Fragmentation to Disrupt Media Marketplace Behaviors in 2015

Company news
10 12 2014

Proliferation of New Media Channels to Drive Key Changes in How Media is Purchased and Consumed

Active International, the largest global independent corporate trade company, predicts significant changes in media marketplace behaviors in 2015, driven by both the rapidly fragmenting media landscape and the expansion of programmatic buying.

"The proliferation of new digital, social and mobile media channels continues to significantly impact how individuals consume media, which is causing great unrest among media companies and marketers alike," said Jim Porçarelli, Chief Strategy Officer at Active International. "As a result of this paradigm shift, 2015 will be a year of significant change for everyone involved with delivering media to consumers. Whether the goal is to design unwired media or gain deeper insights into millennial behavior, marketers will spread their budgets across a wider range of channels, and media companies will need to ensure access to a much more dynamic digital audience."

Among the most significant changes in 2015 will be:

  1. Traditional TV viewing yields to the explosive growth of online video content
  2. The Chief Procurement Officer role will take center stage in managing the growing number of media relationships
  3. Further consolidation of media companies as focus shifts from vertical to horizontal integration

Traditional TV viewing yields to the explosive growth of online video content

With the launch of the CBS All Access streaming service in October, planned HBO and Showtime streaming service launches in 2015, and the first Nielsen ratings for Netflix and Amazon Prime expected later this month, linear TV as we know it will experience a sea change in 2015. At the same time, demand for premium video content will soar to all-time highs, and the market will see streaming offerings from new sources, including cable and broadcast networks. This confluence of events, which is both driven and influenced by the rapid growth of programmatic media purchasing in 2014, will force marketers to reevaluate how they reapportion their advertising spend among traditional and new digital channels. For marketers, this means that many will need to develop or expand their programmatic media buying desks in order to target their audience and ensure they are getting a return on their advertising spend.

"Video content continues to strive, but the traditional TV viewing habits that were established in the 1950s have evolved to new patterns of viewing," said Porçarelli. "Marketers can no longer afford to target a generic 18-49 year-old audience through traditional TV. The new media landscape will require a much more focused campaign strategy, with each product requiring its own customized execution plan that targets a much larger set of channels. Programmatic buying is quickly becoming a necessity. It's no longer the new tool. It is the natural evolution of where big data is driving the industry.

"The good news for marketers who embrace this change is that their campaigns will resonate more with their consumer and deliver higher returns than traditional channels have in recent years. It's an exciting time for markets, but as with any paradigm shift, it also comes with some angst."

The Chief Procurement Officer role will take center stage in managing the growing number of media relationships

The Chief Procurement Officer (CPO) will play a more dominant role in influencing marketing budget allocations in 2015 as fragmentation and the growth of programmatic shifts corporate focus beyond quantitative to identify and deliver qualitative marketing strategies. CPOs will work more closely with CMOs, CFOs and supply chain managers to improve marketing ROI while recognizing the importance of relationships with the customer as well as with media suppliers.

"The influence of the CPO on marketing budgets will burgeon in the coming year," added Porçarelli. "Their challenge will be to develop strong alliances with their CMO and CFO counterparts to effectively guide the focus of larger spends from a small number of media companies to one that divides spending across a much larger set of suppliers with a more targeted approach. CPOs will need to champion and help implement a system for measuring the value of each supplier relationship. With the advent of better data and analytics, this partnership mentality will foster more impactful planning."

Further consolidation among media companies as focus shifts from vertical to horizontal integration

The consolidation trend that began in 2013 will rapidly accelerate in 2015 as media companies seek to find new ways to connect advertisers to their audiences. Rather than focusing on the economics of increased scalability and higher profit margins, media company acquisitions in 2015 will be driven by the need to extend their reach to audiences through a wider range of digital and mobile channels, providing improved measurement.

"As we shift to a more fragmented, video-driven media marketplace, traditional media companies are realizing they're not just competing with a small group of traditional players in the market," said Porçarelli. "Media companies must now compete with emerging digital, mobile and social competitors as well as established companies that are rethinking their existing models. We think a big part of their strategy will be to acquire their way into emerging media markets. Consequently, their growth strategies in 2015 will focus on horizontal integration as they broaden the scope of their offerings to service the new media market dynamics."


francis maire

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