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International: A major media revolution has just occurred<br >Consumers spent more to reach media than marketers spent to reach them

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International: A major media revolution has just occurred<br >Consumers spent more to reach media than marketers spent to reach them

If you thought Open Water was scary, wait until you read the next sentence. Communications spending by end-users ("people" to you laymen) surpassed ad spending for the first time, according to Veronis Suhler Stevenson's Communications Industry Forecast.

U.S. consumers spent $178.4 billion on movies, recorded music, cable TV, Web sites, video games and the like in 2003, compared to $175.8 billion in U.S. ad spending. The gap will only widen in the next five years. Toss in spending by "institutional end-users" (um, "people at work") and the 2003 number was $331.5 billion, more than the $316.8 billion spent on advertising and other forms of marketing services combined.

'A major revolution'

Avi Dan, managing partner at Berlin Cameron/Red Cell, New York, calls it "the big bang ... nothing less than a major revolution."

"For years, the consumer went along with a model of intrusion perpetuated by the networks, advertisers and ad agencies," he said. "The consumer has decided to take over."

Avi is a passionate student of the ad industry who voraciously consumes business books and trend reports and loves nothing so much as to dissect them over long sushi dinners.

"Consumers are willing to pay for personalized information and entertainment that fits their interests," he said.

Smug assumptions

That runs contrary to popular belief. Despite evidence that digital technologies will upend the business of marketing communications, some advertisers and media executives remain stunningly complacent. Their sense of security emanates in part from their role in subsidizing consumers' media habits. If audiences want to do away with ads, some smugly proclaim, they can pay the tab themselves.

The assumption is that they won't.


The Veronis Suhler finding is good news for media companies whose fortunes have been overly dependent on advertising revenue and cycles. It could even be viewed as good for advertisers who have long shouldered more than their fair share of the burden of TV programming and magazine production costs.

Blaring wake-up call

But it's also a blaring wake-up call for those marketers that have clung idiotically to the belief that they could delay or prevent change by threatening to pull funds. This is the latest, and most quantifiable, evidence of the transfer of control from content creators and distributors to consumers.

The implications are many. Avi Dan expects media planning and marketing services to continue to rise; advertising creativity to become more "useful" to consumers; "meaningful" brands such as Apple and Starbucks to prosper; and retailers to be viewed increasingly as media channels.

The control shift also gives rise to the convergence of entertainment and advertising. Brands that can no longer easily intrude are instead looking to integrate their messages into content that consumers choose to spend time with. Or they are creating new forms of ads that have an intrinsic entertainment value and will be invited in, even sought out, by audiences.

"Advertisers have to find new ways to reach consumers, and to do it as effectively as they have for many years with TV," said Avi.

What consumers chose

Cable and satellite TV, the Internet and home video have driven consumer spending in recent years, but Veronis Suhler anticipates a greater upside for satellite radio, video games and video on demand. As a result, it projects end-user spending will grow at a 6.6% compound annual rate over the next five years, while advertising and marketing services will grow at a 6.2% clip.

Like a shark's fin in the water, those numbers simply can't be ignored.

Source: Adagecom


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