I think 2009 is going to be a year of immense change in the UK media landscape. But it’s not going to be the same for everyone. I predict that it will be a bad year for the traditional offline players whilst newer digital players will find 2009 painful but manageable. For many traditional media owners 2009 will be about survival – particularly in print. There is no doubt that the UK media scene will look very different in December 2009 to how it looks in December 2008.
Before we get into the detail, I think it makes sense to divide my 10 predictions into two groups: “structural change” and “reality checks”. The “structural change” predictions deal with fundamental corporate realignments that will be forced upon businesses in order to survive in the UK communications industry. The “reality-check” predictions relate to businesses that will have to make significant changes in how they operate to remain healthy and be in good shape to meet the challenges of the next few years. So below is a summary of what I think will happen in online and offline marketing and media community in 2009.
Structural changes (1-5):
1. The full effect of the flow of advertising revenue from offline to online media in recent years will make a profound impact on the the UK media scene in 2009. Media owner denial about underlying structural shifts in our industry will evolve into acceptance and the adoption of a ‘change or die’ corporate mentality. On reaching this enlightenment, media owners will use the recession as an excuse to make the big changes they’ve been putting off for years. There will be ruthless cost-cutting, divestment, re-structuring and closures.
2. In print, some established brands will collapse. One national newspaper will close or be sold. But the worst pain will be reserved for regional and local media which will come under severe financial pressure because of the combined effect of the shift to online, the crisis in the housing market and reduced expenditure from advertisers, particularly car dealers and retailers. Regional and local directories like Yell and Thomson will also have a very difficult year. All in all I predict regional media will be in for a torrid year, and suffer worse perhaps than any other channel.
3. In broadcast there is also going to be serious financial trouble. Some smaller TV stations may suffer badly and probably collapse. ITV’s situation will get steadily worse. Sky will continue to feel the impact of Freeview through declining rates of subscription growth, but its subscription base will make it less dependent on advertising revenue and allow it to weather the recession in reasonably good shape. Problems will come for Sky if the recession goes on for more than a year and consumers think twice about re-subscribing. Regional radio will suffer badly because of its dependence on cars and retail.
4. Online will not be exempt from any pain (see also 6,7,8) but it will be display advertising networks that have to bear the brunt of it. The whole area of blind networks delivering view based conversions will come under increased scrutiny. These advertising / business models will be under the magnifying glass of both advertisers and investors. Ad revenues will decline and investors will start to duck out. This will cause a shake out in online display advertising networks; some will fold and the lucky ones will be taken over.
5. On the agency side of the business, some traditional agencies could run into serious financial trouble and some may even go under – particularly those with an over-dependence on automotive and retail brands. As usual in a recession, those agencies able to prove a causal link between their activity and sales are likely to suffer less than those agencies who can’t.
6. The business models of social media stars like Facebook will come under increased financial scrutiny as brand owners realise it’s very difficult to communicate in these environments and investors realise it’s therefore very difficult to make money. Some social media sites will be bought up by bigger online and perhaps offline players seeking to broaden their offering.
7. Microsoft may concede it can’t win in paid search and may even surrender and divest from it. Even if this doesn’t happen, watch out for other significant online and offline investments from Microsoft.
8. Google will show signs of maturity and will be forced into making a big move to maintain momentum and investor interest. Anticipate something like a big traditional media owner purchase, the takeover of a big social media player or more mobile developments.
9. There will be significant shedding of non-core corporate assets across the board. More companies will lose patience with their seedlings and turn out the light. Rather ironically from a corporate point of view, traditional media businesses are likely to close their digital businesses. This will reflect the fact that the dominant business model in these companies cannot yet monetise online and digital profitably.
10. Consumers will be lackadaisical about very high speed broadband. As the revelations about high speed actually being slow speed gain more momentum, offers of higher speeds will be met with increased cynicism. As a result, take-up will be slow and providers may run into problems. Those companies betting that offering even higher speeds will add new life to a maturing market may lose.
Despite all this, here’s to a Happy Christmas and 2009.