Henry Blodget recently posted some eye-opening data about the ‘big picture’ shift of advertising budgets from traditional media companies to online media in the US.
US advertising revenue at Google, Yahoo, AOL, and MSN grew by $1.3 billion in Q2, or 42%.
US advertising revenue at 15 big television, newspaper, magazine, radio, and outdoor companies shrank by $280 million in Q2, or 3%.
Blodget draws two obvious conclusions from the data:
These trends are secular, not cyclical: TV networks, radio networks, and newspaper companies won’t suddenly wake up one morning and find themselves back in charge. Individual Internet companies may screw up (see Yahoo/AOL), but if they do, others will rise to take their place (Google).
Traditional media executives are doing a superb job of milking cash flow out of shrinking businesses, but you can’t save your way to prosperity. The smartest companies acknowledge this and are 1) returning cash flow to shareholders, 2) diversifying via M&A (as the Washington Post has done), and/or investing in or buying promising interactive businesses.
He provides his full data and analysis via Google Spreadsheets.