Google paid $3.1 billion for the online advertising company DoubleClick. Microsoft countered by buying aQuantivefor $6 billion. Wall Street thinks they're crazy. You and I know that's cheap. Because you and I are doing most everything online now, and if you want to talk to us, you have to talk on the internet. Why do ad buyers keep pouring money into the old media? Because ad buyers are mostly old.
Television, magazines, and newspapers may be hanging on because they are more powerful media for reaching the consumers companies most want to reach. But I suspect they're hanging on for another demographic reason. Advertising is supposed to be a with-it, hot, trendy, tomorrow-based industry. But at root, the business of advertising is one of allocating capital, not cooking up clever jingles. And the people who make the decisions about how to allocate that $300-odd billion in capital each year—CEOs of consumer products companies, Fortune 500executive vice presidents, media buyers, brand managers, agency heads—well, they're old. It takes time to climb the corporate ladders to get to the rungs where really important decisions are made. Of course, these people, most of whom came of age as consumers in the 1960s, 1970s, and 1980s, use the Internet, spend a lot of time on it, and buy stuff on it. But they don't understand it intuitively the way the younger crowd does.
Old advertising buyers don't understand the Internet. They'll read about it in the newspaper eventually, though, while they're thumbing through the obituaries.