location based services

Classifieds lead migration in search for 'reach'· Tabloids hit hardest but all papers will suffer Dan Milmo, media business editorWednesday May 31, 2006The Guardian
The internet will overtake national newspapers in the battle for advertising spending in the UK by the end of the year, it was predicted yesterday. GroupM, which accounts for about 30% of global media buying, says in a report to be published next month that the internet will account for 13.3% of the £12.2bn UK advertising market this year, overtaking national newspapers with a share of 13.2%. The figure for web advertising could be even bigger, because the report excludes the estimated £1bn a year spent on "affiliate advertising", which largely comprises adverts placed on smaller websites.
The speed at which advertisers have shifted spending to the web has surprised many. Six years ago the web was an upstart medium controlling only 1% of the multibillion-pound British advertising market, despite being lavished with media and investor attention. The related factors of growth in broadband usage and declining newspaper circulation appear to have justified the hype. "Reach is what advertisers want most," says the report. "National newspapers still have lots of it, but less reach means less ad money."
GroupM, the holding company for media-buying agencies owned by WPP, adds that tabloids have been hit the hardest, with ageing readerships and celebrity magazines damaging newsstand sales. It warns that the migration of classified adverts to the internet could be dangerous for all nationals because they are such a profitable niche, accounting for a quarter of nationals' advertising revenue: "Online substitution of classified is therefore particularly threatening given print's massive operational gearing. Jobseekers know they don't need to buy nationals any more."
Google will throw down another challenge to the newspaper industry today by launching its Base service in Britain. Google Base allows users to upload their own content onto the search engine's servers, in effect making the content part of the internet. Because of this, it is perceived as a major threat to print-based classified advertising. Although it has yet to make headway in US classified advertising, the Google Base concept could appeal to advertisers seeking a cheaper alternative to print. Peter Williams, finance director of Daily Mail & General Trust, said yesterday that national newspapers still held advantages over the younger medium: "The one area of media that is not fragmented is national newspapers. There are not too many national newspaper launches, but how many websites launch every day? Also, in national newspapers you can buy critical mass in one place, so we have the advantage of individual size."
Having confirmed the rise of the internet, the GroupM report goes on to predict that advertising on mobile platforms - from phones to lap tops - will experience the next growth spurt: "Mobile advertising is at the start of a growth curve like that of the internet, which initially grew at annual rates of up to 200%." Mobile advertising is starting from a low base and is forecast to double to £60m this year, doubling again to £120m next year.
The study warns that the strong performance of internet advertising is masking the woes of more established platforms. According to media buyers' estimates seen by the Guardian, ITV1 will generate less than £100m in advertising revenues in July - falling 18% to £96m. ITV1 turnover is now heading for a decline of 11% year on year, in a broadcast market that is expected to fall 3% overall.
"Without evergreen internet spending we would be in an ad recession," said the GroupM report. "TV is having its worst year since 2001. This is not a crisis of TV advertiser confidence, but it could be the market imposing a permanent discount on a fragmented medium."
Henry Rowe, managing director of Carat Digital, the online arm of Europe's largest media buyer, predicts 80% of media consumption will be digital in three or four years. Much of this is being driven by digital TV, which is in two-thirds of UK homes, and Britain's 10m broadband connections: "The future for digital media is the future for media overall, which means that phrases like 'new media' will be even more ridiculous than they are now."
Mr Rowe adds that paid-for search advertising, where adverts are triggered by key searchwords, will continue to dominate internet advertising. Carat believes that more than 50% of internet advertising sold over the next few years will be derived from paid-for search.
"We see see search growing for a couple of years but ultimately it will plateau when there is saturation of online consumption and internet penetration," he says. "Once traditional media are fully converted to digital and the internet, non-search advertising will become a bigger part of the total."