'Price war threatens traditional media'
Newspaper and TV companies may fall over the coming years. If the recession strikes hard and long and advertisers switch to the internet en masse as an effective, measurable medium, a potentially fatal price war threatens under the traditional media. That is one of the four future scenarios outlined by Annet Aris for the next few years
Newspaper and TV companies may fall over the coming years. If the recession strikes hard and long and advertisers switch to the internet en masse as an effective, measurable medium, a potentially fatal price war threatens under the traditional media.
That is one of the four future scenarios outlined by Annet Aris for the next few years. Internet has drastically changed consumer media consumption and advertisers are starting to steadily follow. Media companies traditionally come later, which can mean the end for some.
Aris, member of the Board of OPTA and Professor of Strategy at the prestigious INSEAD University, took the appreciation of several newspaper companies during an Immovator meeting as an illustration. The publishers who have few online activities saw their valuation fall to 1 percent in one and a half years. Publishers such as De Telegraaf and Schibsted are still doing a good job with about 30 percent.
The faster the media and consumers switch to new technology and the more drastic the recession is, the more headlines there are in the traditional media.
"The last two years were all about user generated content and social networks: people want to be able to socialize, choose, create and share with each other - this is not a new need for the media consumer, but that has been a long time. This could not be foreseen for socially oriented web services, which is why it is so fast "and traditional media productions are losing interest.
In a hard and long recession, advertisers will focus on the return on their advertising investments. Aris: "Companies must fundamentally think about the effectiveness of advertising spending, and it is wise to seek cooperation with the new giants, such as the large internet and telecom parties."
According to the professor, the new players include cable and telecom companies, Google, Nokia and Endemol-like producers. Each of them individually has a wide range and has a lot of knowledge about and often payment relationships with their customers. These players manifest themselves next to the established parties between radio, television and print.
"It seems that when there is a broadband penetration of between 60 and 70 percent in a country, advertisers will accelerate their spending on online." During an economic downturn, that growth could be exponential if online media proved effective and consumers went online even more. According to Aris, there is probably more in Internet in 2008 than in TV advertising. "You can assume that the US is just before the turning point".
Aris did not merely describe the doom and gloom. She states that the economic downturn lasts for at least two years at best. If consumers slowly embrace digital media during this period and the recession only turns out to be a financial hiccup, then media, advertisers and new market parties will gradually evolve towards a renewed media landscape.