The TV is On, but Who's Watching?

Another trend that's been obvious to most venture capitalists for over a year, but seems to be taking advertisers a long time to figure out, is just how many people (especially young people) are tuning in to the TV versus the Internet these days, relative to the ad dollars spent on each medium.

I write this of course while I'm sitting in front of my TV watching John Adams on HBO.

But that's just it, except to watch live sports and a few HBO shows, I never turn on the tube.

I estimate that I spend an average of 10 hours a day in front of my computer screen or mobile device, and 0-1 hours a day in front of my TV. And I'm apparently not the only one.

E-Marketer estimated US online ad spend at $21B last year, 7.5% of all US ad spend, and forecasts this year at $27.5B, or 9% of total US ad spend, and while this is significant growth, faster in fact than ad spend migrated to from traditional TV into Cable in its first ten years, its not fast enough!

Just take a look at the chart below...this is publicly available information, I might add.

Comments

[John]

Interesting data. One could interpret the difference between newspaper spending and reader time spent with newspapers alternatively as the effectiveness of the medium, customer or advertizer loyalty, or merely a lag in the trend that spells more financial doom to an already beleagured newspaper industry.

[Jenna]

Could another factor be that its far cheaper for companies to advertise on the web than on TV so that they don't have to use such large percentages of their overall ad spending?

[Mark]

Yes, I think you're right that part of it is because TV ads are in fact more expensive, but the price of TV ads is a function of demand. TV ad prices are higher because more advertisers try to buy them.
This is certainly changing though.

Here's a sign... GM just announced that they plan on spending half of their entire $3B ad budget online by 2010. That's $1.5B compared to the $190M they spent online last year...it's also 1/20th of the total online ad spend in the US right now.