Seven predictions for media in 2014
C7 will be used for upfront buys, plus more
December 20, 2013
After years of fits and starts, with seemingly every economic blip sending advertisers into a panic that resulted in a slowing in ad spending, it looks as though 2014 will be the year the media economy finally rebounds.
There are certainly promising indicators.
The housing market has stabilized, unemployment is at a five-year low, and November retail sales outpaced analysts’ expectations.
Perhaps most promising, the economy has continued to improve this year despite the federal government shutdown, the sequester, and a rise in payroll taxes, any of which could have thrown off the recovery.
Further, entering the new year advertisers are more confident than they’ve been in some time.
Ad spending excluding Olympics and political was up 3 percent during third quarter, according to Kantar Media, and digital, outdoor and cable television showed particular strength.
Heading into the new year, small businesses are planning to increase their advertising and are feeling optimistic about the economy, finds a recent Borrell Associates report.
Though many analysts are still forecasting only modest gains for 2014, those improvements could be much better than they’re expecting.
The spark could be a strong end to the year for retail sales. Last year holiday sales didn’t live up to expectations, and that led advertisers to start the year on a more cautious note.
This year online sales have been particularly strong, and while mall traffic is down from last year, thanks in part to nasty weather, analysts still foresee bigger gains in holiday shopping than last year.
That, paired with the Winter Olympics, could spark a strong first half of the year for the media economy, leading into what should be a very strong second half with the midterm elections.
Along with a strong year for ad spending, here are six other bold predictions for what will happen in media in the coming year, based on Media Life’s discussions with media buyers and planners, researchers and analysts:
1. Netflix becomes available on cable
The video streaming service, which now has more subscribers than HBO, has been in hush-hush discussions with cable operators to join their systems as a video-on-demand and streaming option, echoing a recent deal by Verizon to offer Red Box titles on its cable service.
Though cable and Netflix have long regarded each other as competitors, recently their relationship has thawed. Netflix has become more interested in creating its own content, and cable operators see offering Netflix as a way to combat cord cutting. Expect at least one cable operator to sign a deal to add Netflix before 2014 ends.
2. Upfront deals are done on C7
Most upfront deals are currently made using live-plus-three-day-DVR-playback commercial ratings (C3). But the broadcast networks want to move to seven-day ratings (C7) as DVRs become more and more prevalent.
Media buyers see using C7 as all but inevitable. If it doesn’t happen this year, it will happen next year, but they will demand a big break on pricing in return. For that reason, upfront negotiations may draw out again in 2014, just as they did in 2013.
3. A celebrity magazine folds
The already-crowded celebrity magazine field added another member this fall with the launch of Closer, a Bauer-owned publication that targets older women. There are now nearly a dozen magazines going after the same scoops and largely the same readers, and clearly the category can’t support them.
While ad pages are up, newsstand sales for every title were down during the first half of the year, according to the Alliance for Audited Media. The shakeout will come sooner rather than later in the year.
4. Instagram advertising takes off
Instagram is red hot right now, coming off its biggest traffic day ever on Thanksgiving. Facebook is pushing more integration with the site it purchased last year, and it’s begun to experiment with advertising. Considering how quickly Facebook’s mobile ads caught on, expect Instagram ads to grow like gangbusters.
5. Tablets hit 50 percent penetration
A third of Americans own tablets now, but the prices are falling on non-Apple brands and they’re expected to be hot sellers during the holidays. Next year the devices will officially become mainstream. This will have a huge impact on media, as advertisers clamor for ads specially developed for iPads and other tablets.
6. Big changes in newspaper delivery models
Already Advance Publications has changed the model for metropolitan dailies, reducing the print schedule at papers in New Orleans and Harrisburg, Pa., and reducing delivery days in Cleveland. In the coming year, other newspaper companies will follow. After years of hand-wringing over advertising declines, papers will do anything from reducing print runs to eliminating home delivery to stop their revenue bleeding.
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