Friday, June 22, 2012 | Edited by Daniel Moores
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Digital to Account for Two-Thirds of Media Industry Growth, Continue to Challenge Ad Models

The media industry is approaching the "end of the digital beginning," meaning that digital media, technology, platforms and experiences are now embedded in "business-as-usual" and "moving to the heart" of many -- if not most -- media and entertainment-based companies, according to the latest installment of the PriceWaterhouseCoopers annual Media Outlook report.

The 2012 edition of the report, which looks at five-year increments, projects the transformations of the media industry likely to take place through 2016, when PwC projects that global spending on media and entertainment products and services will surge to $2.1 trillion, up from $1.6 trillion last year.

The report, released last week, estimates the U.S. media and entertainment marketplace grew at its fastest rate in 2011 since 2007, and will continue to expand at a compound average growth rate of 5.2% through 2016.

Not surprisingly, PwC finds that digital sectors have and will continue to "significantly outpace" growth rates vs. non-digital media over the next five years.

"Digital spending is expected to account for 67% of all growth in spending during the next five years, globally," the report projects. "Digital spending in the U.S. is expected to account for 31.5% of all entertainment and media spending in 2016, up from 21.7% in 2011."

The report advises media industry executives to focus on three major themes -- "understanding the connected consumer," "new business models to reinvent the value proposition of advertising and content," and "developing organizational models to harness new behaviors and grow revenues in the 'new normal'."

In fact, advertising in the "new normal" will look like anything but normal, as the ad industry struggles to reinvent itself "in the image of the consumer."

"The rise of unpaid or earned media reflects an innovative new mix of advertising, content and analytics, bringing sweeping change to the roles and business models in advertising. The rise of socialization is feeding into the widely-accepted concept of bought, owned and earned advertising among agencies and advertisers," the PwC report concludes, adding: "A fourth category is emerging -- 'managed' advertising, which involves the orchestrated use of social media, such as engagement with bloggers.

"Everything that agencies do for their clients now has an embedded digital component with the attention on measurement shifted towards earned, unpaid media reach and purchasing intentions."

(Source: Online Marketing Daily, 06/12/12)





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