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THE BUSINESS OF MASS MEDIA

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The digital turn has not lessened advertising; if anything, it may have increased its volume. But it has shifted the way ads are bought, sold, and consumed. By 2014, the only older, or “legacy,” mass medium whose global advertising revenue was not totally disrupted by the Internet was television—both cable and broadcast, which includes ABC, CBS, Fox, and NBC. In fact, television’s 38 percent share of U.S. and world ad revenue in 2014 represented a 5 percent rise between 2007 and 2014. In second place for 2014 stood Internet and digital ads, which captured almost 25 percent of worldwide ad revenue, surpassing for the first time the combined total of newspapers (12 percent) and magazines (10 percent). (Back in 2007, newspapers accounted for 28 percent and magazines 14.5 percent of all ad revenue, with the Internet trailing far behind at 8.2 percent.)1

The transition isn’t yet complete. By late 2016, Internet and digital ad spending are expected to catch up with TV, with one forecast giving both TV and Internet/digital 38 percent of the global ad market. In fact, in the first half of 2015, traditional U.S. TV viewing declined almost 10 percent, with Netflix’s digital streaming services accounting for almost half that decline.2 Analyzing data from Advertising Age’ s 2015 Marketing Fact Pack reveals why this is happening. In 2014, the average minutes per day U.S. adults spent watching TV came in at 273 (or about 4.5 hours per day), whereas the average time spent with digital devices and services—from computers to Netflix to YouTube to smartphones to tablets—amounted to about 346 minutes (or almost 6 hours a day). And, of course, we are often watching ads on TV and texting on our smartphones at the same time.3

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ABC, CBS, Fox, and NBC are worried about these trends. While these once-dominant TV networks have started their own digital streaming services—like Hulu—they trail Netflix and Amazon Prime, which remain ad-free, subscription-only services. In 2015, spending was expected to drop 7 percent during the TV “upfronts”—that time each spring when advertisers spend about 75 percent of their TV budgets buying ads on programs like NBC’s The Voice (which in 2014 earned the network about $275,000 per thirty-second ad) or CBS’s Thursday Night Football (which averaged $483,000 for a thirty-second spot).4 Even the joint venture of Hulu held its own upfront presentation, bringing out Jerry Seinfeld to show off its exclusive acquisition of his classic series Seinfeld, long unavailable in a streaming format and one of the last massive hits of the network-dominated era. Hulu can compete with Netflix and Amazon, but it will compete with the networks’ content, too.

Traditional TV models have managed to hold on because in a fragmented marketplace, the “mass” prime-time TV audience—only a quarter of what it was in the 1980s—still remains somewhat larger than the audience most YouTube videos or Netflix series can generate. Once in a while, a hit the size of Fox’s Empire will come along and instill faith in the networks’ ability to capture a mass audience. Still, the great grandchildren of those baby boomers who grew up on TV in the 1950s and 1960s will be raised on smartphones and tablets, with no loyalty to (or patience for) ad-based broadcast networks and no memory of gathering with the family to watch a favorite “must-see” sitcom—and the ads that accompany it—around the electronic hearth.

But people will always want stories; the challenge for the advertising industry is to figure out how their ads can be tied into the consumption of those stories. What will cable and broadcast networks do to get younger viewers to watch those stories on their smartphones? Will Netflix, with its nearly sixty million subscribers in 2015, look to advertising for another revenue stream? How much of the ad budgets for Procter & Gamble, AT&T, GM, and Ford—four of the biggest U.S. advertisers—will shift from TV to digital platforms? In short: What will advertisers do to keep people watching ads, especially in a world of digital devices that let us skip ads, and ad-free story services like HBO and Netflix?

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TODAY, ADVERTISEMENTS ARE EVERYWHERE AND IN EVERY MEDIA FORM. Ads take up more than half the space in most daily newspapers and consumer magazines. They are inserted into trade books and textbooks. They clutter Web sites on the Internet. They fill our mailboxes and wallpaper the buses we ride. Dotting the nation’s highways, billboards promote fast-food and hotel chains, while neon signs announce the names of stores along major streets and strip malls. Ads are even found in the restrooms of malls, restaurants, and bars.

At local theaters and on DVDs, ads now precede the latest Hollywood movie trailers. Corporate sponsors spend millions for product placement: the purchase of spaces for particular goods to appear in a TV show, movie, or music video. Ads are part of a deejay’s morning patter, and ads routinely interrupt our favorite TV and cable programs. By 2012, more than sixteen minutes of each hour of prime-time network television carried commercials, program promos, and public service announcements—an increase from thirteen minutes an hour in 1992. In addition, each hour of prime-time network TV carried about eleven minutes of product placements.5 This means that about twenty-six minutes of each hour (or 43 percent) include some sort of paid sponsorship. According to the Food Marketing Institute, the typical supermarket’s shelves are filled with thirty thousand to fifty thousand different brand-name packages, all functioning like miniature billboards. By some research estimates, the average American comes into contact with five thousand forms of advertising each day.6

Advertising comes in many forms, from classified ads to business-to-business ads, which provide detailed information on specific products. However, in this chapter, we will concentrate on the more conspicuous advertisements that shape product images and brand-name identities. Because so much consumer advertising intrudes into daily life, ads are often viewed in a negative light. Although business managers agree that advertising is the foundation of a healthy media economy—far preferable to government-controlled media—audiences routinely complain about how many ads they are forced to endure, and they increasingly find ways to avoid them, like zipping through television ads with TiVo and blocking pop-up ads with Web browsers. In response, market researchers routinely weigh consumers’ tolerance—how long an ad or how many ads they are willing to tolerate to get “free” media content. Without consumer advertisements, however, mass communication industries would cease to function in their present forms. Advertising is the economic glue that holds most media industries together.

In this chapter, we will:

It’s increasingly rare to find spaces in our society that don’t contain advertising. As you read this chapter, think about your own exposure to advertising. What are some things you like or admire about advertising? For example, are there particular ad campaigns that give you enormous pleasure? How and when do ads annoy you? Can you think of any ways you intentionally avoid advertising? For more questions to help you understand the role of advertising in our lives, see “Questioning the Media” in the Chapter Review.

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