Mermigas: Great (Media) Depression Looms

The level of concern over the future of old media companies is rising among those who observe and write about such things. Diane Mermigas has always been one of my favorite writers, and her columns for MediaPost are getting more apocalyptic with each passing week. “Great (Media) Depression Looms” is her latest.

That digital has become pervasive enough to be mainstream, but not advanced enough to be robustly profitable, is especially problematic. Morgan Stanley Internet analyst Mary Meeker sifted through the current mess in a recent Web 2.0 Summit presentation–conceding that online advertising trends are not the runaway train forecast only a year ago, when there were an estimated 1.35 billion Internet users, $41 billion in online advertising revenues, and about $30 in ad revenues generated per user.

In the midst of a recession, online ad prices will likely decline as supply far outstrips demand. The good news: “History proves that ads follow eyeballs; it just takes time,” she said. The bad news: eyeballs are fixed to every kind of screen imaginable in the world, making measurement and ROI challenging.

The best way to counter the unknown depth and breadth of the recession is to persevere, Meeker added. Master the mobile Internet, learn how to monetize social networks, create a cogent business model, get a foothold in emerging markets and provide digital consumers with value.

Since my work is in the digital space, this section of Diane’s latest caught my attention. The problem with the “money follows eyeballs,” mass-marketing concept is that it assumes the eyeballs are seeing the ads, and this is the greatest problem for mass media today. Usability expert Jakob Nielsen’s eye-tracking studies show that nobody even “sees” banner ads on a web page. Very, very few people watch ads via their DVRs. If we can route around “unwanted messages,” as Doc Searls calls them, we will.

Technology has enabled advertisers to explore the actual business impact of ads in ways never before known, and the very idea of putting a message in front of a vast sea of eyeballs is being called into question, especially given the costs involved. Search ads “work,” because people are already looking for the products and services being offered. Text ads “work,” in part, because they’re unobtrusive, ubiquitous and in context. For all the fancy things that rich media ads can do, for the most part, they just piss people off.

But the biggest problem I see for media companies regarding online advertising is the wishful thinking for a static system built on some form of scarcity, where revenue is determined by quantifiable factors such as reach and frequency. That, to me, is like waiting for the Hale-Bopp comet, and we all know how that ended.

Flexibility for revenue is at the local level, and hustle is what’s required there.


  1. Has anyone done similar studies on the effectiveness of regular TV advertising? I am quite sure that if you studied my eyeballs (and my other behavior) while watching TV ads, you would discover that I am not paying attention to those either.

  2. I believe those studies have been done but I’m not sure where to find them. I think the Usability Labs at the University of Minnesota has done some research.

    In the course of doing my blog I found yours. I’m loving it. I am a 50 year old guy back in grad school and taking this class called the “Future of the News.” I am heavily into studying web 2.0 and social networking tools and how they may be / are being used by the media as they re-structure to survive and maybe even be profitable.
    I’m a reader of Jarvis, Nielson, Godin, and Clay Shirkey (see for a good open letter) among others.
    You’ve introduced me to Diane Mermigas’ writings. Thanks much.
    My blog (my first) started out as an examination of US News Reports’ on-line coverage of the 2008 Presidential Election but has morphed into something far more reaching. I’ve linked to your blog as a resource. If you get a chance to drop by I’d love to have you comment on the “Re-positioning of USNWR” or something else. Its a work in progress which I’m using for a class project(s) insted of a 12 page research paper…
    Your “Local Media in a Postmodern World” essays are terrific and I’ll also use them as resources if you don’t mind.


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