Merrill Lynch (as reported in AdAge [reg. req'd]) says that the Internet will generate more ad revenue in 2006 than magazines. Others quoted in the piece are skeptical. The article says this would make magazines the first traditional medium to be surpassed by the Internet for total ad revenues (Merrill also believes yellow pages will be exceeded this year by Internet revenues).
It's probably not going to be 2006 when this happens, but it will happen within the next year or two. What's at stake is a credibility milestone. When the Internet makes more ad revenue than magazines or phone books then certain classes of advertisers will invest more online. However, the picture becomes much more complex one we get down below that 30,000 view:
- Where's the quality inventory? (It's limited)
- Where are the efficient buys? (The local the market is incredibly fragmented)
- What about small businesses? (Sales channel challenges are plentiful)
- How do marketers duplicate the reach and quality they've historically received from traditional media?
Universal McCann forecasts national magazines will capture $13.56 billion in ad revenues this year, while its Internet forecast is $8.66 billion. By contrast, Credit Suisse First Boston has projected $16.6 billion in US Internet revenues this year. The truth lies somewhere in between: $8 billion is too low, $16 billion is probably too high for 2006.
