I was fortunate enough to not only attend but also present at the Mediatech event yesterday at London’s Imax. The event, which is organised by Library House the Cambridge based group who monitor start ups and investment, featured many key UK entrepreneurs, representatives of new companies, a smattering of VCs and a group of bloggers including yours truly.

In spite of all the activity around the content creation side of web 2.0 much of the conference seemed to focus on advertising solutions. This was especialy pertinet for me as Shiny Media’s income is almost entirely derived from brands booking space on our sites. We, both Shiny and other UK media comanies, have witnessed a strong and steady growth of advertising spend online in the last 18 months or so, but not the huge migration of ad pounds from TV advertising that many had predicted.

It is this belief that online will usurp TV in ad spend that is driving the funding of many web 2.0 start ups and also the acquisition by large media companies of sites like MySpace, YouTube and closer to home, Trusted Reviews. So when is the tipping point? Emily Melton, Director of VC company Draper Fisher Durvetson, one of the most influential and imaginative US VC companies, offered her thoery and for me it’s one that makes sense.

Emily claims that there will be a big move of ad spend from TV to web budgets when PVR (Sky+/Tivo) penetration reaches over 25%. By that point there would be so many people skipping through ads on programmes they had recorded that the dollars and pounds would be heading elsewhere. It is an interesting view and one that makes a great deal of sense to me. There are now over three million PVRS in the UK, which would make PVR penetration at 10% (it is around 18% in the US). So how long is it going to take to reach 25%? Two years? Five years? Realistically it probably won’t be before 2012 and the end of the analogue switch off and the London Olympics.

Of course many other factors influence brands’ attitudes towards advertising – certainly if they want to address influentials they are online not watching TV. However I do think we could be at least three to four years before the huge online ad spend really kicks in. So there’s a real irony in that TV companies, by developing hard disk based video recorders, could be cannibalising their own advertising revenue in the long run. It just shows how smart BSkyB is in their huge broadband and web content investment too. For more good coverage of Mediatech check here

This entry was posted on Wednesday, November 21st, 2007 at 4:04 pm by Gillian Crawshaw and is filed under Broadcast, Events and Conferences, Web 2.0. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.