'The Future Of Legacy Media'

Borrell: Legacy Will Lose Digital Rev Share

Legacy media companies will continue to see their digital ad share slip away to digital pureplays over the next five years, with digital revenue at newspaper, TV and radio companies growing less than 5% per year, according to a new report from Borrell Associates.
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NetNewsCheck,

Media companies operating separate digital divisions are expected to generate more digital revenue than those that view digital as merely a product extension, according to a new report from Borrell Associates Inc. out Wednesday.

Total online spending is expected to rise 28% this year — 42% on the local level — according to Borrell. While three-fourths of all advertising dollars will go to analog media this year, the fast pace of growth represents a challenge for legacy media companies, Borrell says.

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Legacy media companies will continue to see their digital ad share slip away to digital pureplays over the next five years, with digital revenue at newspaper, TV and radio companies growing less than 5% per year and at 5.7% per year for directories, according to Borrell.

Pureplays, such as Google, Facebook and Craigslist, however, are expected to see digital revenue grow at a rate of 34.5% per year. The end result: By 2018, legacy media will hold only a 12% share of digital spending — down 11.3% from 2013 levels — with pureplays grabbing an overwhelming 88%.

Borrell predicts that by 2018 there will be three types of local media companies: legacy-centric, multimedia and digital pureplays.

Multimedia companies, those with separate digital divisions that don’t report to existing or “old-media” product managers — such as Gannett Co., Cox Enterprises Inc. and E.W. Scripps Co., which have separate units for their TV, radio, newspaper and digital — will be the best suited to withstand the pureplay incursion, according to Borrell. These companies are expected to pull in 25% to 50% of their total ad revenue from digital by 2018, according to the report.

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The legacy-centric companies will treat new digital ideas as product extensions rather than new ventures. A majority of legacy media companies will be part of this category by 2018, Borrell says. Digital revenue will represent less than 10% of their total ad revenue, according to the report.

The digital pureplays will continue to “tune their business model and sales approach precisely to the needs of the market, without prejudice or interference,” according to Borrell. “They won’t kill legacy media companies, but they will sap all their growth.”

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Comments (2) -

Bonefish Nickname posted over 3 years ago
ooohhhhh! You don't think Borell would use scare tactics to try to convince stations to pay them their exorbitant fees to accomplish nothing do you?
Gordon Borrell posted over 3 years ago
Damn. Saw right through our strategy. Piss of industry, get business. Thank you for contributing the depth of your thoughts to the betterment of the industry, bonehead.

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