Traditional advertising in for a bumpy 2010, Deloitte Canada predicts

The think tank's annual tech predictions report corroborates the widely held view that online advertising will continue to siphon from TV, print and radio.

Deloitte Canada predicts more tough times for traditional media in 2010.

With the rising popularity of the mobile internet, Deloitte Canada’s Technology, Media and Telecommunications (TMT) Industry Group predicts that a continued acceleration in demand for online advertising will come at the expense of more mainstream avenues, which will continue to lose steam as ad markets adjust.

Although Deloitte pegs the value of global online ad sales at $80 billion, that still represents only 10% of the market, translating into falling prices in both traditional and online arenas that will benefit Canadian advertisers.

‘What online is doing to traditional media is changing the business model,’ Deloitte Canada research director Duncan Stewart tells MiC. ‘Not only is online taking share from traditional media, they’re lowering the price point.’

Stewart says that as advertisers experiment with smaller online dollar amounts, they’ve been pleased with their return, much to the chagrin of traditional media.

‘It’s making a lot of people think about taking their ad dollars away from traditional media and putting it towards online,’ Stewart concedes.

‘Just to use a recent example of Deloitte, somebody quoted us four pages in a national magazine for a price 75% lower than two years ago. That’s a smaller, unprofitable industry. We expect to see significant consolidation within the traditional media space.’

Another 2010 trend Deloitte is bearish on is the prospect of pay walls and micropayments for newspaper and magazine online sites. Using data assembled through a combination of in-depth research and interviews with clients, industry analysts and global executives, the firm predicts that most print media will refrain from charging admission to their online portals, citing concerns of negative traffic impact that might further erode advertising revenues.

‘Certainly on the pay wall side, we’re a little skeptical at this point,’ says Deloitte’s Stewart. ‘It works for the Wall Street Journal, and it seems to be working for the Financial Times, but the challenge is when you look at the media industry as a whole. Although some titles can charge for pay walls or micropayments, the vast majority can’t.’

Stewart does see a glimmer of hope for the newspaper, magazine and television industries with the introduction of tablet computers. Deloitte says that the new tablets could sell 10 million units and generate over $1 billion in global sales this year alone.

‘It’ll help,’ says Stewart. ‘The magazine industry has been clobbered, but the tablet computer is perfect for magazine consumption. Tablets will probably make a compelling magazine reader, and that will greatly help the industry.’

Gilad Coppersmith, OMD’s managing director of digital and emerging media and director ignition, isn’t so sure.

‘The impact of net tablets is going to be largely dependent on what content is available in Canada and their price points in the marketplace,’ he tells MiC via email. ‘I would be surprised if both are at the right level in the market to spark widespread adoption in 2010 and provide any kind of ‘revitalization.”