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Strike Over, New Media Spending Begins

Posted by Mort Greenberg on February 20, 2008

Strike Over, New Media Spending Begins

FEBRUARY 19, 2008

Online video ads are ready now. Mobile video ads will take longer.

With the WGA writers’ strike over, Hollywood is getting back to work. As TV shows and movies go back into production, the work stoppage over revenue from content used online, on mobile phones and on other channels may fade into memory.

The percentage point deals have been settled. But how much ad revenue is actually at stake?

Parks Associates addressed this question, projecting that new multimedia platforms in the US will generate $12.6 billion in advertising revenue by 2012.

Broadband multimedia ads will account for more than $6.6 billion of that total.

Parks Associates told eMarketer that “broadband media” included online streaming video and downloadable media; the latter consisted of podcasts and ad-supported music and video download services.

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“The floodgate is open, and the deluge of ad spending to these new platforms is irreversible,” said Harry Wang, analyst at Parks. “There must be interest alignment among major stakeholders to avoid frictions like the Writers Guild strike that hinder content flow to these new platforms.”

US Advertising Spending on Emerging Multimedia Platforms*, 2007 & 2012 (millions)

Considering the extent to which the media giants are streaming media on their Web sites and tying ad support to that content, this seems logical. The broadband multimedia ad spending numbers also agree with other research company estimates.

eMarketer projects that, by 2009, rich media and video ad spending alone will reach nearly $3.6 billion.

US Online Advertising Spending, by Format, 2009 (millions)

Forrester Research projected over $7 billion in online video ad spending in 2012.

US Online Video Advertising Spending, 2006-2012 (millions and % change)

The non-linear TV services category referred to video-on-demand (both cable and IPTV) and DVR service. Parks predicted $900 million would be spent on ads for those media channels in 2012.

The biggest question concerns mobile information and entertainment ad spending.

Parks’ projection for mobile ads through text messaging, display banner, search, and multimedia services is a very aggressive $5 billion in 2012.

eMarketer predicts that mobile search ads alone will account for $1.4 billion in 2012, but the rest of the mobile infotainment ad spending picture is less clear.

“Multi-billion dollar markets require mature ecosystems,” said John du Pre Gauntt, analyst at eMarketer. “Web marketing needed more than a decade to pull that off. Mobile will probably take less time. But it’s a contradiction to assume maturity will happen in a flash.”

The eMarketer US Mobile Advertising and Marketing report will be published this month. Click here to be notified when it is released.


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