The Need to Move Fasterjan deruiter
Technology is affecting customer behavior and the changes are opening and closing customer touch points with businesses. With businesses in markets across America, the advertising mix is changing, and with that advertising revenues are shifting from legacy media to all things digital. Yet I feel that many in the media sector don’t understand the velocity of the change and how it will affect their business in the next five years.
Case in point:
Those in the newspaper industry would admit today they ignored the trends, did not move quick enough, and never saw the revenue shift coming until it was too late. Too many broadcasters are holding on to yesteryear when traditional marketing, sales and service strategies and structures worked for them. But how consumers are making decisions, their preferences and expectations and values towards advertisers’ products and services are shifting beyond the capacity of legacy media’s approaches. More accountability and metrics are wanted now. Critical data points:
A.) Time Spent With Major Media
B.) Digital Ad Spending – Globally
C.) Radio Revenue Trends
|Source: Rab & Miller Kaplan|
The digital revenue component in radio in 2013 was $889.0M or 5%.
Right now, 24% or $42.0B of the estimated $177.0B advertising pie will be spent online in 2014. The media sector is pacing way behind.
In the past few months, the public companies have been reporting their Q1 performances. One CEO had inferred to RBR/TVBR that he was concerned that the automotive sector would start shifting money from radio and other legacy media into more digital solutions. It may negatively impact the radio sector in the future.
Hello? That ship has already sailed.
All is not lost though. I recently spoke to a radio group head who told me, “We can’t move fast enough!” They are committed to investing in their digital infrastructure and adding as many digital tools to their tool kit as possible. And there are other radio and TV groups forging ahead and leading the charge into this new territory. Fear and a lack of understanding of what is happening in the markets is holding too many back…, that continues to worry me.
The media sector must move faster to transform their infrastructures. Legacy media continues to deliver great reach. If the broadcasters commit to investing and educating their teams to modernize, optimize and integrate digital solutions, we can minimize the potential revenue impact in the future. The biggest concern going forward.
We must work harder to understand the relationship between technology and customer behavior – it is a journey. The opportunity to grow revenues in the next five years is very large. It’s how the consumers want to be reached and it’s what the advertisers want.