The almighty Ad Dollars are on the move …

Buried deep in small boxes labeled “Popular Demand” and “Drilling Down” in the business section of Tuesday’s New York Times were the hints of the demise of traditional media as we know them and how advertisers are moving their dollars in search of more effective eyeball-to-eyeball contact with consumers.

The former ranked 2005 advertising growth in several media according to top winners and losers. The Internet (surprise!) led the winners. It saw a 23 percent increase in ad dollars. National newspapers (surprise!) led the losers. Their take of ad dollars fell 4.7 percent. Newspaper folks pretend to not be alarmed, pointing out that right now, Internet ad spending is only 3 percent of total advertiser spending. But it’s growing.

Sayeth The Times:

More advertising dollars are flowing to the Internet, to the detriment of some traditional outlets. The changes are driven by companies aiming at ever-narrower niches audiences. Advertising share is increasing for local magazines and outdoor media, mostly billboards. And cable TV, with the largest advertising share, is gaining at the expense of networks.

The trend is skewed with newspapers, however, where classified and display ads are slowly disappearing from both local and national newspapers.

Newspapers generally continue to cling to a business model dependent on classified and display ads. National newspapers, however, are working on ways to bolster news Web site income; regional and local papers are slower to adopt necessary changes. Too many Internet means of buying and selling are pre-empting, hell, have pre-empted the newspapers’ role as middleman for buyer and seller. If newspapers plan a new business model, they’d better put it in play soon.

“Craigslist has disemboweled us in many ways,” says Scott Herhold, a columnist for the San Jose Mercury News. [See the fate of this once-proud newspaper in a Times story this week; TimesSelect req’d.] “When you start to lose very high-margin revenue dollars,” says Jay T. Harris, a former Merc publisher, “you can’t make that up with cost-cutting.”

Advertising dollars are moving and dead-tree media aren’t moving fast enough to retain or recapture dollars they’re losing.

Now for the “Drilling Down” item. Are you a boxing fan? Did you watch NBC’s reality show “The Contender” last year?

The program had 15 episodes (with Sergio Mora outpointing Peter Manfredo Jr. over seven rounds to win the $1 million grand prize in the last.)

According to The Times, the 15 episodes had 7,502 product placements:

Contestants on ‘The Contender’ drank Gatorade in every episode, carted supplies around in a Toyota truck and ran through what the host of the show described as a ‘Toyota traffic jam.’ Each appearance of the product counts toward the total. Overall the number of placements on TV rose to 107,839 in 2005 from 82,739 in 2004. [emphasis added]

The Times says actors and screenwriters fear that product placements will move from their current home predominantly in reality TV to scripted TV. That means advertisers would have more say in development of scripts to provide the most congenial environment for their products.

So, kiddies, what impact will these two growing movements of advertising dollars have on the acquisition and distribution of both news and entertainment? Who will control content in a media universe where advertisers play a greater role because 1) they are the financial engine of the media industry and 2) want demonstrated results for each dollar they spend in advertising?

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