Media's Most Critical Challenge: Over-Supply

Total marketing communications budgets will be generally flat through the end of this decade, and down significantly when factoring in inflation. Marketers'total communications investments are estimated to grow from $598.6 billion in 2012 to only $610 billion in 2020. Investments in media advertising (above-the-line) will increase from $203 billion in 2012 to an estimated $304 billion at the end of the decade. Promotional spending, direct marketing, event, public relations and other "below-the-line" marketing communications will decline from $396 billion to $306 billion. Of the $100 billion of increased ad spending in 2020, $90 billion will be focused on achieving below-the-line promotional goals through partnerships with media companies. MyersBizNet estimates that only $10 billion will be incrementally invested in 2020 across all media to achieve traditional awareness, reach, frequency and impressions-based advertising goals. Media inventory supply during this period will increase at an exponential rate. Marketers will achieve their traditional reach/frequency/awareness objectives in an over-supplied and highly fragmented media marketplace by commanding greater cost efficiencies using automated and programmatic systems. Even the most valuable of media outlets will experience cost deflation unless they offer high targeted reach, exceptional performance metrics, and/or integrated promotional and marketing tie-ins.

The growth of advertiser demand since the 1950s has enabled the expansion of print, radio, television, out-of-home, and more recently Internet-based media. While some traditional supply, especially in print media, is eroding, the growth of online, mobile, digital out-of-home and television media is accelerating. All indications are that the amount of digital inventory available to advertisers and their media buyers will increase exponentially, driving down costs for both legacy and digital media inventory. The downward pressure on costs will intensify. It's inevitable.

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