In this morning’s report, Myers says that investment and education in iTV technologies and capabilities is paramount in order to maintain the value of advertising.
There are a number of realities in the media market, he says. Firstly, the media economy is based on supply and demand; supply has expanded whilst demand has declined. Pressures to reduce media costs will accelerate and the fragmentation of audiences will continue. Added to this, is the fact that programming costs, talent costs and sports rights fees are increasing. These trends are long-term and irreversible, according to Jack Myers.
Investments in new media (interactive) technologies are the essential catalyst for the rebirth of advertising later this decade, Myers claims. Without this investment the value of advertising to marketers will continue to erode and ad budgets will sink.
This investment is a difficult task. The money for investment in new technologies has to come, ultimately, from subscriber revenues. Unfortunately, consumer interest in iTV services has not been as great as it might; this is all the more reason for the large media companies, like AOL Time Warner, to aggressively market interactive technologies to consumers and advertisers, says Myers.
“Marketing these capabilities to advertisers is especially challenging in an industry in which relationships between media buyers and sellers are focused almost exclusively on media costs. When media sellers have excess supply, and costs are being driven down, the last complication that either buying or selling organisations want is added responsibility for evaluation and stewardship of new products.
“The long-term viability of the industry, however, is dependent on commitments of resources that extend beyond the urgencies of day-to-day media management. These efforts and commitments exist at many of the major media buying groups, such as Mediacom, Starcom, Carat, MediaEdge and Universal McCann,” reads the report.
Myers warns that with the recent and continuing advertising downturn, there is a danger that iTV investments will be reduced or ditched completely. He says that the slow pace of developments might lull us into believing that there would be little long-term harm to the industry if this were to happen, but in actual fact the economic indicators suggest that the future of the industry is critically dependent on advancing iTV technologies.
