Jupiter Research’s Fuzzy Math

Jupiter Research’s Fuzzy Math: Since the Jupiter Research online ad do-over prediction is getting picked up by every newsite on the planet, I’ve decided to rant on it some more. You’ll recall the prediction: Online advertising to overtake magazine advertising by 2009. And recall, this is from a research company that predicted online advertising would be today about twice as much as it is. Their excuse for needing a mulligan after blowing it the first time around is failing to factor in the whole dot.com bubble bust.

Oh. I see. Well here are three things they are not factoring in this go ’round:

1. Their math sucks. First, I don’t understand where Jupiter Research comes up with that absurdly low prediction for 2007 that $13.8 billion will be spent on magazine advertising. Media investment banking firm Veronis Suhler, which has been tracking advertising spending for 30 years, predicts business-to-business magazine advertising will climb back to $11.9 billion in 2007 (which is still lower than the $13.5 billion record year, 2000). They predict that consumer magazine advertising will increase to $14.8 billion in 2007. Combining consumer and business-to-business advertisng, VSS appears to predict a total of $28.3 billion in magazine advertising spending for 2007 according to the back of my envelope. In other words, Jupiter Research apparently is predicting that all online advertising will be more than consumer magazine advertising in 2007, a rather significant apple-orange comparison consideration missing from all the press accounts I’ve seen.

2. Their predictions are based on CPM inflation. In other words, advertisers will be paying more for online advertising. I applaud this, believe me. I just don’t believe it. Last I checked, the law of supply and demand still works. Last I checked, if there is more demand for online content, there are rich, deep wells that can be tapped a mere few inches below the surface.

3. They assume advertising will cluster around four “properties”: Google, Yahoo, AOL-Time, MSN. So, where is every business-to-business media company in the universe? If the paradigm calls for every media company to fall in line with one of those networks, don’t count on it. This is 1996 Vertical Net goofy think. The business-to-business media paradigm is not going to see companies that own all the historical data in a trade, its major tradeshows, magazines and online properties and unmatchable understandings of their market niche subjugate themselves to the online networks predicted. If you don’t think IDG will cut off search engines from indexing its sites in order to undermine one or all of these “networks” then you’re not reading what its CEO is saying.

While I love magazines, I manage my business and a big chunk of my life via the Internet. I spend more hours each week using the Internet than on any other measurable activity (maybe “sitting” beats it). But I contend the whole “Internet is a ‘medium'” that should be perceived in metaphoric terms resulting in competitive comparisons to the magazine business model is a grand misperception.

Don’t get me wrong. From a business-opportunity standpoint, I would probably benefit more if Jupiter’s predictions come true. Frankly, I actually want more advertising dollars to be spent online than in magazines. But the notion that online advertising will overtake magazine advertising in five years is nothing more than Excel spreadsheet fantasy.

I’m going to stop there: No rants about magazines being an experience medium. No rants about how impossible it is to dislodge centuries-old media habit patterns. No rants about how magazines get displayed on coffee tables as an expression of how an individual wants to identify himself or herself to others. No, I’ll just stop there.

  • Arun Natarajan

  • Anonymous