Bill Gates didn't hold back this week. Speaking to an audience of online advertisers at the company's Strategic Account Summit in Seattle on Tuesday, he painted a bleak picture of the future for traditional media. You can check out the webcast or written transcript yourself
here, but the following snippets from the speech will give you a basic idea of what was said.
On TV and newspapers:I'm saying to you that newspapers will go online, and there will be
massive innovation that comes out of that.
I have a lot of friends in the newspaper industry, and of course this
is a tough, wrenching change for them, because the number of people who
actually buy, subscribe to the newspaper and read it have started an
inexorable decline. In fact, if you look at it by age group, it's quite
dramatic how different that is. People have found some combination of
TV and the Internet as the way that they can get their news, even the
local news that historically was only available in that print-based
form.
We're saying that TV, the
biggest ad market in the world will completely go online and have the
kind of targeting and interaction that you only get out on the Web
today. So as dramatic as things happening on the Web are, that's
actually what all advertising, all these contexts where people learn
about products will be in the future.On reading:
So reading is going to go completely online. We believe that as we get
the smaller form factor, the screen has gotten good enough. Why is
reading online better? It's up to date, you can navigate, you can
follow links. The ads in the online reading are completely targeted as
opposed to just being a run of prints where many of the readers will
find it completely irrelevant. The ads can be in new and richer
formats. In fact, the only drawback of the digital form are the things
associated with the device, how big is it, heavy is it, how many hours
of power does it have, how much do I have to spend to buy it? But those
are things that once you achieve that threshold in terms of the
convenience and the cost, then you see a dramatic change in behavior.
Today for people who read newspapers and magazines, even the most avid
PC user probably still does quite a bit of reading on print, but as the
device moves down in size and simplicity, that will change, and so
somewhere in the next five-year period we'll hit that transition point,
and things will be even more dramatic than they are today.On Yellow Pages:
Well, the Yellow Pages are going to be used less and less... these things always take time, but Yellow Page usage amongst
people in their, say, below 50, will drop to zero, near zero over the
next five years.
........
The latest
figures released by ROI agency ZenithOptimedia confirm Bill's views. Back in December, ZenithOptimedia predicted that online ad spend would
overtake radio in 2009. Only four months later, in its Q1 2007 survey, it claims this will
happen in 2008. By this logic, its next quarterly report in June will
reveal that online adspend has now overtaken radio....
More
generally, ZenithOptimedia claims the internet will account for 9% of
global adspend by 2009, and hit double digits in the early part of the
next decade — although some markets are clearly more progressive than
others. In the UK, ZenithOptimedia predicts the internet will attract
16.6% of ad spend this year, and that this will rise to 22.6% by
2009. Now that's a figure to sit up and take note of.
The internet is clearly sucking up ad spend from traditional media
at a rate of knots, although Microsoft Business Development Director and prominent blogger,
Don Dodge, reckon Zenith's forecasts are way too conservative:
I was surprised by the ZenithOptimedia predictions, and expect the
transition to online advertising to move much faster. However, every 1%
of market share is worth $4.5 Billion so it is a lot of money no matter
how you slice it.