Internet trumps traditional media but not in advertising draw

When it comes to Israeli television, the percentage of consumers (32% of all media consumers) is matched by the percentage of advertising budgets (33%).

By TALYA HALKIN
computer cartoon 88 (photo credit: )
computer cartoon 88
(photo credit: )
In Israel today, 2.7 million people surf the Web on a daily basis, totaling more than the readers of all the country's daily newspapers put together. An additional 900,000 people go online on a less frequent basis, amounting to a total of 3.6 million Internet users. Nevertheless, even as the IBTV (Internet Broadcast Television) revolution fast approaches Israel, 95 percent of the country's advertising budgets are still allocated to traditional media. When it comes to Israeli television, the percentage of consumers (32% of all media consumers) is matched by the percentage of advertising budgets (33%). Yet, while 30% of local media consumers operate online, only 5% of Israeli advertising budgets are directed at online surfers. By contrast, even though only 8% of Israelis consume print media, 50% of advertising budgets are still channeled to newspapers. How fast, in light of these statistics, will online consumption of content and advertising revolutionize the Israeli media and advertising worlds? And how will the increased consumption of IBTV affect the cultural and commercial power of local local television? These were some of the questions debated Monday at TheMarker COM.VENTION, the two-day international Internet conference organized by TheMarker to examine some of the latest technological and business developments on the Web. "Today, television - widely defined - is available both via cellular phones and online," said Iris Beck, Orange Israel's VP for Marketing and Content. "What counts is the content, not the technology that hosts it - as well as a consumer who is willing to pay for specific kinds of content, such as VOD (Video On Demand). "IBTV is the current buzzword," agreed Yon Feder, editor-in-chief of Ynet. "At this very moment, online television is coming into being," he said, noting that on election day last week, Ynet operated 12 news crews composed of a reporter and/or a photographer armed with a modest video camera. "We are playing the TV game, but we are still limited in terms of development funds," Feder said. In contrast to consumers of traditional media, the target consumer of IBTV, as well as of online media more generally, is not a passive observer. Whether he is surfing the web on his home computer or using a "Third Generation" cellular phone, he is an active - and interactive - partner. "The Internet allows customers to create content, so that each of them becomes a potential reporter from the field," Beck said. "Especially when it comes to online communities who are interested in niche subjects, the Internet has tremendous power that is unrivalled by television." "Online TV," Beck said, "has to base itself on social and cultural phenomena created on the Internet - such as sharing and micro-communities. It has potential for endless forms of collaboration between the Internet, cellular phone companies, and television." According to Feder, the question of whether the Internet will replace traditional media is the wrong question to ask. "Newspapers, radio, and television did not supersede each other," he said. "Mediums change and adapt themselves to a new reality, and redefine themselves and their target audiences." According to Google Israel CEO Meir Brand, online advertising can potentially enable small business owners to reach consumers with special needs around the world. "In Israel today there are approximately 200,000 small businesses and 10,000 exporters, most of which have still not created for themselves a digital identity," Brand said. Traditional advertising, Brand noted, focused on creating generic messages for a large number of consumers at high advertising costs. By contrast, he said, "the media of tomorrow" creates messages for an individual, interactive consumer at a low cost, with a high level of control and a real ability to measure the return on investments. In the US, Brand added, over 41% of online advertising is on search engines. In 2005, it amounted to a total of $10 billion. At least part of the reason for this, he said, was that surfers preferred less intrusive and distracting forms of advertising which they could control, and were, therefore, more likely to click on a search engine Word Ad than on a popup banner. Israeli Internet users, Brand said, were the world's leading web surfers in terms of their adaptation of new technologies and the time they spend online. Their sophistication, however, stands in stark contrast to the state of online advertising in the country. "Compared to the States, we in Israel are still back in the year 2000," he said.