Generation Z and declining revenues the key challenges facing marketers and media over next five years: PwC

One of the key challenges facing the industry is the rise of Generation Z – those aged between 8 and 22 – who are safety conscious, privacy aware and hostile toward advertisers, “the product of the airbag generation”, warned Megan Brownlow, partner at PwC during the closing keynote of Mumbrella360.

“The safety aspect is interesting as it’s going to present a particular marketing challenge. It will be hard to get their data as they know how to use their privacy settings, they are pretty smart in that regard,” she said, noting “they are also pretty hostile to interruptive advertising”.

Some sectors face multiple challenges in the coming five years, according to Brownlow’s predictions, such as broadcast media. “We don’t have a very pretty picture here,” she said as she forecasted continuing declines in revenues and audiences with the only bright point being Streaming Video On Demand up 16.4% over the five years to 2021.

Radio and outdoor however will continue to hold their revenues – “the lucky sectors” as Brownlow described them – as voice-activated services, on-demand products and digital screens drive the sectors.

One of the opportunities among that group lies in various online platforms.

“The next big thing in sports, it drives advertising and subscriptions, is e-sports,” Brownlow said, noting 43m watched the League of Legends championship final.

Subscriptions are one of the main drivers of new media models, with Brownlow citing online services such as e-gaming sites earning twenty times more revenues through subscribers than advertising.

“There is no middle ground” with subscription services Brownlow warned, with customers either choosing big purchases or microtransactions.

In a largely static advertising industry, which Brownlow projects will grow from $15.7bn this year to $17.3bn in 2021, internet advertising will move from 43% to 55% over that time.

Established broadcasters and publishers will grow their share of that online market as they move their products onto streaming and mobile platforms, believes Brownlow, citing this as one area where incumbent players have opportunities.

For publishers, Brownlow’s projections continue to make worrying reading with newspaper revenues falling 4.5% each year and magazines 10%, however books are projected to grow 0.8% per annum over the next five years.

Increasingly newspaper publishers will be using bots to automate subscribers’ news feeds, something that Brownlow suggested may address the ongoing ‘fake news’ problem.

The advertising and marketing industries continue to face major change as business models evolve, Brownlow noted.

“Agencies have been incredibly disrupted over the past 15 years, not just by digitisation like the media companies, but more by fragmentation of the media. For the media agencies so many more transactions and for the creative agencies so many more pieces of creative. But not necessarily more money.”

Increased automation hasn’t delivered many of the promised benefits to the industry, however canny agencies are still exploring their way through the new landscape, Brownlow observed.

“We forecast that this would free them up to provide more strategic advice for their clients. Many of them did that but also what happened was the strategic advice was conflicted by what was best for the robots,” she said.

“The winners will be the agencies that can separate these parts of their business and demonstrate they are conflict free, that the advice is coming from a trusted advisor. It’s really hard to do. It requires a complete restructure of the pricing model, those who do it will win.”

Brownlow concluded her presentation by advising industry players to collaborate, “you don’t need to own everything. Don’t overestimate your own contribution… Don’t make the mistake of walking away from the partnership because you think your data is gold.

“It’s not a zero sum game,” she said. “Think bigger is what we’d say here.”

As industry functions become more blurred, the need for platforms that give greater access to markets and talents becomes more important she believes. All of which is important in a less-focused world.

“If you can answer the question ‘What business you are in?’, that will help you navigate through the blur.”


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