Traditional media threatened by surge of net ads

23 May 2008

With close to 900,000 people with broadband connections, the internet market in Ireland is becoming the mass market that may replace the increasingly fragmented TV sector in terms of advertising spend, a new report claims.

The latest State of the Net report from Amas, published in conjunction with the Irish Internet Association, predicts that broadband subscriptions in Ireland are likely to break through the one million barrier this year.

Two third of Irish homes now have a PC, and increasing numbers of Irish businesses are using services like Skype as well as mobile broadband services.

The report suggests that the greatest increase in internet usage over the past four years has come from those over 56 – the so-called ‘silver surfers’. At 18pc, the over-56 year olds have some distance to go on 16- to 24 year olds, where internet usage was at almost 70pc. Even so, that 18pc compares with a meagre 7pc in 2004.

Businesses have taken a real shine to e-government services. The number using the internet for full electronic case handling increased significantly between 2006 and 2007.

As many as 59pc of businesses said they used the internet for full electronic handling with a public authority, compared with 46pc the previous year. Form filling is among the most popular online activities, with 82pc of businesses obtaining government forms online and 68pc returning completed forms online.

However, in its focus on online marketing Amas predicts a major sea change in ad spending with the internet becoming the prime advertising medium.

The UK Internet Advertising Bureau predicts where advertising will become the primary channel after 2010. In the UK, online advertising stood at £2.8bn sterling in 2007, a 106pc increase in just two years. It commands a 15.3pc market share of advertising spend, overtaking old media stalwarts like radio and regional newspapers.

As a category, online advertising (display, search, classifieds, email) is in third place behind press at 19.9pc and TV at 21.8pc.

“Ireland is playing catch-up but there are strong indicators that Irish marketing professionals are shifting their budgets online,” said Aileen O’Toole, managing director of Amas.

“This is good news for online publishers but less so for traditional media. Based on experiences in other countries press and TV could lose out as advertisers divert their spend online and realise the value, reach and accountability of online advertising and marketing,” O’Toole said.

Her colleague Fiachra O’Marcaigh explained: “The audiences for traditional media are becoming more fragmented. TV has gone from five stations to 50 to 500 in this country in a decade. Only a small number of TV shows now get the mass audiences of a decade ago.”

He says that studios like Endemol are adapting to the change. “There are now four soaps on Bebo with substantial budgets behind them. I don’t think we’re talking about an overnight revolution so much as a fast-paced evolution.”

Is it too late for traditional media formats like newspapers and magazines to move to the online world? “A lot of successful Irish media brands are already adapting to this and are moving a certain amount of content like classified ads into places that work best online.

“By varying degrees, many traditional Irish media brands have recognised the threat and are adjusting their offerings,” O’Marcaigh said.

By John Kennedy