At the time of writing, the business pages of the quality
newspapers are reporting concerns that the financial problems being
faced by Asia and Russia may soon be prevalent in Latin America. If this
proves to be the case, how far behind will Europe be, or indeed, how far
behind is a world economic crisis?
While these words do not strike an optimistic note, given the strong
links between economic performance, particularly in terms of company
profitability and consumer expenditure, it would be foolish to ignore
some of the signs that are being highlighted by the financial
journalists. It is of particular relevance at this time because the old
adage that the only constant is change is certainly applicable to the
European media scene. So, while advertisers could be faced with a
slowdown in demand for their goods and services, and while agencies
could see their revenue streams struggling to achieve real growth, some
of the major media owners could have the ’double whammy’ of lower income
from advertising and a lower consumer uptake of the new television
technology. The latter is already challenged in the UK by the ’battle of
the formats’ and economic uncertainty in the eyes of the consumer can
only compound the problem.
If we adopt a more optimistic positioning, or accept that we are
entering a recessionary phase - albeit short term - what does the
medium/long-term future hold for the European media sector?
As part of the answer to this, it is important to stress that despite
the dynamic nature of many elements of the media scene, the maxim
repeated above about change being the only constant is not universally
There is a danger that, as the number of media choices continues to
expand at a dramatic rate and the whole European media scene takes on
even more complex characteristics, the media practitioners put too much
emphasis on the internal micro elements of media rather than on the more
fundamental relationship between the brand and the consumer.
Because here is the real constant, the need to communicate brands to
consumers in such a way as to produce maximum effective response. This
task does not change although, clearly, the means of delivery can and
For the media owners, thinking particularly of those in the broadcast
sector, the required levels of investment are accelerating and, as the
advertising income fragments, the need to build the revenue stream from
subscription customers will also grow. This increased vulnerability will
mean more mergers and strategic alliances as companies look to both
spread their risks and strengthen their competitive positions. It is not
just Murdoch who sees the important stage as the World and not Europe;
and we will see more examples of the recent report of CLT’s interest in
Running in parallel to these media-owner developments which are not the
sole domain of broadcasting, are the mega-mergers on the agency/media
company side. Here there are two key motivating pressures. The first
requires media companies to be in stronger positions to negotiate on
their client’s behalf with the major media owner companies.
Although pan-regional negotiations and indeed worldwide negotiations are
still relatively few in number, their incidence will grow in the coming
years. The second pressure is from within the agency/media company
sector itself. The almost universal acceptance is that in the future,
for multi-national companies, being big will not be sufficient - you
will need to be very big. (That is not to say that smaller, high quality
local operations will still not have good market opportunities).
This is not ’macho speak’ and it does not relate purely to volume. It
relates more to the funding of the resource required to provide
genuinely competitive media services for clients. Proprietary systems
and proprietary research will be two of the key differentiators between
media companies and the required investments are very significant.
So while the media owners face their own set of challenges, the race is
on to establish real and effective media company networks that can
provide both local and multi-national clients with the best media
services. I am sure that nobody involved in the developments, certainly
including myself, underestimates the size of the challenge; in
particular the need to turn words on paper into a fully operative media
service that provides clients with real added value.