Free ContentFor Members Only
Home > MyersBizNet Media Business Report > Media Industry is in an Unprecedented State of Economic Disarray. JackMyers Think Tank

Media Industry is in an Unprecedented State of Economic Disarray. JackMyers Think Tank

March 18, 2008
Barry Diller and John Malone

Published: March 18, 2008 at 05:34 AM GMT
Last Updated: April 7, 2008 at 05:34 AM GMT

What a week last week was -- and what a week this is already shaping up to be! The Eliot Spitzer affair was beyond comprehension. The John Malone/Barry Diller soap opera played out in a Delaware courtroom. But for long-term impact, the Bear Stearns debacle was the major story, with the economy taking a turn that could have significant impact on this year's advertising marketplace. Plus NBC and News Corp. launched video website Hulu last week. Debbie Richman left OMD to join Lifetime. Curt Viebranz was unceremoniously dumped by AOL and replaced by insider Lydia Clarizio. Joanne Bradford departed MSN, where she was GM, to join Spot Runner, a company that is gaining increased recognition and that former MTV and IPG executive Mark Rosenthal recently joined as Vice Chairman. There were multiple acquisitions and far more major personnel announcements than in an average week. The rate of industry change is accelerating.

While I am not yet prepared to revise my relatively bullish ad spending forecast and I continue to believe most media other than newspapers will experience revenue increases in 2008, the economy is clearly heading into a recession. And while our analysis of the historic impact of a recession on ad spending supports our bullish forecasts, the combination of a severe economic downturn with the dramatic erosion of broadcast network audiences resulting from the recent writers' strike could cause advertisers to finally resist the cost-per-thousand (CPM) increases the networks will undoubtedly be seeking. Although, for reasons I point out below, I expect the Upfront market will once again be a good one for the networks.

Broadcast networks, buoyed by their success in generating higher than expected CPM increases last year, expect buyers to once again pay mid-to-high single digit CPM gains in this year's Upfront marketplace. These increases are anticipated although strike-related ratings declines were dramatic and the ratings recovery has been slow. Leading cable networks are projecting double digit CPM increases. But agency executives are quietly expressing concern that the network run of year-after-year CPM increases may be at an end due to marketers' economic concerns.

Compounding marketers’ concerns, the writers' strike has caused unprecedented disarray at the networks and studios. With the launch of Hulu, with investors financing alternative programming studios like Next New Networks ($15 million more invested last week), with accelerating audience fragmentation, and with networks struggling to bring viewers back into the fold, agency media departments and media sales executives are facing unprecedented demands.

Yahoo!, AOL, Google and MSN should be well positioned to benefit. But, except for Google, these companies are also in a state of unprecedented disarray. Microsoft’s focus is on its battle to acquire Yahoo!, and Yahoo!'s focus is obviously on its response. Both should be concentrating on maximizing brand advertising revenues. But who at either company is leading the charge? While they both have competent executives, the lead dogs at both companies have virtually no experience in the traditional media marketplace.

In recent months Yahoo! lost Greg Coleman, Wenda Millard, Jackie Kelley and others who had Madison Avenue experience. At Microsoft, while the aQuantive acquisition brought several executives experienced in the digital ad market, only Bradford was well known in traditional ad circles. AOL should capitalize on the brain drain at Microsoft and Yahoo! but it has suffered its own executive departures. Neither Viebranz nor Clarizio have traditional ad industry sales and marketing credentials.

Google's acquisition of DoubleClick finally gained EU approval last week, but Google’s most active executives in the ad community also lack experience in the traditional media marketplace. While Microsoft, AOL and Google have been actively acquiring companies and recruiting talent to bolster their bona fides in the digital ad marketplace, none can field a team with experience and credibility in the network TV departments of traditional media agencies and among the senior brand and advertising executives at top 200 marketers.

Attention is being paid to vertical ad sales networks, behavioral targeting, administrative backbone companies like Rapt (acquired last week by Microsoft), and social networking, but very little attention is being paid to brand advertisers' needs and opportunities. Nor is attention being paid to developing quality content to offer a trusted environment for brand advertising. The focus instead, it seems, is on advertising as a commodity rather than advertising as a tool for building brand awareness and sales.

This is an industry in disarray. In chaos. In a chaotic marketplace, advertisers and agency buyers will, like consumers, turn to those brands they know best. And that means that for one more year at least, the TV network Upfront marketplace should be a strong one.

Only at JackMyers.com: TV Maven:
"The Bachelor": British Banker Rejects a First-Round Love Thong

This Year's Upfront Events -When Are They?
Find Out at JackMyers.com

add this social bookmark link

Post a Comment

Commentary Archives

October 2015
September 2015
August 2015
July 2015
June 2015
May 2015
April 2015
March 2015
February 2015
January 2015
December 2014
November 2014

See all Archived Material


Beware! Congress Is Back in Town!
All the Congressmen not running for President will be in the District of Columbia for about 15 or so working (!) days in December. Lock your doors. Bolt your windows. Keep the children safe!

TREotM: The History of Media Revenue Models Continued
Chapter 14, Part 1

Disarming the Ad Bomb: Part 2
Editor’s Note: The controversy generated by Mike Drexler’s September 28 column “The Advertising Industry As We Know It Is About the Blow Up!” continues.

The MediaVillage Articles Club: Friendsgiving
In celebration of the giving season, this month's Articles Club was billed as a Friendsgiving-style potluck. Were it not for some delicious chili and cornbread from our hostess, Chelsea, the evening may have fallen short of expectations. (I came armed with store-bought desserts and we also ditched a called-for side dish in favor of some Cabernet.) Our conversation covered a lot of ground this month even if our dinner table spread did not. As we look ahead to 2016 we have set a resolution for more diversity in our slate of suggested reading. With all due respect to The New York Times, we are going to make more of an effort to share articles from other publications in the coming months.

Stuart Elliott Revives "20 Questions" -- A Popular Holiday Tradition
One of the best friends of a columnist, apart from an elastic deadline, is the perennial feature, and I was known for one during my more than two decades writing for my previous employer. It was called "20 Questions," a column that would run before or after major holidays. Since we're about to celebrate Thanksgiving I thought it would be fun to revive it for my MediaVillage audience.

Pepsi on “Empire”: Coolest. Sponsor. Integration. Ever.
Call it the wave of the future, or a blast from the past. Pepsi’s sponsorship of Fox’s hit primetime serial “Empire” became virtually DVR-proof on this week’s episode while also evoking that long-ago era of television when advertisers were integral to the presentation and content of programming.

Office Smackdown! Baby Boomers vs. Millennials and Vice Versa
Have you noticed a difference (or ten) between Baby Boomers and Millennials in the workplace (and everyplace else, for that matter)? Especially the younger end of the former and the older segment of the latter? Of course you have -- and you aren't the only one.

SMI: Television Roars Back to Life; Digital Questionable?
Fresh off the back of soft results for many media owners in the third quarter of this year, the start of the new broadcast year has delivered some very heartening news for the television industry. Strong ad sales results for both the broadcast and cable sector helped the market to its best result of the year, with the total market up 15% compared to the same period last year.

DPAA: Audience Targeting -- Are You Missing the Mark?
With years of media fragmentation and increasing demands for better ROI, audience targeting has never been more valuable to marketers than it is today. The value for the marketers employing it, of course, includes better measurement and message delivery – and for those who fail to take advantage, smaller budgets or shorter careers.

Ten Expert Practices for Optimizing Team Performance
Visionary leaders are agents of change. Highly observant and great at reading situations, these managers know how to motivate teams to achieve new goals in the pursuit of excellence.

Net Neutrality Work-Arounds; Cutting Cords, Any Cords!
So you’ve got a MVPD subscription -- whether cable, satellite or telco -- plus broadband access and you’d like to watch video on some device or another … but you don’t know what exactly you’d like to watch and you don’t really feel like surfing 7,842 channels and web sites to find out what’s on and/or available. What do you do? Panic? Hope whatever MVPD or broadband provider you have gets smart enough to produce a guide that actually, uh, guides? Well, there are already a few gleams in the gloom out there.

NNN: When a Crisis Hits, Smart Marketers Like VW Know Where to Turn
Yesterday, Volkswagen began a print campaign in 13 newspapers across America. The purpose: To regain the trust of their customers following news of their emission issues. In the ad, CEO Michael Horn extends his apology and a special offer to those affected. Specifically, customers who qualify will be given a $500 prepaid Visa Card along with a $500 dealership card. This is the first official, public gesture that the company has made to address the consumer crisis and here at the Newspaper National Network we were honored to work with them in executing the initiative.

ABC's Geri Wang To Be Honored By Reisenbach Foundation Tomorrow Night
Geri Wang started as a physical therapy major in college but later changed to communications. Upon graduation she landed her first job working for Helen Johnston at Grey Advertising as a media research analyst. From there Geri was recruited by ABC, where she excelled. She is currently President of Sales, leading a team of nearly 300, and she is responsible for advertising sales and integrated marketing across the entire ABC portfolio including ABC Primetime, Daytime, News, Late-Night and Digital; the Disney/ABC Domestic Television Syndication Group; Fusion, and ABC Sales Development.

Unlike Certain Ads, This Column is Viewable
It seems that most weeks bring yet another jaw-dropping story from the wacky world of digital advertising. We’ve had bots, fraud, trading desks buying inventory from themselves and a host of other wonders. Last week though brought an excellent example of the genre, for which I’m grateful to Linda Holliday, the CEO of CITIA.com who brought it to my attention.

Driverless Cars and the New Automobile Era
We are now about 130 years into the automobile era. Starting with Karl Benz’s patent in the 1880s the automobile quickly became widespread with Henry Ford’s model of mass production scaling up the market 100 years ago.

Click Here for Membership Information