At any given moment, there are more internet users than there are television watchers or magazine subscribers. According to emarketer, Americans spend a per day average of 5 hours on-line, 4.5 hours watching television, 1.5 hours listening to the radio and half hour reading printed material. Considering that there are about as many internet users per day as there are US households, approximately 110 million, the internet logs more viewing hours. (For a simple as close to apples to apples comparison, I’m going to assume per day numbers instead of per month, and an average online user has five page views per site.) Although there are about as many total magazine subscribers, magazine subscription is losing ground and on a fast decline. Yet, view for view, television, radio and printed advertisement dollars far outweigh that of the internet. Has easy business entry and low start-up cost lower the value of the internet ad revenue stream?
The low cost of ads may be due partly to the fact that almost anyone can turn on the internet, create an free account on a blogging site somewhere without any additional manpower or resources. What happens when the cost to start a website exceeds the cost to start a physical business and there are fewer businesses online? We've seen the outrageous millions of dollars required for a beautifully crafted thirty second commercial on television, or the thousands of dollars required for a voice promotion on the radio, or even more thousands for a printed graphic design or photography, depending on if you want a black and white or colored page. While an online ad can start as low as a couple cents per thousand page views. Pennies on the dollar per thousand views. For video ads at an estimate of $5 CPM and assuming 110 million page views, this could mean paying about $550 thousand for a 30 second ad on youtube or $4 million for a thirty second commercial during the Superbowl. That's outrageous since writing an article for print in a magazine doesn't take more than a thousand times the manpower or resources than to publish an article online.
What's causing the skewing affect of revenue dollars on-line? It can't be economy of scale because according to netcraft, there are 200 million active websites while quora thinks there are around 190 million or so businesses worldwide, although online viewership accounts for about a third of all consumers, 2.5 billion. That's still plenty to command a higher ad price.
You know what it is then? Business fear. Fear that the consumers' fickle and fast fingertips will drive away a page view at the click of a button. You can't click through a television ad while you can skip an internet ad, so consumer power drives ad cost; although DVRs are giving viewers that same ability on television. As a consumer, ask yourself if there's really truth in that or has the internet not caught on to our bluff. If youtube didn't allow you to skip an ad in 5 seconds, would you sit through a 15 or 30 second ad before watching another pewdiepie, or would you say Screw it; I'm going to go out and play ball instead of spending another five hours online watching someone else play games? I'd say you'd still sit there and watch that online ad because you're so fixated on that youtube channel or whatever you're reading, that very few things can distract you from moving away from your seat now. And, because online activities still outpace other leisurely activities, and I don't see that number decreasing any time soon.
If websites stop offering the option to click through ads and leave the ads on the sidebars or in between articles, consumers may start appreciating the 15 to 30 seconds of video creativity some team spent putting it together and every second of impression on the user counts so websites should hit users as many times as you can. As the price of doing business online increases, and better content and sites rise to the top, online ad revenue may finally meet its match with other media ad streams.
