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Why Online Ads Will Surpass TV in the UK Within a Year (And Why They Won't in the US)

bbc.jpgToday another report came out, this time from Enders Analysis, showing that in the UK, online ad spending is set to outpace television by the end of the year. This only cements the conclusions an earlier Internet Ad Bureau report reached this year this year (though that report posited 2009 as the year the shift would happen). Curious about why this is happening in the UK, while in the US television ad spend continues to dominate, I emailed Kim Marcille, a consultant and expert in strategic innovation, and former vice president of new initiatives for the Miami Herald Media Company. Her answers are below:

BNET: Do you agree with the forecasts that online ad spend is going to surpass television in the UK?
Kim Marcille: Yes, this is a foregone conclusion, if not this year or next year, the
year after that.

BNET: Do you think the same trend is likely to occur in the US? Why or why not?
KM: Yes, in 4 or 5 years. It will take us longer because the differential between TV's share and the Internet's share of the market is much greater here. Broadband penetration is much lower in the U.S. than in the U.K., as is mobile Internet access. The Internet advertising growth rate is slowing. But it will happen. TV cannot compete with a medium that allows you to watch what you want to watch when you want to watch it.

BNET: What are the differences between the US and UK advertising market?

KM: The BBC is a huge difference, being publicly funded. No advertising. Huge audience. The print market is more vital in the U.K., and they have deeper broadband adoption, which inspires faster growth in the online advertising market.

BNET: What are the differences between the US and UK television market? Is the
overall size of the media market? What does the presence of the BBC do to
the amount ad space costs?

KM: The overall size of the media market in the U.K. is smaller, about $50B vs. $149B, so yes, television has a smaller piece of a smaller pie. The presence of the BBC probably depresses the share of both TV and Internet in the media market. Although I can't say I have a definitive answer on the pricing question, I don't think the BBC's presence impacts advertising costs since it doesn't play in the U.K. (although they do sell ads in other markets).

BNET: How do these differences influence the mix of online vs. traditional that
ad agencies spend in the US vs. the UK?

KM: They don't, much. Companies advertising in both places are moving a larger portion of their advertising investments to online.

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