The battle for eyeballs between the home computer and the television has reached a crucial point, a report by technology giant IBM Corp. suggests.
In study called “The End of Advertising as We Know It,” the consulting division of IBM surveyed more than 2,400 consumers and 80 advertising firms around the world, and concluded that time spent with the personal computer is exceeding the number of hours devoted to TV, particularly among younger viewers.
Though audiences aren't necessarily using the devices for the same purpose – such as watching shows online instead of on television – tasks such as social networking, general Internet surfing and online games are outpacing time spent flipping channels, the report says.
“We are reaching a critical juncture where new platforms may soon have more impact than TV,” the report says. “Especially for young users, TV is increasingly becoming a secondary background medium. The primary focus of attention is elsewhere – surfing the Internet, chatting or playing an online game.”
The trend has huge implications for advertisers and broadcasters, who are already forced to pursue an increasing amount of revenue online. New advertising formats, such as mobile devices, the Internet, in-game ads and interactive TV promotions, are expected to grow at a rate of 22.4 per cent between 2006 and 2010, the report says.
Traditional ad media, which include TV, radio, magazines and newspapers, will grow by 4.4. per cent in that time, IBM suggests.
Though IBM was one of the biggest makers of personal computers in the eighties and nineties, it has pulled back from that business and now deals mostly in large mainframes and consulting for various industries on where technology is headed.
According to IBM's survey, 71 per cent of respondents said they use the Internet more than two hours a day for personal purposes, while just 48 per cent are spending as much time watching TV.
“Among the heaviest users, 19 per cent spend six hours or more a day on the [computer] versus just 9 per cent who watch a similar amount of TV,” the report says.
The report, an annual study by IBM that is watched closely in the North American media sector, comes on the heels of a speech given to the Canadian Association of Broadcasters this week by former U.S. Federal Communications Commission chairman Michael Powell that highlighted similar trends.
Mr. Powell, who led the FCC from 2001 to 2005, said the biggest challenge for television in its battle with the Internet is captivating younger audiences. “My kids tell me they don't want to watch it because it doesn't do anything,” Mr. Powell said in Ottawa.
However, IBM predicts broadcasters will still make most of their money through traditional forms of advertising – the 30-second commercial spot – for the near future.
Broadcasters must make a series of “no-regret moves” to ensure they can capitalize on future trends in advertising. Those are essentially leaps of faith, trying to guess where advertising trends are headed, without seeing an immediate return on investment, said IBM's general manager of media and entertainment, Richard Anderson.
“The old segments will be where [media companies] will make their money,” Mr. Anderson said. “They probably won't make money in the new segments – and those segments are going to cost money in investment. So you have to improve your efficiency in the old way of doing business, and invest it in the new opportunities.”
