Ten Marketing Trends: VC Collapse, Creative Agencies Strike Back, Arbitrage and More

Last week I shared my Top Ten 2012 Tipping Points for Marketers Here are my top ten implications of these advances and shifts in media advertising marketing and entertainment that will boil over in the next 12 to 24 months and require marketers to take action The obvious trend of increased focus on social marketing is pervasive and integrated throughout pretty much every aspect of the shifting landscape of media marketing and advertising Similarly increased interactivity integrated into all forms of marketing communications is a given and is a trend that has been obvious for years Last week39s report included the acceleration of interactive and addressable TV even on the heels of the collapse of Canoe Ventures and possibly because of it Combined with mobile marketing growth faster online connection speeds cloud marketing and other forces all marketing is moving toward interactivity which is more a powerful reality than a trend Please share your comments and trends you see emerging and gaining traction in 2012 at wwwjackmyerscom or by email to jmjackmyerscom Some links in this report require a password to access subscriberonly content at JackMyerscom Please contact maryannjackmyerscom for your access code1 Creative Agencies Strike BackMedia agencies have been in the forefront of capitalizing on and monetizing the digital explosion As pointed out in last week39s report search and social marketing are pulling promotion and direct budgets into traditional and nontraditional media execution The media groups of the major holding companies along with large independent media agencies have profitably launched andor acquired specialized groups to support their client needs Publicis39 VivaKi has increasingly defined itself through its digital focus Public relations agencies have adapted to accentuate their social media expertise Promotion agencies are struggling to build digital marketing capabilities Creative agencies while expressing an interest in digital have remained mired in the outmoded emphasis on 30second network television commercials There are numerous exceptions such as Ogilvy39s Ogilvy Entertainment division and IPG39s RGA Group IPG39s McCann World Group moved Nick Brien in as CEO from sister company Mediabrands to foster a shift to digital marketing Most creative agencies are making similar shifts But they remain spiritually emotionally and creatively locked into legacy business models that will be progressively less relevant unless they accelerate their digital focus and that39s exactly what they will do in 2012 and beyond Just as media agencies offer creative capabilities to support their digital media strategies creative agencies will begin actively hiring digital media experts who can develop the big mediabased creative ideas and assure that the agency creative teams remain at the head of the table It will be a battle among corporate brethren amp8211 and fun to watch as it evolves2 Video Increases its Market ShareIn 2000 local and national television media accounted for 107 of marketers39 total communications investments Online video was nonexistent By 2010 television39s share of marketers39 spend had increased to 132 a gain of nearly 19 billion in annual TV ad spending from 587 to 775 billion Video advertising in online originated video content amounted to only 350 million By 2020 traditional television advertising is forecast to grow to 1084 billion representing 193 of marketers39 total communications investments An additional 14 billion is forecast to be invested in advertising associated with online originated video content With cinema digital outofhome video and mobile video advertising will surpass 25 of all marketing communications budgets reinforcing the role of creative agencies and the need to move wellbeyond the traditional 30second commercial3 Marketers Look Beyond the Newspaper and MagazineIn the 1970s newspaper companies captured as much as 20 of all advertising investments a share that will decline by 2020 to only 40 The importance of local marketing has not declined but the forces that made newspapers the most attractive and productive marketing tool have diminished as coop coupon trade promotion and print budgets have shifted to more effective solutions Marketers will return their focus to the local community Some such as American Express have developed innovative local business strategies and capitalized on the vacuum as competitors have emphasized national and regional marketing Local community newspapers and pennysavers along with ValPak direct mail coupons are the last frontier of print media that have yet to be disintermediated by digital That unique position is eroding as competitors from Google to Yelp Savored Angie39s List and Thrillist to Groupon and Living Social capture a growing share of local merchant spending The erosion will accelerate as hyperlocal digital options and solutions expand Local digital media such as AOL39s Patch have yet to get it right in understanding the commerce dynamics of local media The integration of local merchantrelated content and commerce with social media and locationbased marketing will motivate marketers to move budgets back into communitycentric marketingMarketers are also actively beginning to underwrite documentary films recognizing their emerging role as the new investigative journalism GE39s FocusForwardFilmscom initiative empowers documentary film makers around the world to tell their stories in threeminute films about innovation and invention contributing to human advances Typically these are stories that would have been told by journalists Funding distribution and creative resources are now more accessible for videobased storytelling and marketers will look toward these opportunities for brand association Full disclosure I am a producer of the FocusForwardFilms initiative4 News America Valassis Catalina and Other Promotion Companies Figure It OutTheir clocks are getting cleaned by Groupon Living Social Thrillist Daily Candy and every VCfunded johnnycomelately company with a digital coupon distribution scheme The legacy leaders have been incredibly slow to react blaming steadily decreasing revenues on tough economic conditions Their problems are more endemic than economic Historically promotion has increased during recessions Consumer and trade promotion is important to marketers but there are more cost efficient digital promotion opportunities and they will continue to move dollars in those directions In 2012 the traditional leaders in coupon distribution will aggressively shift their focus to digital and mobile businesses or they will be outofbusiness by 2016 Whether they39ve already missed the boat remains to be seen5 Arbitrage Business Models Move to the Forefront as Media Becomes Less TransparentIn 2010 I reported on the inevitable shift away from fully transparent media relationships between media agencies and their clients as well as between media buyers and media sellers The expansion of Demand Side Platforms DSPs Media Exchanges Vertical Networks Supply Side Platforms addressable media capabilities enhanced targeting and VCMMAR Very Cool Marketing and Media Analytics Resources are resulting in a restructuring of the underlying foundations of media buying and selling In 2012 agencies will become more aggressive in building out the resources that enable them to bypass some of the traditional requirements for fully transparent media buying European agencies are not required to maintain as stringent transparency policies as in the US With General Motors Unilever and major international marketers consolidating their global media planning and buying agencies are likely to reduce fees in order to gain more opportunities to leverage media relationships to not only their clients39 advantage but their own amp8211 by taking more risk and expanding their arbitrage business models6 Powerful Media Brands ReEmergeBroadcast and cable networks will factor the brand equity potential of new series into their development considerations Magazines will evaluate the potential of each of their properties based on their multiplatform and cross marketing potential Radio and TV stations newspaper publishers and all media will review their talent lineup and measure them based on whether or not they can be branded Content will continue an inexorable shift from mass to highly targeted audience reach Mass media is reasonably safe as a realistic concept for another two decades perhaps three Premium media value however will be concentrated among those assets that offer audiences and marketers both wide popularity and a loyal engaged and interconnected audience That model strongly supports the economic value of those companies that own valuable and sustainable media brands at their core Not all will grow and there may be one or two companies that structurally collapse for reasons other than the value of their content Companies that are layering new digital businesses on top of their nonbranded legacy businesses will struggle if they fail to either 1 shed all or most of those legacy assets or 2 deliver mass audiences at cheap costsperthousand Content brands that will be the beneficiaries of premium pricing and revenue growth will be those that enable the activation ofamp183 Consumer promotion including coupon and offer deliveryamp183 Database development and enhanced direct marketing assetsamp183 Gaming and virtual assetsamp183 Multiple Video Windowsamp183 Direct commerce opportunitiesamp183 Enhanced targeting and retargeting toolsamp183 Results measureable by multiple analytic tools audiences39 emotional connections and engagement7 Digital Economic Collapse and VC Funding Shifts are on the Horizon As always there will be new entries into the marketplace that will disrupt the already volatile status quo Of greater economic concern for the thousands of VC companies that litter the digital landscape is the economic restructuring of the media industry that will redirect VC39s to other business categories as their funds decline in value as their investments consolidate with unproductive valuations and as uncompetitive investments are forced to shutter or shrink It is increasingly apparent that there will be a fundamental restructuring of early and midstage companies that have yet to achieve profitability as investors can no longer justify additional capital For now venture capital is still flowing but the spigot is closing For some companies it might close in the next several days and weeks as the demand for profitability and return oninvestment intensifies Tech has become a commodity available to customers at a fraction of its real value due to an overpopulation of competitors all marginalizing the business Some standouts have staying power but the possibility that they might collapse under their own success is just as real Equity capital is becoming attractive again and most legacy media companies are performing reasonably well shifting the emphasis of value investors away from the venture market and toward legacy media companies that have strong established businesses with digital growth layered on8 Investor Focus Shifts to Content and ContextVenture capital investors in general are locked into rigid patterns and decadesold decisionmaking opening the doors for a new wave of investors who have a fresh vision of the future and of opportune growth markets These investors will be more interested in the content and context oriented business models that capitalize on the cheap availability of technology to drive distribution deliver advertiser value measure performance and generate consumer engagement and loyalty The technology infrastructure to support advertising and media businesses for the next decade has largely been builtout Yes there will be advances but the technologybased venture opportunities in this business have been largely played out Many VC39s will simply shift their focus to other business categories but those who remain loyal to the media community will look toward underserved markets that technology has enabled Digital media and advertising businesses will be most appealing in the future to VC39s when they focus on communicating effectively with actively engaged consumers byamp183 delivering valued and engaging content amp8211 especially video social content and mobileamp183 organizing content based on both the individual and group needs and interests of targeted and welldefined audiencesamp183 targeting currently underserved markets such as local neighborhoods interest groups ethnically cohesive groups discreet consumer pocketsamp183 integrating content across multiple platforms using video social marketing commerce direct marketing event and experiential marketing resources9 Connecting InPerson with Consumers Gains ImportanceExperiential and Event Marketing captured 20 of total marketing communications budgets in 2000 a total of 108 billion By 2010 marketers had increased their investments in touching consumers inperson to almost 185 billion amp8211 31 share of their budgets Between 2012 and 2020 I forecast marketers will increase their event and experiential budgets an average 34 annually The form and function of these promotional budgets are likely to shift however Marketers will move these funds progressively toamp183 Virtual Presence Marketing resources that enable marketers to engage directly with consumers within virtual games social networks and digital locationbased communicationsamp183 Consumer Connected Media Brands amp8211 media properties that have the power to attract audiences to live events inhome parties social activities bars and other venues where marketers can directly connect with and engage their consumers in a positive environment10 Transformation of Marketing and Media Research In last week39s report I wrote quotWith the increase in digital data streams measuring an array of consumer transactions there has been far more information but still too little knowledge gained about its relevance for marketing decisions That39s all changingamp8230 2012 represents the tipping point year in the marketing intelligence business as marketers media and agencies shift the focus of marketing research away from transactional currency to returnoninvestment intelligence Researchascurrency will of course remain relevant but its value will be increasingly diminished as it is relegated to the bottom of the media ecosystem where commoditized purchase decisions will be made primarily through electronically managed online systemsquot Measurement is shifting from information to knowledge and intelligence We have an overload of information from an overwhelming avalanche of data points coming at us from all directions The demand will grow for analytic tools that sort through the data and are able to effectively convert information to actionable knowledge with evidence that it worksThese are just a few of the many implications resulting from the trends that are moving past their tipping points Every day these marketplace shifts are becoming more relevant to every executive decision The decisions you make and how determined you are to embrace these shifts will be the defining realities of your future careerYou are receiving this email as a corporate subscriber to Jack Myers Media Business Report Redistribution in any form except among approved individuals within your company is prohibited As a subscriber you have full access to all archives and reports at wwwjackmyerscom If you require your ID and password contact maryannjackmyerscom

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