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us watch_us watch 14/08/2015 10:51 Page 1 Social media now rules the ad world… and the real world Larry Gerbrandt casts his expert eye on the emergence of social media and its effect on advertising spend. comment by a terrorism analyst on a US TV news show about how the emergence of social media as a communications medium has made ISIS a much more effective recruiter of followers than Al Qaeda was after 9/11 got this media analyst wondering: Just how big a change has there been over the last 15 years? In 2002, only 20% of wired cable households equipped with PCs in the US subscribed to high-speed data. Facebook was launched by Mark Zuckerberg in January 2004. Twitter followed in March 2006 and the first Apple iPhone appeared in June 2007. Today, all of these technologies and services have evolved to the point of near ubiquity. One of the guiding principles of media is that advertising spend generally follows eyeballs. Though there are a host of factors, such as demographics and the ability to create the current Holy Grail of “engagement” that can affect media cost as measured in ad A rate CPMs, the ability of new media delivery platforms to provide instant dissemination of news and personalised ondemand access to video is painfully visible when data from 2000 is compared to 2014. According to SNL Kagan estimates, advertising spending on consumer media (newspapers, magazines, television, radio and Internet/mobile) has grown from $149 billion in 2000 to $171 billion in 2014. The intervening years US CONSUMER MEDIA ADVERTISING Year (mil.) 2000 $149,277 2001 $135,230 2002 $138,954 2003 $143,183 2004 $154,422 2005 $159,781 2006 $167,728 2007 $167,067 2008 $159,444 2009 $134,720 2010 $141,753 2011 $146,673 2012 $156,264 2013 $161,756 2014 $170,984 Source: Analysis of SNL Kagan data. painfully reflect the impact of the digital bubble bursting in 2001 and lingering Great Recession following the global financial meltdown in 2008, with the latter wiping out a full decade of advertising growth. The rise of digital communications can be seen most visibly in the mobile and Internet ad Larry Gerbrandt larry@mediavaluation.com has been a media analyst for more than 25 years with companies such as Kagan and Nielsen. He is a principal at Media Valuation Partners, which provides strategic consulting, research, valuation and expert witness services and is a managing director of Janas Consulting, which provides management consulting, valuation and investment banking services. sectors, which comprised just 6% of the total in 2000 but now represent a full 25% of all US ad spend. Most of this has come at the expense of daily newspapers (dropping from 36% to a 15% share), radio (from 13% to 10%) and magazines (from 8% to 5%). Below the macro shifts in ad budgets is a much more powerful technological hand, and it is what brands, from retail chains to ISIS, are exploiting: the shift from mass media to niche and personal media. Information that once was disseminated through a relative handful of channels and daily newspapers have been replaced by a viral network of blogs, tweets, Facebook postings and texts, the equivalent of millions of channels all bounded only by bandwidth and the speed of light. The challenge is that media technology is morally neutral. The great irony is that the wiring of the world with geosynchronous satellites and a web of underwater fibre optic cables and cellular towers has left us both more connected and more divided than ever before. EUROMEDIA 25