to hit methods where clear measurements must be made, you are hitting out a point where there is too many advertisements. I think one of the interesting questions of the internet- will the conversation about advertisement shift back about how advertisement is produced and shift backed to a conversational point (ie back to lead gen, more complex, take a back seat, and let the consumer drive) because we’ve commodified every other possible space…why bother advertising if that area you are using is saturated?

  37. Brenton Gieser

    I can’t imagine direct mail climbing that much further with all the cheaper and more effective digital ad channels now.With more targeted data, and strong metrics to measure by internet ads will start to become a major piece of the pie once social ads harness the data and the new metrics and actually become effective.

  38. Venkat

    Just remembered this link from before, in Fast Company, that presents a slightly different picture. I am unable to reconcile the two pictures. Help someone?Ad Dollars Go DigitalAccording to this, online ads will actually outpace print this year, at a projected 119.6 billion as opposed 111 billion for print. What am I missing? Both graphics include print, TV and online. Fred’s Google graphic includes a few more minor categories, but can they make such a huge difference? I must be missing something very basic and dumb if the two sets of numbers are off by this much.

  39. amytindell

    I really do wonder what is included in that word “Internet”. I also wonder if there is any control for the cost of advertising on paper vs. internet. From my research, internet advertising can be substantially cheaper than more traditional methods. Perhaps in a normalized study, internet advertising would be up even more. Also, some businesses do straight-forward paid advertising on the internet, and others do advertising and marketing via social media methods – these are usually ultra-cheap to free, but still take time and resources to pursue. For example, see this blog on the MassChallenge site: http://www.masschallenge.or


      However the cost of creating and managing the communications on the internet can be exponentially greater than traditional “mass” advertising, where it only takes one ad. To optimize the targeting capabilities of the internet, the communication needs to be tailored to the context & the timing, at least. To participate in Social Media, it takes a human being 24/7. These are not “cheap” resources.

      1. amytindell

        Thanks – you are absolutely correct. I suppose my statement was inconsistent – I meant that the up front monetary cost of say, creating a facebook page or a twitter account, may be zero. Of course, hiring a person to create the accounts, keep up with postings, respond to followers, and reach out to different forums definitely does have a monetary cost. I am participating in social media in a marketing capacity for the first time, and I am learning this lesson well! Always open to tips!