This year will be a transitional one for the media economy, with continued consolidation of buyers and sellers, developments in technology and an uncertain economy all continuing to play out, according to Jack Myers.
Myers says that the major issue facing media businesses in 2002 is the ongoing downturn in the advertising economy. Jack Myers Report projects a continuing economic stall in 2002, with additional declines of 5.7%.
However, the dynamics of the industry are changing quickly as well: media fragmentation and media agency and owner consolidation are all shifting the relationships between buyer and seller, says Myers.
In the US, for example, nine major media buying organisations now control more than 65% of all national television media buying. Similar consolidation is occurring across the world as more and more agencies merge into global entities (see Insight Analysis). Whilst media companies have also consolidated, it is buyers that have taken control of the market, according to Jack Myers, and they are driving down the costs of media and driving up media companies’ costs of sales.
“How are media companies adapting to an over-supplied marketplace, and do they need to constantly lower their prices to remain competitive?” asks Myers, adding: “What are the new services that media sellers need to provide, and how quickly will electronic data exchanges and computerised buying and selling take the place of personal salesmanship?”
For TV companies, is investment in original programming the best way of remaining competitive and if so, can networks the make this investment maintain profit margins and continue to invest?
“2002 promises to be a transitional year for the media economy. Consolidation of media buyers and media sellers, the evolution of technology, and an uncertain economy will continue to play out. Industry executives have no time to wait and see how these changes will affect their businesses. They need to make decisions now, adjust their strategic and tactical plans immediately, and fight to assure their survival and growth,” Myers concludes.
