Digital advertising will drive large portion of future revenues: Study

By Giselle Abramovich

May 6, 2008

The future is digital

Media and entertainment companies are in strong consensus as to what will propel the future growth of the digital market, where the opportunities lie and what will drive revenues over the next five years, according to a study conducted by Accenture.

Accenture’s 2008 Global Media Content Survey questioned 100 senior executives in the media and entertainment industry regarding growth strategies of digital. The survey revealed that the majority of respondents indicated they derive some revenue today from some form of digital media.

“The survey revealed that there appears to be strong consensus as to what will drive future growth,” said Gary Morgenstern, director of communications and high tech media relations at Accenture, New York.

“Key is that 70 percent or respondents indicated they derive some revenue today – albeit less than 10 percent – from new alternate forms of media," he said. "That small percentage of revenue actually represents tremendous growth and demonstrates that substantial revenue streams are being derived today from these new forms of media.”

Four of the main sources of revenue growth cited by respondents are multi-platform distribution, short form video, social media and advertising.

When asked to identify the largest drivers of revenue growth over the next five years, two-thirds of respondents cited new platforms or new ways of delivering content -- more than the number who cited new content types or new geographies

Almost two-thirds of respondents said they will pursue a multi-screen distribution strategy, which includes television, online and mobile delivery.

Two-thirds of respondents identified social media and user-generated content as a high-growth opportunity and more than half said they are already involved in social media.

When asked to identify what they believe will be the No. 1 business model in five years, nearly two-thirds of respondents selected advertising-supported business models.

The fact that digital advertising will drive a large portion of future revenues, was a common belief among the respondents Almost every media company is trying to adapt to the reality of digital advertising as a major source of revenue.

Fifty-two percent of respondents said they see digital advertising eclipsing traditional advertising within five years.

When asked when they believe the mobile market will become a mass market, respondents were split, with slightly more than half (55 percent) saying within three years. On the other hand, 45 percent said they believe it will take longer.

Consumer readiness was said to be a major barrier to the mass uptake of the mobile market, cited half of the executives surveyed.

“[The findings of the survey imply that] this then opens the door to deliver content to mobile,” Mr. Morgenstern said.