Message From Michael -- October 1, 2007

DON’T COUNT OUT DEAD TREE TECHNOLOGY

ONLINE VIDEO IS LIKE HAVING YOUR OWN DVR

ADVERTISING AND RODNEY DANGERFIELD

MONEY MAKING MEDIA MILLIONAIRES

COCKTAIL CHATTER



DON’T COUNT OUT DEAD TREE TECHNOLOGY: That wasn’t exactly the point of a MediaWeek Special Report looking at the 2008 media outlook, but when you crunch the numbers, like I did, you are reminded just how much of the advertising dollars they account for. Newspapers and magazines together account for nearly as much advertising spending ($73.41 Billion projected for 2007) as all of television (network, cable, spot) and radio combined ($76.77 Billion). Of course, they’re growing at a much slower rate than broadcasting. I am not going to try and summarize the report here, but instead offer a brief overview and a different way of looking at the numbers. The report offers three projections for growth from Price Waterhouse Cooper, Veronis Suhler Stevenson and ZenithOptimedia. I averaged the three to come up with a projected growth and then projected what 2008 means in actual numbers. (Yes, I know, I don’t have a life.) And I apologize, but there’s lots of numbers coming up.

Low man on the growth totem pole of course are newspapers which actually showed a decline from 2006 to 2007 in circulation and revenue, and are only expected to grow an average 2/3rds of one percent in 2008. But at around $49 Billion, it is still #1 and the 600-pound gorilla of the advertising picture. I have to confess that I didn’t realize that magazines (which comes in #2) accounted for such a huge part of the advertising dollar ($24.85 Billion projected for 2007). But, again, growth is pretty low, with an average of 4% projected for 2008. By comparison, TV in all its forms (network, cable and spot) is expected to average between 6.5% to 7%. Cable TV leads the pack at $20.2 Billion projected in 2007 and an average growth rate that will put it at roughly $21.63 Billion in 2008. Network TV comes in next with $18.45 Billion projected in 2007 and a projected growth rate that will put it at $19.68 Billion in 2008. And finally, Spot TV with a projected $18.3 Billion in 2007 growing to $19.5 Billion in 2008. Another thing I didn’t know (there’s so much I don’t know) is that radio advertising is actually larger than any of the individual TV segments, at least in 2007 with $19.82 Billion. But with a meager 2.2% average growth rate, radio will fall behind cable TV in 2008 and just barely ahead of the other two, reaching $20.26 Billion.

The wild card in all this, of course, is digital advertising. It is the third largest category of advertising, but of course that covers everything from MySpace and Yahoo to television video online and newspaper websites. Still, with an average growth rate of 19.8%, digital is on advertising steroids compared to the others. Digital in its myriad forms has projected revenues of $21.1 Billion in 2007, just barely ahead of Cable, but then leaping to a projected $25.28 Billion in 2008, just barely behind magazines. The report notes that broadcast networks are doing everything they can to leverage their brands, content and distribution system into new media; and that newspapers are leveraging their news brand online and garnering a greater growth (24%) than anybody else in their digital efforts.

ONLINE VIDEO IS LIKE HAVING YOUR OWN DVR: New research by NBC-Universal indicates that people are using online video like they use their DVR. They miss an episode. They just go online to watch it. And, says NBC’s Chief Digital Officer, George Kliavkoff, the research shows that online video viewing is not just for people wanting to watch snippets. More than four out of five (83%) who start watching an hour-long program online finish watching it online. Kliavkoff admitted he was worried that online video would “cannibalize” the on-air product. Even better, the research indicates the online viewing, like the DVR viewing actually adds to the viewing ‘incrementally.’ And, as a personal footnote, I missed the comedy Back To You that I mentioned in last week’s MfM, and it was nice to be able to go online to watch it.

As a footnote to this, DVD penetration has almost reached the level of VCR penetration, according to data from Nielsen Media. The difference is that VCR usage has been slowing declining from a high of 91.4% in May of 2002 to 86.4% in May of last year, while DVD usage has been steadily increasing from 42.6% in May of 2003 to 82.4% in May of last year.

ADVERTISING AND RODNEY DANGERFIELD: What do they have in common? They get no respect. At least, according to a survey by advertising giant J. Walter Thompson which found that only one in seven (14%) of Americans respect ad people. But, a consolation prize to my advertising friends, nearly a third (31%) saw ad people as a “necessary good” and that was better than politicians and car salesmen. Even more interesting to me was the finding that four out of five (84%) think too many things are over-hyped and three-quarters (72%) say they are tired of people trying to grab their attention “and sell me stuff.”

Okay, I have to at least acknowledge the more famous study released by the folks at J. Walter Thompson, even though it has made all the media rounds. That is people’s addiction to the Internet. The ‘snicker fact’ is that one in five actually admitted to having less sex because of the Internet. The less humorous but probably more telling factoid is that almost the same number (one in five) said they could go a whole week without the Internet but most said they couldn’t stand being without the Internet for a day (15%), or a couple of days (21%) or a few days (19%).

MONEY MAKING MEDIA MILLIONAIRES: Okay, say that five times real fast. Actually, don’t bother. Just say Oprah. Forbes magazine unofficially announced her queen of media, naming her as the top money-maker in the media world, earning $260 Million from June of 2006 to June of 2007. You’re probably saying ‘no surprise there.’ True. But how about the #2 spot – Jerry Seinfeld. Thanks to re-runs, he gets $60 Million a year. The one I wouldn’t have guessed, at #3, is Simon Cowell, who gets $45 Million a year, followed by David Letterman at $40 Million, Donald Trump (no, I don’t understand why he’s on the list either) at $32 Million, Jay Leno also at $32 Million, Phil McGraw at $30 Million, Judy Sheindlin (aka Judge Judy) at $30 Million, George Lopez at $26 Million, Keifer Sutherland at $22 Million, Regis Philbin at $21 Million, Tyra Banks at $18 Million, Rachel Ray at $16 Million, Katie Couric at $15 Million, Ellen deGeneres at $15 Million, Ryan Seacrest at $14 Million, Matt Lauer at $13 Million, Barbara Walters at $12 Million, Diane Sawyer at $12 Million and finally Meredith Viera at $10 Million. Just for the record, that’s 11 men and 9 women.

And as a footnote – Oprah also made Forbes 400 list of the world’s richest people. Even more fascinating – for the first time, everyone on that list is a Billionaire. Yes, including Oprah.

WORTH NOTING: This is somewhere between Cocktail Chatter and Factoid, but Nielsen Media has taken some of its own research advice and launched a social networking site, heynielsen.com. It is, according to the site description, “a place where you can make a name for yourself while trading opinions on TV, movies, music, personalities, web sites and more.”

COCKTAIL CHATTER: According to linguist K. David Harrison, author of When Languages Die, every two weeks one of the world’s 7,000 languages falls out of use. Some 2.5 Million U.S. adults took part in online dating in the last 30 days, according to research firm Mediamark Research Inc., with men accounting for 52% and women 48% of the users. Researchers at the University of Campinas in Brazil (where sugarcane-based ethanol accounts for a third of its fuel), say they boosted ethanol yield by 17% and shaved two hours off the fermentation process by circulating the fermentation brew past six magnets. Nicholas Negraponte and the folks at the One Laptop Per Child effort have announced a buy one get one program, starting in November, in which you can buy a computer for your child and one for a child in a developing nation.