The roughly $20 billion shift from traditional advertising media to digital, meaning online and mobile platforms, over the next three to five years is expected to benefit companies that help advertisers better target consumers and/or measure the effectiveness of various marketing solutions, says Mark Zgutowicz, a Vice President and Senior Research Analyst at Piper Jaffray & Co.
“The biggest shifts we still see coming from print. For instance, newspaper share of advertising spend continues to outpace time spent on the medium. Roughly 15% of U.S. advertising dollars are spent on newspapers, when only 4% to 5% of time per day is actually spent reading the newspaper,” he said. “Compare this to time spent online, which is in the high 20% range. However, only a low 20% percent of ad dollars are directed online.”
Zgutowicz recommends Meredith Corp. (MDP), a traditional magazine publisher with a burgeoning digital platform. He says Meredith is the early stages of migrating more of its 30 million annual magazine subscribers to the tablet format in order to develop an attractive scalable platform to sell premium-priced interactive advertising to a more engaged customer.
“The opportunity here is twofold. The first is migrating their traditional print magazine members eventually to a tablet subscription, which saves the company around 40% in printing, postal and distribution-related costs,” Zgutowicz said. “The second digital growth driver, is the company’s in-house digital agency, enabling advertisers to best reach the female demographic direct through Meredith-branded content and sites.”