November 24, 2015

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First Mediaworks

1/10/00 Publisher's Notes
The Associated Press announced recently that total dot-com advertising exceeded $1 billion. Dot-com advertising has been a boon for Radio and is primarily responsible for shoving Radio over the 8 percent mark for the first time in history. But what will happen if the dot-com gold rush dries up? The economy is being fueled by the success of the Internet. Venture capitalists have poured more money into the Internet in the last six months than at anytime in its history. Why? The rewards are enormous. Most believe it necessary to build new companies fast for fear the gold rush could soon come crashing down. Their bet is that the companies who have succeeded by that time will probably remain successful. So, getting to market quickly is crucial to establishing a brand. In simple terms, that means build it fast, get it to market fast, establish your name fast, go public fast, and reap the rewards before it all falls down. To beat the clock and get high traffic counts, dot-com companies are leveraging the existing Radio, TV and all other media traffic to build their own traffic (to compete with us for ad dollars). They are flooding the media like a fire hose in a teacup. Internet companies are throwing money at building market. VC firms tell them to spend 60 percent of their money on marketing. But at some point, there will be a huge correction. The VC firms will see a point of diminishing returns. Logic dictates that only the top three in any category will survive. The rest will fail, or be consolidated. Of course, Radio, in the meantime, will have ignored all the former advertisers who could not afford to get on the air to compete with the rates paid by the dot-coms. These advertisers will have been forced to find other ways to survive. Will they still be there if, and when, this dot-com ad rush comes to an end? (Dot-com companies will continue to be strong). Moral? Take the dot-com income while you can -- it will be here for quite a while -- and start infiltrating into much smaller markets. But donít abandon your core clients who built your station. It may be a struggle for them to pay the rates on your Radio stations, but you might need them in the future. Take care of them.

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