Advertisers Scared of New Ways to Reach Consumers

An article in today’s New York Times talks about how advertisers are taking a pragmatic (cautious?) approach to mobile video. It cites a six-episode series based on the television show “Smallville”, which was popular with consumers but only attracted one advertiser, Sprint. One of the biggest challenges (problems?) apparently facing mobile video content makers is advertisers are reluctant to move away from formats they have been using for years – television, radio, product placements, etc. In 2006, the mobile ad market was $421-million compared with the TV broadcast ad market’s $48-billion. A quick back of the napkin calculation suggests mobile video has less than 1% of the market.

Of course, mobile content makers aren’t the only ones battling to attract advertisers to something new and different. Blog and podcast producers are facing the exact same wall of pragmatism. According to a few studies I’ve seen, the blog and podcast markets are only expected to be worth $300-million to $400-million each by 2010/2011 – a drop in the bucket compared to the ad market overall. You can give advertisers some benefit of the doubt given mobile video, blogs and podcasts are new and emerging formats. But sooner or later advertisers will have to start to take them more seriously given the number of people embracing them. In a recent blog post, Fred Wilson suggests the 15 million active blogs in the blogosphere works out to 150 million readers – a number that’s difficult for any advertiser to ignore.

One of the problems/challenges is getting ad buyers to shift some of their default spending habits from Old Media (broadcast TV, newspapers, magazines, radio) to New Media (podcasts, mobile video, blogs, online video). While everyone is patting themselves on the back about how well online advertising is growing, it’s still accounts for only 5% of total spending. For a good example of how the ad market is moving at the pace of an iceberg, look at how much money is still being spent on full-color ads on the back pages of newspaper sections. While these ads are being sold as a premium placement at a premium price, how many consumers these days actually read these ads? I suspect much less than newspapers tell advertisers.

And this brings me to another point about advertising in the Old Media vs. New Media: audience measurement. In the Old Media, you gues-timate now many people are seeing your TV, radio, newspaper, magazine ad. In the New Media, you can measure everything – impressions, click-throughs, purchases, etc. In theory, this should be the New Media’s most powerful weapon (along with growing audiences) when it comes to attracting advertising. Yet, the only online group really thriving from this performance-focused format is Google’s AdSenes.

So, what’s it going to take for mobile video, blogs, podcasts and online video to really start to resonate with advertisers? Is it just time? Or have we over-estimated the advertising appeal of New Media? If you’re an advertiser or an ad buyer, I’d really be interested in your view of the world.

Update: Chad Randall, director of sales with b5media, has a post looking at the seven different levels of blog advertising. His take is Google AdSense ranks at the bottom of the food chain. Meanwhile, b5media CEO Jeremy Wright has a post on why he doesn’t like Google.