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GroupM report highlights factors impacting the publishing industry

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We may have reached peak anxiety in many corners of the media world. Despite their best efforts, a number of publishers are failing to accelerate their digital revenues fast enough to offset the cost of legacy operations and falling advertiser demand.

These are just some of the observations contained in GroupM’s latest ‘Interaction’ report, an annual overview - and speculation - on the state of digital marketing and its implications for advertisers and publishers.                                                      

The idea of ‘peak stuff’ is derived from a statement by the head of Ikea’s sustainability unit, Steve Howard who said last year that (in the West), “We have probably hit peak stuff. We talk about peak oil. I’d say we’ve hit peak red meat, peak sugar, peak stuff... peak home furnishings.”                                                             

The authors of Interaction 2017 contend that this may be true in some areas, however, there are many peaks yet to be scaled. “We are nowhere near peak data but have clear line of sight into its processing, we are nowhere near peak interpretation of moving images but again the solution is visible. We are only in the foothills of peak bandwidth, the ubiquitous capability to stream the highest resolution content untethered from physical cable and Wi-Fi...

“However, in the publishing world the legacy business model is most probably scaled. This model has always been based on two or three constituents. The ‘universal two’ are revenue from circulation/subscription and revenue from advertising. The third… is a wealthy proprietor.”

The report points out that the first two have reached “peak anxiety” with the entire publishing industry challenged by five further factors. These are:

- Direct digital competitors that combine demanded content with lower operating costs like Vox, Buzzfeed, Vice and Refinery 29;

- The inefficient monetisation of original content. This content is consumed on major social platforms where publishers do not make enough from their owned and operated digital properties;

- Newspapers are also challenged by their ‘content bundle.’ There are different advertising and subscriber models for news, sport, travel, finance, technology, arts and automotive content. Hard news has always been the hardest to sell and the most expensive to produce. Many native players have successfully picked apart this bundle both editorially and commercially to the detriment of newspaper publishers.

- An aging population means that there are few new readers of magazines or newspapers (in the traditional sense). Dominance of the newsstand or the doorstep is only of value if there is demand to dominate; and

- There is a loss of immediate attribution. Without the super scale of television and the biggest digital platforms, publishers are challenged in their inability to attribute outcomes of scale and at speed. This undervalues the value of their properties and discounts the worth of committed, influential and affluent audiences.

While GroupM’s annual reports tend to focus on findings, observations, statistics and speculations, these reports seldom offer solutions. However, in this year’s introduction, there are some nuggets of advice to the found. The report says the future will see a time where it will be “challenging to discriminate digital marketing from all marketing. Consumers barely separate their digital and analog lives; little media is published in only analog form and enterprises infuse digital processes into every aspect of their organisations”.

Despite this, marketing strategies and services remain more siloed than consumer behaviour. Likewise “marketing and sales organisations remain more separated than they should be…” .

The report echoes sentiment in the publishing industry, which would suggest that advances in technology (both hardware and software) are leading the industry (and the world) from the Information Age to the Intelligence Age.

While 2017 is the 10th anniversary of the iPhone, it can also be the “the beginning of a sequence of changes that will have equally profound implications for society and thus for marketers”.

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The Interaction report touches on many of these changes and its relevance to advertisers, media and technology. These changes include the rising influence of artificial intelligence, developments in augmented and virtual reality, the competition for video advertising between television and other video providers, the impact of ‘relevance’ on the trading of media, developments in the application of data to television, the impact of streaming and on-demand audio, the Google/Facebook duopoly, live video, ecommerce, marketplace integrity and fake news.

You can request the full report from GroupM here.

* GroupM is a leading global media investment management group serving as the parent to WPP media agencies.

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