Media Oversupply to Drive Down Ad Market

A recent Yankee Group report notes that the new world of  Anywhere Media 1087821_tv_addictis rapidly changing the way consumers interact with content. Analysts predict this change will cause the value of the U.S. ad market to decrease  by $1.6 billion in 2009. Further, Yankee Group believes that the value of the broadcast TV ad market will suffer a drop of as much as $2 billion this year.

Part of the problem for older media outlet models is that the concept of Anywhere Media means consumers are expecting media to be:

  • Screen-independent
  • Available on-​demand
  • Easy to consume

This trend does not bode well for the way broadcast TV companies deliver content. These days, Anywhere Networks, a Yankee Group term, can offer consumers access to an infinite stream of video while TV offers the average consumer a limited 119 channels.

However, the problem for the overall ad market is more complex. Despite the fact that consumers spend more time with media, there is only so much content they can consume, even simultaneously. As online media outlets grow without limits, experts such as Rupert Murdoch see “constant downward pressure on the [ad] rates you can get.”

In order to get advertisers to spend at high rates, media companies must address the following problems in the marketplace:

  • Too much media supply
  • More consumer choice
  • Limited consumer attention

Even as they attempt to maintain or increase the value of their media space, these companies are expected to develop models that do not rely solely on ad revenues. This detail suggests that the decline in the value of the ad market may be long term.

[Source: Radio Business Report, August 2009] 
Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-​owner of several small businesses in the health care services sector.