the overall advertising pie will shrink

the greater efficiencies of “digital” mean that the same amount of “advertising” can be achieved with fewer dollars because more waste can be eliminated. The decreases in ad spending in traditional media channels like newspapers will only be partially replaced by ad spending online.

For example, the dollars that used to fund newspaper classified advertising has been replaced by free online classifieds through Craigslist. While newspapers had incremental costs due to materials, printing, labor, and distribution, online classifieds have virtually no incremental cost.

Similarly print advertising, which was based on targeting ads to specific demographics of readerships are being replaced by online ads which can be more finely targeted to even more niche readerships — e.g. contextual advertising. And the revenue models based around cost per click are inherently more efficient (and thus lower cost) than the impression-based revenue models of magazines. Again for every dollar taken out of print advertising, only a few cents are needed to replace it in “digital.”

Agree with me or tell me I’m stupid @acfou

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