2009 Predictions: Media

In my last entry, I unveiled my pre­dic­tions for macro-economic con­di­tions. Today, I want to focus on the media space and look at how cer­tain changes will impact media in 2009.

Media: Adver­tis­ing

The adver­tis­ing indus­try is prob­a­bly going to be one of the most affected indus­try this year, hit by the dou­ble wammy of a slower econ­omy and a push to digitization.

The eco­nomic slow­down will result in a sub­stan­tial drop in adver­tis­ing expen­di­tures for tra­di­tional media: News­pa­pers and mag­a­zines are already feel­ing the pinch and I sus­pect it is not too much longer before tele­vi­sion, radio, and dis­play adver­tis­ing go through the same changes.

Direct media will con­tinue to do OK, how­ever, as it is result ori­ented and this fully measurable.

Online adver­tis­ing will con­tinue mov­ing towards performance-type mod­els with CPMs drop­ping sub­stan­tially and CPCs and CPAs becom­ing the de-facto standard.

Social Media will see a sharp reduc­tion in invest­ments unless it can prove that it can per­form bet­ter than other forms of adver­tis­ing, as com­pa­nies will be less inter­ested in exper­i­ment­ing this year. This will put pres­sure on pric­ing mod­els relat­ing to social media. One poten­tial way to fight back is to high­light tar­get­ing and demon­strate as such tar­get­ing ben­e­fits ad buyers.

The net-net of all this is that adver­tis­ing agen­cies and their hold­ing com­pa­nies are going to feel pretty squeezed this year, unless they start devel­op­ing mar­ket­places than can help their cus­tomers pur­chase bun­dles in a more effi­cient and more cost effec­tive fash­ion. Because ad agen­cies have gen­er­ally been slow at react­ing to changes in their indus­try (we’re over 10 years into web-based adver­tis­ing becom­ing main­stream and some ad agen­cies buy­ers are still ques­tion­ing its impact), I’m not very hope­ful for their short term out­look and pos­i­tively wor­ried about their long term one.

Media: Print

Print media is about to have one of the worst years of its exis­tence. News­pa­pers will con­tinue to fail and at least one major news­pa­per will close by year end (by major, I mean one of the top 100 news­pa­pers in the coun­try).

Most mag­a­zines will see sub­stan­tial drop in their adver­tis­ing base and many will move to web-based only pro­duc­tions, trans­form­ing them­selves from print pub­li­ca­tions into web-based ones. In the process, many of them will have to shed staff as the eco­nomic model for web-based pub­li­ca­tions tends to be much more thinly staffed than that for prinit publications.

Other mag­a­zines, like The Econ­o­mist, The Atlantic, Harper’s, and The New Yorker, will con­tinue to thrive as print con­tin­ues to be a bet­ter place for long form writ­ing than the web. As other pub­li­ca­tions depart for the web, those long-form, more reader-oriented (and by reader, I mean peo­ple who READ instead of scan arti­cles), will con­tinue to thrive, with their adver­tis­ing base increas­ing in value.

Media: TV and Movies

The movie indus­try will, at best, remain flat, and prob­a­bly see a small decrease in revenue.

TV, on the other hand, is in for a major shake-up. Just as news­pa­pers are start­ing to feel the pinch of the Inter­net, IP-based video is going to have a sub­stan­tial impact this year, erod­ing audi­ences as they increas­ingly choose the place and time for the shows they want to see and, in some cases, may even demand the way in which the media offer­ings are offered to them.

Just think of the cur­rent offer­ings: today, you can watch a show on tele­vi­sion, you can buy it from iTunes or Ama­zon, you can stream it (or at least stream older episodes) on Net­flix as part of you rental plan, or you can watch in in an adver­tis­ing sup­ported mode on either hulu.com or the station’s own site. On hulu.com, you may have a choice of adver­tis­ing either watch­ing a two-minute com­mer­cial before the show and watch the show unin­ter­rupted or you can watch the show with some lim­ited interup­tions as you would on reg­u­lar TV.

How­ever, today, most of that expe­ri­ence is based on the assump­tion that you would be using your com­puter to do so. A new class of devices is start­ing to appear that are offer­ing access to some of those ser­vices directly from your TV: Apple started with their AppleTV device and com­pa­nies like Roku, LG, Sam­sung, and oth­ers also now have offer­ings on the mar­ket. This will become more com­mon and con­tinue to erase the mark of what TV net­works are about. The focus will con­tinue to shift to shows, giv­ing more power to cre­atives who can deliver the goods to an audi­ence and low­er­ing the use­ful­ness of aggre­gat­ing mid­dle­men, which is essen­tially the role TV net­works cur­rently play.

In turn, adver­tis­ers will want to pay less for TV as they can mea­sure those audi­ences less than they can those online and see decreas­ing return on invest­ments for their TV-based adver­tis­ing expen­di­tures as com­pared to their dig­i­tal ones.

So the bot­tom line is that tra­di­tional TV will suf­fer as more an more of video pro­duc­tion is mov­ing to an IP stack.

In the next entry, I will look at gen­eral tech­nol­ogy related trends that may emerge over the next 12 months.