Internet ad revenues in passing lane

In fact, says the CMA, radio will be eclipsed as a medium some time in February. And television will be left in the dust by October 2014.

Over the next few weeks, the Internet medium will pull up beside the radio medium, wave goodbye, and then accelerate away down Canada’s ad revenue expressway.

The moment of eclipse – that point in time when radio and Internet media capture comparable rolling 12-month ad revenue levels – will probably happen sometime in February. And by the end of this year, radio will become a speck in Internet’s rearview mirror as the medium grabs $1.7 billion, well ahead of radio’s $1.5 billion in annual ad revenue (2008).

These projections are contained in the Canadian Marketing Association’s recently released data book Marketing’s Contribution to the Canadian Economy 2007. The chart below (by PHD Canada) plots past, present and future (to 2011) ad revenue by medium and extrapolates further out to 2014.

It’s been fascinating to watch the Internet move so dramatically from media upstart to media usurper in the space of just a few short years. Out-of-home and magazine media were the first to bite the Internet’s dust in 2004 and 2006. But the radio medium is a longstanding member of the billion-dollar club. It has held a number-three mass media revenue rank position as far back as any of us can remember. Radio’s drop to the number four position is a testament to the Internet’s relentless, ever-increasing absorption of hours of consumer media attention.

Just how far the Internet has come in the battle for the hearts and minds of Canadian consumers is carefully charted in the Internet Advertising Bureau of Canada’s newly released Annual Canadian Media Usage Trends Report. The study isolates trends in media usage over the past seven years, and shows the Internet currently neck and neck with TV in the fight for youthful hours of media usage.

Ad revenue follows consumer hours, which is why the Internet will maintain its steep revenue growth trajectory over the next five to six years. The newspaper medium will likely be the next to drop in rank. Newspapers are in the ad revenue ‘slow lane,’ exhibiting below-average annual growth rates. The Internet will approach newspaper’s annual ad revenues three years from now and, according to CMA projections, eclipse newspaper ad revenues just in time for Christmas 2010. If these trend lines continue, television, the last pillar in our traditional media temple, will fall by October 2014.

2014 is a long way off and, as we’ve seen in the past, the future inevitably confounds prediction. Some disapprove of comparisons being made between Internet and traditional media because Internet revenue includes ‘search’ dollars and ‘long-tail’ ad support, which lie outside traditional media’s tidy arena of brand advertising. But all ad dollars come from single wallets, and this week the big news is that more of them are being directed to Internet than to radio.