Tipping point for media viewing as couch potatoes go digital; US digital media use overtakes TV viewing

Last updated: August 1, 2013 8:14 pm

Tipping point for media viewing as couch potatoes go digital

By Emily Steel in New York

The amount of time people in the US spend consuming digital media is set to overtake hours spent watching television for the first time this year, marking a significant tipping point in the shift away from traditional forms of media. The average adult will spend five hours and nine minutes a day online or consuming other types of digital media this year, an increase of 38 minutes or 16 per cent compared with 2012, according to new estimates from eMarketer. The amount of time spent watching TV is projected to fall by seven minutes to four hours and 31 minutes.In another pivotal change, mobile devices such as smartphones and tablets will overtake the computer as the primary means of consuming digital media. The amount of time people spend using mobile devices to surf the web will increase by nearly an hour to two hours and 21 minutes, compared to one hour and 33 minutes in 2012.

Meanwhile, hours spent using a desktop PC or laptops for internet-related activities will fall by eight minutes, from two hours and 27 minutes in 2012 to two hours and 19 minutes.

The change in consumer behaviour is already shaking the foundations of the advertising business. Google reported a larger-than-expected drop in advertising rates during the most recent quarter because of the shift to mobile, where ad rates are typically cheaper. In contrast, Facebook shares have soared after the company last week reported better than expected mobile ad revenues.

This week, Publicis and Omnicom announced a $35bn tie-up, which will create the world’s largest advertising and marketing services group. Executives are pitching the deal, the largest in the history of the ad industry, as a way to create a technology and digital media-driven advertising company for the future.

“The objective was not to do a deal to be bigger,” said Maurice Lévy, the chief executive of Publicis. “The objective is to drive the key issues of the future of this industry.”

 

Yet advertising dollars still lag behind. While marketers are steadily shifting their budgets to follow how people are spending their time, ad spending on television far dominates ad spending on digital media. Marketers are set to spend $205bn on television commercials worldwide this year compared with the $116.8bn they are expected to spend on digital ads, according to eMarketer.

Marketers are set to spend $15.8bn on mobile this year, up 80 per cent from 2012 but amounting to just 3 per cent of total global ad spending.

Internet companies, including Facebook and Twitter, are rolling out new advertising products to lure marketers to transfer more dollars from television to digital. Facebook is set to roll out a new video ads in the coming months, for instance.

Television companies are not standing still. CBS, which owns the top broadcast network in the US, reported an 11 per cent increase in revenues in the most recent quarter to $3.7bn from the same period last year. The company is attempting to make money on its video programmes, regardless of what devices people are accessing them from, through licensing agreements for digital streaming and selling digital ads.

CBS.com ranks as the top website among all TV networks in unique viewers and reported a 35 per cent increase in revenue during the most recent quarter.

“We’re very nimble. We realise the models are changing,” Les Moonves, chief executive of CBS, said during a conference call this week. “We welcome what’s happening with technology, and we’re on top of it.”

The forecast decline in TV watching in the US is in stark contrast to the UK, where a report this week from Ofcom, the industry regulator, showed the medium remains central to the British household, with viewers on average watching four hours a day in 2012, up from three hours and 42 minutes in 2004.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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