The business of digital media is not dull. It can be a bit like the not-so-well-wish “may you live in interesting times,” though. Keeping up with it all is a big job for digital media executives tasked with keeping their organizations healthy and at the forefront of this industry. A clear-eyed look into what’s next is important in order to keep up with the pace of innovation in this industry. To help, I’ve outlined four trends I’m watching closely during the second half of 2021:
1. Pandemic-era rebound in advertising market
Big takeaway. Knocking on wood, but all digital revenue indicators are trending positive in 2021 through midyear for premium publishers. DCN distributed both its proprietary annual benchmark and first quarter revenue reports in the past month. The reports are only available to participating members. However, I can share the top-line good news: Year-over-year growth was strong. And that’s even prior to the favorable comparisons to the depressed market from the onset of Covid in the Spring of 2020. CPMs have also strengthened in the open market where advertisers are finally putting in more diligence to know where their money and brands are delivering.
Watch this. The largest challenge to the premium publisher business is keeping pace with the massive consumption in the back-half of 2020 due to a record convergence of captive audiences and riveting news cycles. Putting aside what is good for our business for a moment, it’s nice to see outdoor activities once again competing for attention! And for the booming digital audio market, that has some upside as well.
Surprise twist. The Delta variant looks like it may drive many Americans back to some of our early 2020 habits. Clearly, Covid continues to concern all of us personally and professionally. How it impacts economic and media consumption trends is to be determined as we approach the Fall.
2. Privacy and data protection
Big takeaway. 2021 will be the year that killed “tracking” – regardless of how successfully Google protects the soft underbelly of its surveillance business model. Apple will continue to distance itself from Google in an effort to position itself as the consumer champion by carrying the privacy torch. They pressed forward with iOS 14.5 in Q2 with installations now approaching 75% of the market. Why does this matter? It’s the first major operating platform to require consumers to grant companies permission to track them outside of the apps they’re choosing to interact with.
Watch this. This move better aligns iOS with the tracking prevention values long held by the Safari browser and those increasingly held by consumers. Given the market power of Apple, it has triggered a war with Facebook, the second largest tracker on the internet. In fact, Apple’s impact on Facebook’s future revenues was mentioned repeatedly on Facebook’s Q2 earnings call yesterday with future headwinds dominating the press headlines (despite their efforts to talk about the future “metaverse.”) As global regulators have frequently noted, a majority of Facebook’s data (and with that, their revenue) has long been derived from tracking users.
Surprise twist. The Attorney General of California also announced last week that their office had accelerated sending out warning letters to companies that weren’t properly honoring consumers’ opt-out of tracking requests via the Global Privacy Control. This should send fear through Google and Facebook as California law has defined tracking consumers as a “sale of data.” That definition will be mighty uncomfortable for two empires built on exactly that. And the California AG’s moves will accelerate pressure to create a federal law where Facebook and Google already have multiple regulatory issues to deal with. All of this has forced industry to accelerate its “reality check.”
3. Growing consumer revenues
Big takeaway. After a robust 2020, consumer direct revenues — including subscriptions — continue to grow, albeit at a slower pace. Overall, non-advertising revenues grew in the first quarter of this year. And they are trending up to 30% so far this year.
Watch this. Although “subscription fatigue” continues to be a topic of discussion, DCN’s prior research and industry trends have shown nothing short of an insatiable appetite for quality programming. Yes, even when it bears the price of subscription. It doesn’t hurt that making a purchase is now as easy as a thumbprint on mobile.
Surprise twist. Gen Z (yes, the kids who grew up with iOS) don’t seem to mind advertising. DCN will be releasing research in September that shows that Gen Z’ers (16-24) actually have something in common with Gen Y (25-40). Both groups are very open to advertising in their programming. Whether they pay or opt for a free service, the existence of advertising doesn’t seem to be a major factor for younger media consumers.
4. Strong streaming market
Big takeaway. No market has had more of a dichotomy between advertising and subscription-supported models than the red-hot video market. In fact, DCN broke out the “advanced video” segment for the first time in our most recent quarterly revenue report. And it nearly tripled in our first year-over-year comparison.
Watch this. Apropos to this heading, America can’t seem to get enough to watch from these trusted brands (and DCN members): Disney Plus, HBO Max, Peacock, Discovery Plus, Paramount Plus, and the many other services that have gone direct to the consumer and are reaping the rewards.
Surprise twist. The 10-ton giant of streaming video, Netflix, missed earnings in Q2. It lost hundreds of thousands of U.S. subscribers in Q2, with metrics that looked more like a traditional cable TV company. Maybe it’s a momentary lapse from last year’s stay-at-home streamers. But it could be a sign of migration to the newest competitors. Either way, I’ll be watching.
Trend watching and trendsetting
As someone whose job it is to promote the value of quality and trusted media brands and to call out those who seek to disintermediate them, monitoring trends can be one of the most fluid and head spinning parts of the job. The team at DCN will continue to champion the trusted providers of content that informs, entertains, and delights because that is what consumers expect and what we believe will ensure a healthy future for our industry.
Rounding up these current trends, I see a lot to be excited about – particularly with the next generation – as we continue to learn the lessons, both good and bad, from the pandemic. It’s never a dull business and I can’t wait to see what’s next.