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Deloitte analyses top trends for the media industry for 2012

17 January 2012

  • The schedule will continue to drive most TV viewing in the UK and abroad: 95 per cent of all television programmes watched in 2012 will be live or within a day of the original broadcast.
  • The advertising industry will have brains on the brain in 2012 with the increased use of fMRI machines.
  • Growth in revenue from social games will slow to less than 20 per cent in 2012.

The Technology, Media and Telecommunications (TMT) practice at Deloitte today announces its predictions for the media sector in 2012.

Jolyon Barker, global lead for Deloitte's Technology, Media and Telecommunications Industry, comments: “This year’s predictions cover a range of topics, highlighting challenges for the social gaming, targeted advertising and online coupon sectors.

“For all the talk of the death of linear television, 95 per cent of all television programmes watched in 2012 will be live or within a day of the original broadcast. Technology has not shattered the TV schedule: it has made it more resilient, through making it more flexible.”

Ed Shedd, lead media partner at Deloitte, adds: “The technology to deliver targeted advertising - marketing served to a specific TV set or computer based on data such as income or age - is improving all the time. However, such advertising will account for less than a tenth of one per cent of the £148 billion total global television advertising market in 2012, as the investment required to develop such specific campaigns remains too expensive.

“The financial potential of ‘social gaming’ has been drawn to businesses’ attention, with the growth of social networks and the popularity of social gaming taking off in 2010 and 2011. Companies need to evolve away from the ‘freemium’ model that has propelled them into the spotlight to take a greater share of the £41 billion global games market from 2 per cent in 2011.”

One area of growth for the advertising industry is the use of functional Magnetic Resonance Imaging - fMRI – machines growing in influence. Companies are well advised to explore this new window on the human brain but also to remember that it may be a pretty foggy window.

Key predictions include:

The schedule still dominates

95 per cent of all television programmes watched in 2012 will be live or within a day of the original broadcast, despite the proliferation of technology that enables the schedule to be bypassed. A leading video-streaming company has even acknowledged that it is not directly competing against traditional linear television and offered a service it dubbed “re-run TV.” Even the advent of social networks has enhanced, rather than diminished, the schedule’s appeal as commentary on programs has expanded from the living room to a community. Choice is cherished but choosing is a chore. Conventional broadcasters need to build on this power and show advertisers the advantages of the schedule and building campaigns within the context of a schedule.

Targeted television advertisements miss the target

In 2012, Deloitte estimates that targeted TV advertising will likely represent less than one tenth of a percent of global television advertising revenues, which is less than £139 million out of a total market of £148 billion. Targeted TV ad campaigns enhanced by technology are certainly attractive in principle, but execution remains a challenge. And in 2012, it is unclear whether the need to deliver further degrees of advertising is sufficiently widespread to justify the required investment: many broadcasters offer hundreds of different customer categories, but advertisers rarely ask for more than 10 different segments. The high cost of creating a television commercial means that advertisers are very unlikely to make multiple versions for a single campaign. The rationale in developing targeted television advertising for video-on-demand programming, arguably the most fertile ground for such campaigns, is constrained by its relatively small share of total viewing.

Extracting the premium from social games

Despite the growth in the popularity of social gaming in 2010 and 2011, growth has already started to slow for some developers, while the overall community of social gamers has stuttered over the past two years. Growth in revenue across the sub-sector will slow to less than 20 per cent in 2012 which may force games developers to focus less on selling virtual goods over social networks and to consider the potential of advertising or charging for games up front. In this way it needs to adopt the business model of the more traditional console gaming industry and look to develop franchises.

Online coupon intermediaries: from novelty, to celebrity, to sizable niche

The online coupon sector’s evolution from novelty to celebrity over the course of 2011. We predict that 2012 is the year that it is likely to settle into a small niche, albeit one that generates billions of pounds in revenue. The online coupon sector’s rapid evolution means that hundreds of online coupon companies will disappear during 2012 as competition continues to intensify and margins decline. The number of people using online vouchers should also decline moderately. Intermediaries that sit between the consumer and the retailer will continue to generate billions of dollars but will need to increase the quality and variety of offers available. They may also need to accept lower commissions on sales of coupons - which can be as high as 50 per cent - to entice more retailers to consider using their services as well as shifting their focus from discount size to value, utility or even rarity to change the perception of the service they offer.

Market research is all in your head: MRI machines and media

The advertising industry’s use of functional Magnetic Resonance Imaging - fMRI - machines grows in influence. Similar to larger, more expensive MRI machines used in the medical sector, fMRI analysis can show that activity in certain regions of the brain correlates with specific emotions and types of thinking. The controversial technique, known as neuromarketing, has already started to gain traction with food companies altering their packaging and even the flavour of their products as a result of this technique. It appears likely that fMRI will become a key tool for advertisers in 2012 but it is likely to work best as part of a package alongside more traditional marketing techniques.

Ends

Notes to editors
For a full copy of the report (launched on Tuesday 17th January) with all of the Deloitte predictions please email: Selina Abbiss or Melissa Armstrong visit www.deloitte.co.uk/tmtpredictions.

The 2012 series of Predictions has drawn on internal and external inputs from conversations with member firm clients, contributions from Deloitte member firms’ 7,000 partners and managers specialising in TMT, and discussions with industry analysts as well as interviews with leading executives from around the world.

About Deloitte
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.

Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.

The information contained in this press release is correct at the time of going to press.

Member of Deloitte Touche Tohmatsu Limited.

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