For all the talk of fragmentation in media, isn’t it funny how similar the digital media business is to the old TV business? Take a second and think about it from the perspective of a mainstream advertiser…
In the old days an advertiser had three network television stations to choose from (ABC, NBC and CBS). As cable TV became a force and the “major network” landscape expanded, most marketers would view the world in terms of 5 primary networks (adding CW and UPN) with a small handful of really strong cable players (i.e. ESPN, MTV, USA, TNT, etc). These days you have the majority of dollars focused on the primary networks and a few major cable providers plus a strong pool of innovation driven by players like HBO and Netflix with their original series getting a lot of attention from the market.
The Internet is actually very similar, albeit reversed in its path towards the same outcome. In the early days of the business there were many options for how to spend your dollars, but if you look at the way the business has consolidated you have a few major players that take the majority of the ad dollars (i.e. Google, Facebook, Twitter, Yahoo, AOL, Microsoft) and a pool of innovative companies who deliver audience and are evolving to deliver media revenue (i.e. SnapChat, Pinterest and more). You can double-click into the business and come up with the names of companies in video and mobile who are doing good things, but the best tend to get acquired into these larger entities and packaged up for advertisers.
This oligopoly-driven view of the business is not a bad thing, but it’s an interesting one. There’s no monopoly at play here, not even Google can claim to own the only position of power. This is especially true when you dive deeper into the business and understand the difference between the media companies and the technology used to execute these kinds of campaigns. No single company owns the path to implementation. This is a complicated business, but I find it interesting that the digital media response to fragmentation is actually consolidation. Consolidation has been predicted over the last few years, and if you listen to industry intelligentsia like Terry Kawaja and Mary Meeker, they are spot on that now is the time when these predictions are coming to fruition. Consolidation is breeding efficiency and these larger media companies will also innovate either through development or acquisition, or even through mirroring what the innovators are coming up with through necessity. An oligopoly still breeds competition and in a market where the media companies are not in control, but rather they are trying to keep up with the consumer who dictates how and when they will request interaction with brands and services, the oligopoly approach can actually create a stronger, more consistent path towards a strong business. The oligopoly creates a strong core and that’s what this business will build upon over the next 10 years.
These next 10 years are a crucial one because the shift from the desktop to the mobile environment is an important one and the companies in a leadership position (those mentioned before in this article) are all very focused on mobile. They are providing content across channels and they are monetizing that content accordingly.
So from the perspective of a media buyer or a general advertiser, how much are you consolidating your dollars against the industry core vs. trying out the new innovative paths towards customer engagement? Are your priorities aligned with your budgets? Are you planning in a proactive manner or are you reactive?
What are your views on where things are headed?