Wednesday, March 26, 2008 - The Progress & Freedom Foundation Blog

"Critical blow" for broadcasters in the ad market?

One of the installments in my ongoing Media Metrics series was called "Ad Wars" and in it I discussed the radical changes underway in the modern advertising market. And in a subsequent installment in the series entitled "Changing Fortunes," I made it clear that we are already seeing the ramifications of these changes for some of the nation's oldest media providers, especially broadcasters.

On that point, Diane Mermigas, one of the finest media market watchers in America, has a piece up today about how the "Recession + Google = Critical Blow To Broadcasters." She argues that:

"The one-two punch of an economic recession and Google steamrolling Madison Avenue is a double dare to the broadcast networks to adjust their advertising practices and pricing now–or suffer imminent bottom-line consequences. These two change agents will unavoidably shape this spring’s upfront and scatter markets, which the Big 4 have used to artificially boost pricing and demand. Their consummate game of supply and demand will not survive much past the end of the decade as interactive advertising becomes the norm, and online becomes the biggest ad-supported medium. That only gives television broadcasters several years to more dramatically alter their advertising tactics against some stiff headwinds.

The ravages of a recessionary economy (which eventually will abate) are being compounded by Google’s intensified assault on traditional advertising pricing and practices (which are permanent). Given historical trends, a national ad slowdown will become apparent in the second quarter and remain negative for six to 12 months after the “official” end of the recession and the resumption of real GDP growth, according to Bernstein Research."

I think that's right and the implications of this shift will be quite profound for the future of broadcasting and all traditional media providers as they look to stop the bleeding and meet the challenge of a digital future. Regardless of how that battle turns out, what all this proves is that America's media market is far more dynamic and competitive than many critics care to admit.

posted by Adam Thierer @ 3:09 PM | Mass Media