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Johannesburg - Advertising expenditure has been dealt a permanent blow by the economic crisis, from which it may not recover in the immediate future, according to PricewaterhouseCoopers global entertainment and media outlook.
"We are not predicting a recovery of adspend," says the consultancy's global leader of the entertainment and media practice, Marcel Fenez. "By 2011, global advertising will still be below the 2007 level.
"There is a structural change happening at the same time as we are experiencing a recession that we expect to be deeper and longer than previous downturns. Previous recessions generally lasted nine to 18 months. This one is likely to last 24 to 36 months."
Fenez was talking to AdReview in Johannesburg this week.
The recession is accelerating the pace of the digital transformation. In 10 years' time we will have seen two to three years of amazing adspend, followed by a deep and prolonged recession. That has masked the transformation of media, hiding the fundamental changes. Now, says Fenez, "there is no place to hide".
The companies that emerge as winners in the new environment will do so by embracing digital migration, says the 600-page report, which is produced annually.
"Digital spending will be the industry's main engine of growth over the next five years, making further major inroads into all segments and claiming a rising share of overall industry revenues."
In some segments (such as subscription TV, filmed entertainment and video games) digital spend will help drive expansion of overall revenues. In others, it will partially offset the wider decline. But during the forecast period (through to 2013) non-digital revenues will continue to dominate.
"Providers need to expand their share of digital revenues while ensuring they do not undermine or cannibalise their legacy of non-digital spend." Global digital spend is expected to rise from 21% of total adspend now to 31% in 2013.
Despite the collapse of venerable newspapers around the world, "there is always a market for high-value online content in specific topics. Consumers are willing to pay for such content - both online and in print format such as specialist newsletters - but newspapers need to develop strategies for monetising their content and intellectual capital".
- Fin24.com