Media owners eye digital revenue growth

03 August 2011

NEW YORK: New technology, social networks and online advertising are expected to be among the main drivers of growth by media owners in the next three years, a study has found.

KPMG surveyed 101 senior industry executives, 94% of whom agreed digital revenues would increase in 2011, measured against 83% predicting the same in similar analysis last year.

More specifically, 37% of interviewees thought the returns provided by this area of activity should climb by at least 10%, improving from 31% in 2010.

A 58% majority of the sample also anticipated their total company revenues would rise in 2011, while nearly three-quarters concurred with this sentiment when looking forward 12 months.

The primary factors supporting this trend are set to include the opportunities, such as mobile commerce, resulting from strengthening convergence.

Current priorities among the featured organisations are maximising digital sales, managing subscriber growth and limiting churn, KPMG added.

"Companies are placing bets that now is the time to position and invest for growth, despite an uneven economic recovery," said Paul Wissmann, KPMG's national sector leader, communications and media.

When assessing the industry as a whole, 47% of the panel argued revenues were likely to increase by between 1% and 5% in the next 12 months.

An additional 32% demonstrated greater optimism, pegging these figures at a minimum of 6% and a maximum of 20%.

A 44% share of contributors suggested new distribution techniques - be it devices or methods of access - may constitute one of the top three sources of rising revenues in three years time. A further 43% afforded social media an equivalent status, and 37% cited online advertising, including search, as playing such a role.

Three-quarters of respondents also believed cloud computing would have a "slight to moderate" impact on their business during this period.

Carl Geppert, KPMG's national account leader, communications and media, asserted that several trends were informing current strategy across the sector.

"Communications and media companies are sensing industry momentum that is the result of leaner organisations coming out of the recession, combined with the opportunity offered by the development of and users rapid adoption of innovation such as tablets," he said.

To fully exploit these shifts, 68% of corporations anticipated being involved in mergers and acquisitions in the next two years, with 58% buying and 10% selling.

Accessing pioneering technologies and products was the goal of this activity for 53% of the company in the coming 12 months, ahead of product synergies on 38%, and entering new countries, on 35%.

Elsewhere, 47% of participants stated headcounts would rise in the next year.

But 35% thought it could be 30 months before staffing totals returned to pre-recession levels, and 34% forecast employee numbers were unlikely ever to match previous figures.

Data sourced from KPMG; additional content by Warc staff