Rise of competition, consolidation and collaboration are evidence of a sea change in media
A view from Nick Manning

Rise of competition, consolidation and collaboration are evidence of a sea change in media

Barely a day goes by without a piece of news that demonstrates the extraordinary pace of change in the marketing industry as it adjusts to the disruption of established business models.

Our industry is reacting to dramatic trends as direct-to-consumer markets thrive at the expense of established players, and the "digital duopoly" captures users and ad revenues at enormous scale.

The need to compete is driving bold corporate moves, characterized by consolidation within markets and new collaborations among traditional rivals.

Retail has been severly disrupted, leading to consolidation such as the planned merger of Asda and Sainsbury’s in the UK, and now collaboration as Tesco partners with Carrefour to pool their buying power in the face of competition from Amazon and the ‘upstart’ competitors such as Aldi and Lidl.

The media industry itself is going through a "Big Bang" period as the TV world gears up for the streaming-led evolution, with Comcast, Fox and Disney locked in a complex set of possible transactions to compete with the Silicon Valley players, including Apple, Amazon and Netflix with substantial content budgets.

New hybrid revenue models are emerging as subscription TV merges with ad-funded channels to create new consumer propositions but headaches for advertisers.

Within the converged media and telecommunications sector, the approved merger of AT&T and Time Warner brings content and distribution together at scale, while A&T’s acquisition of AppNexus addresses the need for programmatic ad delivery also at scale.

Old media rivals bury the hatchet-and not in each other

While competition and consolidation are rife, new collaborations among previous rivals are forming rapidly to protect established businesses. 

In Germany, Discovery and ProSieben have formed a joint venture to create a new subscription TV competitor to Netflix. In the US, NBCU has joined rival networks Warner, Fox and Turner in the Open AP platform.

In the UK, ITV, Channel 4 and Sky are working more closely together on the promotion of TV while Sky and Virgin Media have put their competition aside to collaborate on addressable TV.

Additionally, rival print publishers in the UK have successfully come together to create multi-platform research (PamCo) to provide new levels of insight into audience reach while News UK, The Guardian and the Telegraph announced a joint digital ad sales house.

Industry trade bodies such as Egta internationally and the domestic players such as Thinkbox in the UK and ThinkTV in Canada and Australia are helping to drive a new level of unity in the TV industry. 

The marketing services industry is responding in kind

In the face of this dramatic change, marketers are taking control as they seek new growth strategies and efficiencies. Clients are diversifying their agency rosters and seeking new models, often eschewing the "horizontality" of one big group for a hand-picked model across multiple parties. They expect agencies to collaborate, whoever owns them. 

Vodafone is the latest big advertiser to announce the in-sourcing of some of its media as advertisers seek more control over data and money, reducing the scope of agency partners.

Marketers are collaborating more closely through their trade associations, as evidenced by the impressive work conducted by the World Federation of Advertisers in their Global Media Charter.

The agency holding companies, reacting to new competition from the "digital duopoly" and the management consultancies, are themselves changing shape in moves which aim to both protect and expand.

The announcement that Interpublic Group is to acquire Acxiom’s Marketing Solutions business for $2.2 billion investment is the latest evidence of the shift towards data as the driving force in our industry, and the kind of strategic move that will future-proof the legacy agency model.

Shared interests are driving new collaborations

With change, competition and consolidation a permanent feature, parties with common interests are recognizing their mutual dependency.

The rise of direct-to-consumer business and the interactivity of digital channels have led to a focus on short-term marketing metrics, and there is a growing realisation that this is harmful to long-term brand health and therefore advertising.

The agency groups and media companies have a joint interest in protecting brand investment, where so much of their revenue comes from. This is opening up a more collaborative dialogue between two groups whose commercial interests have often conflicted.

This new embryonic togetherness is a welcome reaction to industry change, the market strength of Facebook and Google, the impending audience fragmentation from streaming TV and the need to promote and protect the role of brand communications as a driver of growth.

Competition and consolidation are evidence of a sea-change in business; collaboration between parties who share common interests as business models adapt is an inevitable response.

Having a clear change strategy at this time is a business priority.

Nick Manning is senior vice-president at MediaLink

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