If you work in digital advertising, you'll surely want to stay up to date with industry trends. That's why, in this article, I want to share with you the most interesting data from the PwC Global Entertainment & Media Outlook 2018-2022 study, which takes an in-depth look at what we can expect in the coming years.
Online advertising now playsa much more important rolethan it did 10 years ago, and the forecast is that this transformation of the sector will allow it to continue growing. Let's see how and why!
The keys to change in online advertising
The 5 drivers of change
PwC has identified five major factors that are contributing to the transformation of the sector and will therefore have an impact on digital advertising revenue:
- Ubiquitous connectivity. Consumers are now permanently connected, thanks to technological advances such as the expansion of broadband. This makes it possible to offer them a constant supply of content, experiences, and applications wherever they are.
- The mobile consumerMobile devices are increasingly becoming consumers' preferred means of accessing content and services. This means that content creators, distributors, and platforms must move away from traditional distribution and sales approaches.
- The need for new sources of digital advertising revenue growth. Changes in the media and entertainment ecosystem have caused many channels and media outlets to decline, such as print newspapers and magazines. Faced with this situation, players in the sector are forced to seek new sources of revenue.
- The shift in value towards platforms. The main beneficiaries of growth in user time and consumption are no longer publishers and media outlets, but platforms, which monetize their business through advertising, subscriptions, and transactions.
- Personalization. Consumers are demanding personalized content, experiences, and advertising. The ability to analyze data to deliver this personalization has become a decisive factor for success in the sector.
New business models in digital advertising
The entertainment and media sector is growing at a steady pace similar to that of the overall economy, but it is far from experiencing a period of calm. A large number of companies and businesses are disappearing, forcing companies to rethinkhow they generate profits and their role within the new ecosystem.
One of the issues that most affects the entertainment and media business model is, of course,advertising. These are the most significant trends:
- Theduopoly of Google and Facebook in digital advertising, where they occupy 57% of the market. This has led to the decline of some players that were very important until now, such as Buzzfeed, Vice, and Mashable.
- The growth of adblockers, a movement driven primarily by consumers tired of intrusive advertising and which companies such as Google have joined.
- Viewers are turning away from traditional advertising networksdue to the saturation of commercials. In response, networks are reducing the number of ads and incorporating innovative formats.
- Elauge formats that allow for a more direct relationship with the consumer, such as video on demand and subscriptions to services like Netflix or Amazon Prime. In this case, we see that the business model chooses to abandon advertising and rely on monthly payments.
The role of new technologies
Advances in recent years are leading to increasingly cheaper and more personalized content distribution. This is driving less efficient players out of the market and forcing companies to invest in technology to improve costs.
Afteranalyzing150emerging technologies, PwC has selected the eight that they believe will play a key role not only in online advertising, but in all sectors of the economy:
- Augmented reality
- Virtual reality
- Blockchain
- Artificial intelligence
- 3D printing
- Drones
- Robots
- The Internet of Things
To take advantage of all these technologies and offer a better user experience,data processing, analysis, and managementhave become fundamental. The most valuable asset is first-party data, with advances such as a prediction model that determines the probability that a user who sees an ad will become a subscriber.
What lies ahead: digital advertising revenue between 2018 and 2022
Over the next few years,digital advertising revenue is expected torise from 50.8% in 2018 to 56.9% in 2022. But as we have just seen, we are in a sector where change is constant. To better understand what will happen in the coming years, we will analyze the situation and prospects of the different players in the media and entertainment sector in Spain.
