New Business in a Media Decline

Reports point to continued decline, with opportunity on the horizon
by Todd Knutson

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It feels so good to wake up to a headline like this: ...during a presentation this morning Brian Wiesner of Interpublic Group of Cos' Magna, said that the U.S. advertising economy will drop 14.5% this year...(as reported by AdAge).

This prediction is based on "a new forecasting model, which is no longer calculated on advertising expenditures, but instead on the advertising revenue generated by the media suppliers."

And then there's an article in Forbes magazine from last week, which says that the "ad collapse in television, radio and magazines isn't a passing dip, but a permanent drop." It cites a report from private equity fund Catalyst Investors that documents how spending as a percentage of gross domestic product declined from 2000-2007 due to the Internet.

The Internet broke "the oligopolistic pricing power that traditional media enjoyed in the 1980s and 1990s."

Catalyst predicts a further dip in ad spending as a percent of GDP over the next two to three years, with radio and magazine revenue bottoming out in 2009, but then enjoying a 5% increase in revenue in 2011.

So, what's the new business impact of all this gloom and doom?

  • The reports predict that the bottom of the decline in traditional media will be Q1 of this year - good news, the worst is over!  The bad news may be that overall spending levels may remain flat for a long time.
  • The Internet continues to change everything. However, clever entrepreneurs will continue to figure out ways to deliver ads to consumers. How can your agency take advantage of new technology to benefit your clients? Are there opportunities for you to partner with one of these new technology companies and share in their growth?
  • Traditional media may continue to decline, but it still delivers lots of eyeballs and listeners. How can you even further integrate and leverage the full range of traditional, new and emerging media to create a plan that delivers outstanding, measurable results?

Even though we're in a recession, we're also in a time of exciting change that offers new opportunities for those looking for them. The challenge is the recognize them when you see them; that's your new business opportunity.

 

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