The Oscar winners have, in their Slumdog glory, all been revealed, so it’s left to me to announce the biggest loser at this year's 81st Academy Awards.
And the grand loser is (drum roll)… the advertising business.
The economic crisis hit the Oscars big-time this year, with ABC snipping prices on its television advertising slots by up to 20 percent and losing L’Oreal completely, while American Express, MasterCard, and Coca-Cola all cut back on their ads from last year.
But it’s not only the Oscars and ABC that have been hemorrhaging advertising revenues. The financial crisis has triggered a full-blown economic crisis throughout the advertising ecosystem. And the crisis is constant across media sectors -- from television to radio to print and the Internet.
The dramatic decline in advertising revenues for print newspapers has resulted in massive editorial layoffs and a series of high-profile bankruptcies. Advertising revenues for radio in 2008 were down 9 percent from 2007. Comcast Corp. (Nasdaq: CMCSA, CMCSK) reported a 32 percent drop in earnings in the last quarter of 2009, mainly fueled by dropping advertising revenues on its cable television networks.
Everyone in the advertising business is hurting -- even, amazingly enough, Google (Nasdaq: GOOG), which, having recently discontinued both its Print Ads and Google Audio Ads programs, is now going through the first redundancies in the company’s 10-year history.
Things have gotten so bad in the advertising business that alcohol and sex commercials are now successfully infiltrating prime-time television. During the Grammy Awards earlier this month, Absolut Vodka commercials ran on 15 local networks, including those in Los Angeles, the first time this had happened for many years.
Even Facebook and Google have relaxed their rules about alcohol advertising, with Facebook now allowing software developers to run promotional programs pushing alcohol over their social networks.
As the Kathy Doyle, SVP and director of local broadcast at Universal McCann, explained to the Los Angeles Times, “The bottom’s dropped out of the market.” Bottom perhaps being the appropriate word -- with one Los Angeles radio station (KROQ-FM) now running breakfast ads for an online dating service that promotes extramarital sexual relationships.
While it would, of course, be unfair to blame the Internet for the collapse of the advertising business, the digital medium does bear some responsibility for the current crisis. The problem is that our culture of ubiquitously free online content has meant that advertising has become the only viable business model now for the vast majority of Internet publications, music labels, and video companies.
But the advertising model -- with what NBC CEO Jeff Zucker memorably described as its destructive tendency to turn offline dollars into online pennies -- doesn’t enable the financing of high-quality online content. And as the cost of online advertising impressions continues to plummet, so the increasing commodification of Internet advertising is contributing to a general crisis for all content companies -- from The New York Times and Random House to EMI and Newsweek and to popular blogs like “Fake Steve Jobs,” which are all struggling to extract cash out of eyeballs.
As Bill Keller, The New York Times' editor-in-chief, wrote on the Web last week: “A lively, deadly serious discussion continues within The Times about ways to get consumers to pay for what we make."
Yet getting consumers to pay for the content that they consume on the Internet is, oddly enough, one key solution to today’s crisis of the advertising industry. The Web 2.0 model of giving away content for free and then realizing revenue via advertising isn’t working on any level. Consumers have been spoilt by free content and advertisers by cheaper and cheaper CPMs (cost per thousand times an ad is served), while highly trafficked but still unprofitable sites like YouTube Inc. and Facebook are struggling to realize the scale of advertising revenues to make them genuinely viable media companies.
Could Madison Avenue go the same way as Wall Street? Unfortunately, yes it could. The financial tsunami has triggered a dangerous crisis in the advertising industry. And it is in nobody’s interest -- advertisers, media companies, or consumers -- to allow this crisis to spiral into a full-blown meltdown.
Still, unlike Wall Street, the U.S. government is not going to bail out Madison Avenue if it completely fails. And just as a broken financial system is wrecking our economy, so a fully dysfunctional advertising sector could, I’m afraid, destroy our media.
— Andrew Keen, Silicon Valley author, broadcaster, and entrepreneur, can be reached on Twitter at @ajkeen.
This does indeed seem to be uncharted territory. From my understanding, entertainment thrives during recessions[depression], however this doesn't seem to be so as you've mentioned.
I hadn't a clue that alcohol commercials were allowed again...was it triggered by the ad revenue bleeding?
Not to knock newspapers, however their advertising rates were RIDICULOUS...I expect the same shake up to occur (if it hasn't already) to yellow pages advertising.
Maybe it's time to try bartering for content. No, I don't mean I'll send a dozen eggs to you for a dozen articles. But maybe those who post interesting content will be granted free access to other interesting content, while the non-creators will be charged a low, reasonable fee.
Nah, it'll never work. How 'bout a gallon of milk AND a dozen eggs for a year subscription to the Times?
yeah, this is a great post. I think that tv companies will buy newspapers. the big question is how they reinvent business models that combine tv and newspapers in the face of free content. I suspect that we'll get a third model that will vault over tv and newspapers
The newspapers may fold, but all the content of newpapers and magazines will never go anywhere, nor will the writers, they will all still be around and writing.
What we are going to see disappear is the reputation for quality that stands behind that content. When we see something on the New York Times, or Wall Street Journal website, we know there is a 157 year old company and a 120 year old paper with a solid reputation of "quality" reporting and "honesty" behind it.
If you all of a sudden remove those old source with solid reputations for the news, who are you going to end up with?
I think we are going to see television and news stations buying up names of these newspapers and magazines, the internet has not severely affected television yet, and I think television/cable news will start to morph further into the newspaper business, and possibly the online newspaper business.
I think ISPs might start thinking about partnering with content providers to sell packages to their subscribers. Tack on an extra $2 to your monthly cable bill and get access to the sports package content from Sports Illustrated, ESPN, FoxSportsNet, SportingNews, or the financial subscription for another $2 a month for the Wall Street Journal, Money Magazine, Time, New York Times, Washington Post and the LA Times.
"Cable" for the internet... Sign up for the basic package and then add some of the premium packages...
Way to go! Please don't make IE pay! As it is theres way too much competition in the Online space& if you do go pay there is a chance that you may lose many valuable readers.Lets face it,even Facebook is scared of the competition ,otherwise one of the best ways for them to raise Revenue (instead of all this ham-fisted approaches they are pursuing so far) would have been to put in a small Log-In/User Fee.How about USD 12/year ???It doesnt sound that much,but you have to realise that if they do that,how is the competition[Read Myspace,Orkut,Bebo,Hifi, LinkedIn, etc) going to react?Especially some of the players with super-deep pockets like Myspace and Orkut-They will go on National TV during events like the Super-Bowl ,NASCAR and NBA Finals-With ads like these,
"
kid with Glasses speaks [Looking suitably Downcast]to his more Trendy Shades wearing Friend -You know Facebook went Pay!
Trendy Kid-Don't worry I use Myspace/orkut and "They have promised me that They will never Go Pay
Kid with Glasses- Really?
Trendy Kid- Yeah and not just that they are now giving Facebook users new tools to make a completely Painless Transistion for me and Friends to Myspace for FREE "
Kid with Glasses- Really? I am moving with my friends to Myspace,right now!"
And then Rupert Murdoch will come on screen and Say," MYSPACE because we beileve that the best things in life are free!"
Okay the Murdoch coming on-screen is a little over the top,but you get the picture don't you?Competitors would love it!!!
Lets face it,Except for the relevant and famous examples mentioned here[FT,WSJ,Porn],I can't think of any other websites which are pay. Even Businessweek and The Economist[I work on both their Panels] are both mainly free & whatever else anyone says you can't beat these two great Magazines for Business Insight and content.Also, the pay per view thing has never really caught on in Asia.And we are all agreed on one thing.Asia represents the World's Future and if they are'nt going to pay,I can't see how Content Providers/Websites are going to force them to do so.
But I agree that we need to look at ways to re-invent revenue streams in the online space.Maybe by giving more Highly specialised content for pay or,giving advertisers more qualified(?) information on Page viewers(Like where he/she is from and how long they spent on a particular page and which pages they tend to ignore,etc.And also,getting viewers/readers do some of the websites work for them like Advertising through Word or Mouth/Clicks/Diggs,etc. What else? I can't figure out that much right now....
Oh wait there is one more thing.How about Hosting Company Information for the company?Similar to Peer to Peer networks,All loyal readers who want to access content for Free will have to download a Piece of Software on their own PCs which takes care of some simpler processing tasks for the company.This non-obtrusive (lightweight)SoftWare would ensure that there is less need for companies to spend Ginormous amounts of money on Datacentres and especially servers and cut Power costs for companies.[My idea is'nt exactly original- I picked it up from IBMs World Community Grid Project-which does some cool calculations for Medical Diseases and Food projects ] on community machines during downtime.
Think about it,the more you think;the more awesome ideas you come up with!!!
Right now,whoever can demonstrate a better value for money for the Sponsors will get an increasing share of the Shrinking Ad-spending.
And as for our friend Andrew who probably thinks just Ads won't work ;I have to say that Things are darkest just before the dawn.We have already had 14 months of Recession in America it will be over soon,maybe in another 4-6 months and then we will be spending money on Promoting products,etc,etc as normal again.
Online advertising is particularly susceptible to scammers. We've seen criminals misrepresent themselves as legitimate companies in order to get flash creatives inserted on very high-volume adservers. This happened because sales staff, motivated by commissions, tend to be less vigilant (that's as nicely as I can put it).
We're also seeing some pretty fearless enterprises dedicated to the delivery of malware recently. The techniques employed render most defenses employed by home and corportate users irrelevant. Ads are being corrupted on big sites powered by the biggest advertisers. Social networks are also all the rage with online criminals.
A faltering economy is a threat to the Internet's business model, but if it becomes a place where the average user can't expect a certain level of safety in their online activities, the deterioration of the advertising model will accelerate.
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Good news for those with a religious faith in Sarah Palin: She’s done the impossible. Miracle of miracles, she’s made me -- the Antichrist of Silicon Valley -- fall in love with the Internet.
To celebrate the launch of the Nook, its new e-book reader, Barnes & Noble is giving away a free copy of Malcolm Gladwell’s The Tipping Point to the first 10,000 people who buy the $259 device when it is released late next month.
It’s one of the great ironies of the new Internet economy: As the value of digital content on the Internet falls toward zero because of its ubiquity, the value of real-time physical products increases. While this is promising news for musicians and writers, it’s no panacea for those filmmakers now desperately searching to discover a new business model to revitalize their old industry.
While Google introduces its new Chrome OS (which I'm hearing will be widely available in one year? Did I mishear that?), IBM announced 10 new products today to help companies using IBM System z mainframe technology.
Smarter Collaboration: How to Thrive in a Challenging Business Environment Market conditions are changing faster than ever, and organizations need to improve their agility and adaptability in order to provide better service and improve processes. The ability to work with customers, business partners, and employees as effectively as possible - while at the same time holding down costs - is a key to success. READ THIS eBOOK
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The problem with telepresence is that it's not universally accepted, because video calling isn't. While we can all do video calling, we also apparently worry too much about how we look. If we want HD telepresence in our future, we have to dress down, mess up our hair, and dive into our online life.
A digital content market is emerging. Only two things are known about it: the first is that at some point the Internet will primarily become a paid network. The second known factor is that there are innumerable variables in the digital content market that have yet to be worked out. It’s not known, for example, exactly how users will pay for content (micropayments, subscriptions, bartering of farm animals, other).
The Google backlash continues. After seeing their Project 10^100 submissions disappear into the bowels of a Google server farm, a group of irate developers has started their own site to re-collect and vote on the ideas.
Good news! The cost of Internet infrastructure, services, and access devices has been plummeting at an accelerating rate over the last 10 years and will approach a point in the next 20 years where these technologies become so fantastically cheap that ubiquitous, low-cost, high-speed networks, storage, and access devices will effectively eliminate the digital divide for most of the world's population.
What can users today do to protect their online privacy? The simplest and most obvious option is to not use the Internet – at all. However, once all digital information is consolidated over the Internet, trying to protect digital identity by simply unplugging from the Internet becomes impossible – a fact that has manifest implications for civil liberties, Saunders says.
By 2011 the number of Internet-connected sensors will exceed 1 trillion, making your chances of doing anything or going anywhere unnoticed pretty much zero. Saunders talks about how the 'sensortization' of the Internet is eliminating the traditional divide between online and offline populations.
The 20th Century Internet was characterized by the ability to interact with other people and information on the Internet largely without anyone knowing who you were. The Internet of this century, conversely, will be defined by identity. Saunders explains how Internet users are unwittingly contributing to the demise of the anonymous Internet.
Steve Saunders talks about the risks inherent in uncontrolled, widespread profiling of Internet users, and how one day this practice could form the basis of a new industry, the Outernet, which in economic terms will have outgrown the commercial value of the Internet itself.
Search companies and social networks are collecting incredibly detailed information about their users, says Steve Saunders, who predicts that these 'profiles' could one day become commodities to be bought and sold by companies on 'profile markets' or 'identity exchanges’ – the digital DNA equivalents of the financial and commodities exchanges on which stocks, oil, and gold are traded.
One of the most important Internet issues of all time is being ignored by the media. In this three-part video series Steve Saunders explains how search companies are turning the tables on their users by creating user profiles for financial gain, and how soon this trend will explode into full scale profiling.
Industry initiatives and government stimulus funds are giving enterprise software vendors a great opportunity to help build out and manage smart grid technologies.
The problem with telepresence is that it's not universally accepted, because video calling isn't. While we can all do video calling, we also apparently worry too much about how we look. If we want HD telepresence in our future, we have to dress down, mess up our hair, and dive into our online life.
The US loses about $20 billion a year on pirated software, movies, and music. But public policy can help stem the tide of digital theft. For example, France has recently passed a 'three strikes and you’re out' law, whereby if after two warning letters an individual continues to download pirated software then his Internet access will be cut off. US policy makers should consider adopting similar policies.
Financial management planning does not need to include Voodoo economics, but it does help to tap into the knowledge base of your team through some sort of real-time system. We explore your options.
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