IBM Study Quantifies Ad Spend Shift

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cashmoney.jpgAbout 30 percent of the advertising revenue now resting in the coffers of traditional media companies will shift to online ad exchanges like Yahoo! and Google in the next five years, according to a new report from IBM Global Business Services.

More than half of the 80 industry executives IBM polled for its survey anticipate a shift of this magnitude, which would involve billions of dollars, said Saul Berman, a co-author of the report, “The End of Advertising as We Know It.”

What’s more, two-thirds of the execs expect 20 percent of today’s ad revenue to shift from media channels with rates based on numbers of impressions to those that are tied to actions, such as click-throughs on Web ads.

Released today, the report predicts there will be more changes in the ad industry in the next five years than in the past 50. The findings stemmed from online, telephone and face-to-face interviews with the execs (representing marketers, agencies and distributors) and responses to a digital questionnaire that reached some 2,400 consumers worldwide.

The picture that IBM draws is not new—several recent surveys have illustrated the growth of online marketing, for example. But the magnitude and speed of the shift away from traditional media the report outlines appears substantial enough to give any agency, marketer or media company pause.

Indeed, IBM concludes that “as the advertising value chain reconfigures, broadcasters, advertising agencies and media distributors in particular will need to make a number of ‘no regret’ moves” in key areas such as how to better connect with consumers in a multi-channel world and how to create new business models.

“There is no question that the future of advertising will look radically different from the past. The push for control of attention, creativity, measurements and inventory will reshape the advertising value chain and shift the balance of power,” per the report summary. “For both incumbent and new players, it is imperative to plan for multiple consumer futures, craft agile strategies and build new capabilities before advertising as we know it disappears.”

IBM cited a handful of main drivers behind the shift toward new-media channels, including the rising popularity of Web sites that feature user-generated content and the increasing ability of consumers to control how and when they view ads.

In addition, marketers are “demanding more individual-specific and involvement-based measurements” and “new entrants are making ad space that once was proprietary available through open, efficient exchanges,” IBM concludes.

Andrew McMains is on the team of reporters that covers national news for AdWeek

Compliments of AdWeek

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