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Digital Advertising is the Elephant in the Room for Media Companies

The rise of the World Wide Web that began at the fag end of the twentieth century has since then been dominating people’s attention spans and garnering eye balls unlike anything else the world has ever seen. 2015 will be the year that will see big wars being fought by media behemoths to conquer this space, the last frontier!

People are getting comfortable with the online media and this has got the advertisers excited. Today brands are devising video advertisements tailor made for the online world rather than taking the ads running on the television and serving it to digital users. The advertisers’ switching to the digital arena is not a question of if but more about when, and 2015 seems to be the right time!

The total US TV advertising spends rose a mere 2.6% to $11.4 billion for the third quarter. But the US online advertising spends for the same period rose by a staggering 22% to $8.7 billion! Now you don’t need a rocket scientist to see the writing on the wall, for the TV broadcasters!

If the offline media companies are unable to adapt to the changing dynamics of people’s penchant to view digital content, then they might come up against some harsh realities in the not so distant future.

The Digital Stomping Ground

Hulu, the ad-supported online video service offering TV shows and movies and video clips is doing a roaring business. Though initially Hulu did not find much luck with advertisers, it is now a hot favorite among online advertisers! The owners of Hulu – Walt Disney Co., 21st Century Fox Inc., and Comcast Corp. are some of the biggest media companies on earth. Together they agreed to invest at least $750 million into the business venture in 2013, seeing the potential of online video consumption.

But the billion dollar question to ask here is ‘will that be enough?’. Today it is not a labor intensive or a capital intensive economy but it is a knowledge intensive economy, all the way. All you need to look at, is a three year old photo messaging application developed by guys in their twenties, that is worth a staggering $10 billion dollars today! Yes, we are talking about Snapchat. That is the beauty of the online arena. Start-ups of today can become multi-billion dollar enterprises of tomorrow.

This has got the media behemoths quite worried. What guarantees do they have that tomorrow some wunderkind will not come up with something that rivals Hulu. Now this would thoroughly challenge the old media barons in this new digital stomping ground that is the World Wide Web. Who knows tomorrow a dark horse from Silicon Valley might just challenge the 800-pound gorilla of the media landscape!

Do share your thoughts on this issue!

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Team Position2

January 2, 2015

By Team Position2