Valitics. Web Strategies, Net Results

Revenues from online advertising are growing faster than any other media in history.  Check out the (inflation adjusted) ad revenue from each media source in the States over the past 60 years.  That yellow line on the bottom right is Internet revenue (shown with Forrester's forecast through 2014).

The printing press, radio, and TV were all great and essential, but their days are numbered.  Whether the Internet and digital devices replace all these media in 5 years or 20, the genie is out of the bottle.  That's not to say that TV will disappear (we love our shows), but the Internet will become TVs primary distribution channel.  There's simply nothing unique to print, radio, or TV that can't be done cheaper and better through the Internet.

As younger generations command greater earning potential, the shift will inevitably happen.  What's really astonishing is how thoroughly young people have made technology a core part of their life.  Consider this report from Nielsen that shows the average teen sends and receives 3,300 texts per month!  If you factor in 8 hours for sleeping, that's more than 1 text every 10 minutes.

The tipping point for the media revolution might just be Google TV.  Online revenues are still a small portion of overall ad spending, and Google has much to gain by entering the $85bn TV ad market.

Here are some interesting ideas for consumer applications of the new technology:

• Imagine seeing a near-live fact check during a political debate.  You watch the debate shortly after it happens, and in that time editors have evaluated the general accuracy of statements made and linked to more info.
• Devices like Logitech's Revue offer an optional web cam.  Imagine watching a football game with your Dad, even if he's halfway across the country.
• When people you follow on Facebook/Twitter are watching the same show, you could see real time chat -- or see comments they made in the past.

Advertisers will benefit greatly by gaining the rich data the web offers:

• Adding a payment source to your TV would allow one click ordering of advertised products.  Another measurable call to action, coupon redemptions, could greatly benefit from Internet TV.  E.g. "Try us out -- here's 25% off.  Just click and we'll email or text you a coupon."
• Facial recognition is common place even in cheap cameras.  Imagine seeing a commercial dropout rate based on monitoring faces in the room.  If people leave the room during commercials, it could be detected and reported.  Better yet, advertiser data could be anonymized and benchmarked (e.g. against other CPG companies, your dropout rate was 20% lower - congrats!).
• This may be too Orwellian for some, but it is already within the realm of technical feasibility.  In addition to monitoring faces, webcams can monitor emotional expression.  Microsoft's Kinect controller already has this feature.  Imagine seeing the quality (humorous, thoughtful, etc.) and intensity of the emotional connection you make with your audience.
• Here's a big one: segmentation.  Logging in to Google and Facebook accounts through your TV means that your online profile can be reported along with all of the reaction data.  E.g. An advertiser thought their commercial would be ideal for 30-40 year old women, but it turns out that women who are into high-end fashion react very poorly.
• An ad system could automatically optimize targeting based on ad response.  You know you need some percentage of people to respond in a certain way for the ad to meet your profitability goals.  If any significant audience segment fails to respond in the desired way, whether it's a gender/age/interest/education/career/etc. segment, that segment is automatically excluded from seeing the ad again.  This could bring about huge efficiency increases in advertising budgets -- billions of dollars would be freed up for more productive uses than wasting peoples' time.
• As an example of the last point, I'll never eat McDonalds.  Nothing against the company, it's just a nutritional thing.  If the ad systems sees that I never respond to any of their calls to action, have a high dropout rate, and negative emotional responses... then McDonalds doesn't need to keep wasting money by paying for my attention.