Online ads for teens seen ripe for investment

SAN FRANCISCO (Reuters) - Advertisers are sure to follow viewers, and especially teens, to the Web from television, presenting a ripe opportunity for investment, a top venture capital investor said on Monday.

Large media companies, accustomed to courting advertising money in television, cable and print, will be in trouble if they are not ready to shift those dollars online, Allen Morgan of Mayfield Fund said at the Reuters Venture Capital Summit.

"The casualties will be media companies, where most of the spending occurs offline, if they don't adjust," said Morgan, a managing director at Mayfield.

Only 10 percent of about $125 billion of U.S. advertising spending by consumer brands last year was done online, which is disproportionate to how much time people spend on the Internet, he argued.

The bulk, or about $80 billion, of media advertising spending goes to television and cable, with other forms of media comprising between $10 billion and $20 billion, Morgan said.

"There is a big mismatch where media spend occurs and where media consumption is occurring today," Morgan said. "Media spend eventually (catches up) with media consumption, because marketers are not stupid about where they spend their money."

Some of Mayfield's investments are geared toward capitalizing on that shift of ad spending, especially in areas targeting online media focused at a specific demographic, with an eye toward discovering the next widely used Web service.

Morgan's investments focus on new Internet services in social-networking, blog, and wiki software areas, including job recruiter Jobster, media syndication site Pluck, Web search alternative Snap and teen social network site Tagged. Earlier investments include ringtone maker Beatnik, founded by '80s pop star Thomas Dolby, and gay/lesbian media company PlanetOut.

When it comes to adjusting to new trends, Morgan said don't count out big conglomerates like Time Warner Inc. (TWX.N: Quote, Profile, Research, Stock Buzz), Viacom Inc. (VIA.N: Quote, Profile, Research, Stock Buzz), and News Corp. NWSa.N, because history suggests they endure even during periods of great change.

In fact, those companies are already showing an ability to adapt in how to market online video.

"I have been surprised with the agility with which some of the major video content programmers have adapted to the Internet, compared with what the music companies spent the last six years doing," Morgan said.