Post by Michael Kahn, Chief Executive Officer of Performics Worldwide & Global Performance Practice Lead of Publicis Media
In the last week, AT&T announced the intended acquisition of Time Warner. AT&T, a U.S. telecommunications giant with connections to millions of consumers, seeks the considerable content assets owned by Time Warner that include CNN and HBO. This intended purchase follows a steady stream of acquisitions across the media landscape such as cable TV giant Comcast’s acquisition of NBC Universal, and Verizon’s acquisitions of the Huffington Post and Yahoo! on top of AOL which it had purchased a few years back.
The business rationale is relatively simple in all cases. These combinations bring together enterprise organizations capable of producing compelling content and distributing it to millions of consumers through some combination of wireless phones, broadband subscriptions and cable/satellite TV connections. They combine first party relationships, delivery pipes and entertainment platforms to attract audiences/gain advertising dollars.
And why would these traditional subscription-based businesses go after the ad dollar marketplace? According to data shared at a Wall Street Journal conference on Tech and Media, media/technology revenue growth is predicted to reach $400 billion over the next five years, outpacing overall economic growth and productivity. In short, media usage and advertising investment are growing and expanding sectors.
Beyond revenue upside, these acquisitions are also a direct response to an ever changing media and communications delivery landscape. One being disintermediated and dominated by alternative content providers like Netflix, Amazon Prime and YouTube as well as the digital/mobile giants Google and Facebook (Google and Facebook are expected to command 73% of each additional digital ad dollar over the next 3 years*).
To compete, more traditional media and communications companies are pursuing strategies based on a set of core beliefs:
These are sound principles for any entity conducting business in our digitally-infused world. And certainly for a global performance marketing network with 2500+ practitioners, investing billions of dollars on behalf of its clients to drive customer engagement and conversion.
Have a good week!