A new research study by PriceWaterhouseCoopers (PWC) suggests we are in for a digital deluge over the next four years. PWC’s Global Entertainment and Media Outlook 2009-2013 was conducted across 12 Entertainment and Media industry segments, such as Internet advertising, television advertising, newspaper publishing, and video games, in 48 countries.

In the study, PWC admits to “a period of broad decline” in global ad revenues, but at the same time, there will be “a profound structural shift” towards digitally-based advertising models. While non-digital will still represent the bulk of ad spending by 2013, digital ad spending will increase 10 percent from 2008 to 2013. PWC says “digital spending will be the [Entertainment and Media] industry’s main engine of growth, making further major inroads into all segments.” The study indicates that mobile and digital newspapers will enjoy the largest advertising revenue growth in that period.

The three primary reasons for the growth of digital revenues, according to PWC, are the economy, consumer behavior, and advertising. The economy is obvious – companies will migrate more rapidly to less expensive, more efficient digital technologies during the widespread economic downturn. In the area of consumer behavior, PWC says consumers are demanding “more control over where, when, and how they consume content,” as well as higher value from media choices.

As for advertising, PWC predicts:

“a new generation of ad-funded revenue models” will emerge, emphasizing “more accurate targeting and relevance of ads to the specific consumer.” The firm says the key to success in the digital future will be the use of technology to “exploit consumer data to the fullest extent possible.”

PWC sees new opportunities in digital technology areas such as personalized online video advertising, with the objective of more effectively and accurately targeting audiences.

PWC predicts the highest ad spending growth from 2001 – 2013 to come generally from Internet access, and specifically from Internet advertising. Global spending on Internet access, including wired and mobile, will reach $334 billion in 2013, up from $215 billion in 2008.
“TV subscriptions” (paid television such as cable) and video games are the next highest growth segments, according to the study. Filmed entertainment will also grow significantly. But recorded music, business-to-business publishing, newspaper publishing, and consumer magazine publishing, says PWC, will all see declines in total global revenues. Basically, growth in digital revenue will not be able to stem losses from traditional, non-digital revenue sources.

PWC concludes that companies involved in advertising “will have no place to hide from the remorseless digital advance.” It is interesting to note this unrelated but relevant story: Last week, Kodak announced it is discontinuing Kodachrome film after 74 years, indicating that 70 percent of revenues now come from the company’s digital business.

This is more compelling evidence of the sea change upon us – that what we read, see, hear, and respond to will increasingly be digital in nature.

Source:
Digital Deluge