One thing is a certainty: traditional media will come to an end. It’s simply a question of when, not if, says Jarred Cinman.
Those of us who are in the business of pioneering ‘new media’ are on the side of history. We are plagued with two important questions: when will we become the largest medium and how will we monetise our medium effectively?
Understanding how to drive digital ad spend is key. A series of missteps in the short history of this medium has left us with a self-contradictory context: under-valued but overrated; pervasive but drowned out by noise; and measurable but misleading.
Spend will eventually move from traditional to digital platforms. How much and how quickly is less certain.
Of all the media types, print faces the reaper first. Globally print revenue is in decline. Mark J. Perry, from the American Enterprise Institute’s Carpe Diem blog, says print ad revenues are now the lowest they’ve been since 1950.
In South Africa, as in other developing economies, print still has some life in it. According to PricewaterhouseCoopers (PwC), print ad revenue will grow by around 7% year on year to 2017. That is, however, below real inflation and far below the kind of growth in other media.
Because of the challenges in broadband and the lack of cheap tablets at present, print has 10 years left, in my view. By then every consumer worth reaching will have a device that will make print both obsolete and inferior.
Print offers, at the moment, a superior form factor, low cost, household shareability and a degree of cultural inertia. Digital has a way to go on the aesthetic front, but a generation that grows up with devices in hand and not paper will feel none of the attachments to traditional media felt by adults today.
Despite its enormous reach, radio in South Africa only earns about 50% of the revenues of print, according to PwC. This is expected to grow at about 8% per year till 2017.
Unlike print, radio as a medium has a lot of life in it. But that depends on how one defines radio. If you define it as ‘programmed audio distributed digitally to listeners’ then one can see a very long future for radio programming. If you define it as ‘programmed audio distributed using radio waves to radio receivers’, the picture is different.
Audio compression is constantly improving and streaming radio over the internet is possible, even in a country with bandwidth constraints like ours. Because radio has a sense of common experience about it, it is less likely to be displaced by on-demand, although ultimately people will probably lose a taste for having their content chosen for them.
I give broadcast radio another 15 to 20 years until internet devices are the primary form of audio content distribution.
Commanding the biggest piece of the advertising pie and forecast to reach R15 billion by 2017, TV is also only growing at 5.8% year on year. It has in its favour the fact that it is the medium with the slowest turnaround in technology (a TV is not replaced every year or two), and the most aspirational content. Furthermore, the appeal of global sporting properties and time-sensitive programming, like reality TV, give it strong appeal.
Interestingly, we have two competing digital trends when it comes to TV. Digital terrestrial TV, although digital, remains a broadcast medium with little interactivity for the consumer. Internet-based TV – such as Netflix – is something entirely different. On-demand, interactive, personalised and social, this clearly represents the world of TV to come.
And make no mistake, the technology giants see this too. Apple and Google both have firm plays in the TV space and are rapidly evolving devices and content.
I give broadcast TV another 15 years before it is firmly displaced by on-demand internet television in South Africa. A new generation is only starting out on the TV journey now, and bandwidth and infrastructure costs are going to take a long time to land. Expect huge players in a monopolised market, particularly in satellite TV, to fight fiercely to keep broadcast TV alive as long as possible.
By contrast, digital ad revenue is growing at around 25% year on year. It’s off a low base but it’s the only medium that is growing fast enough to look like a long-term player. This also counts as common sense given the pervasiveness of mobile phones and other internet devices in the market and around the corner.
None of this should be taken as conceit. I love traditional media as much as anyone of my generation. But we are past the point where that kind of nostalgia has meaning. The future is written and it is our job to make it great.
Jarred Cinman is managing director of Native VML.
This story was first published in the September 2014 issue of The Media magazine.
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