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Old media will never be as profitable again, warns WPPs Sorrell


The profit margins within traditional media, including television and newspapers, will never be the same again, according to WPP chief executive Sir Martin Sorrell.

Speaking to more than 250 media and advertising professionals at an IAA event yesterday (January 21), the leader of the group behind some £15bn in revenue last year, warned the media sector continues to be "disintermediated" by low-cost business models. "The painful thing for old media is it will never be the same again," Sorrell said. "It will never be as profitable as it has been."

To underline his point, Sorrell, drew on the UK's receding ad market, which WPP's GroupM forecast to fall 5.8% and 6% in 2008 and 2009 respectively: "ITV and Michael Grade continually say it (TV airtime) is as cheap as it's ever been and impacts are up, so why aren't they buying?"

Turning his attention to print, Sorrell warned that the "structural changes" - referring to the many job losses, falls in circulations and drops in print advertising across the sector - were set to continue.

He said the seeds of the problem were sown when the people who created the new-media industry in the early Nineties, decided to give it away for free.

While he admitted this was the right move from the consumer point of view, it has changed the nature of the print business model.

"It is impossible to take it back up," he said. "You can always start up here and take the pricing down, but you can't start there and start moving it up."

He also drew on the fortunes of the British regional press, where revenues are set to plummet 19.1% in 2008 and a further 13.2% in 2009, according to GroupM.

Sorrell recalled a time not too long ago when Johnston Press was "the best run media company", noting that now its market cap has "gone from £1.2bn to virtually nothing in a very short space of time".

However, despite the fundamentally changes brought about by new media, Sorrell called the marketing and communications business a "vibrant" industry that remains "front and centre of importance".

"None of our clients will survive and prosper unless they continue to differentiate themselves in either tangible or intangible ways," he said, adding that this is where branding and innovation is required.

"Without innovation you can’t have branding. But the two go together. Differentiation, which is at the heart of everything we do at WPP, is critical." 


Survey: Web Video Beats TV Among Respondents Ages 18-24


Coveted 18- to-24-year-old consumers now spend more time watching Web-distributed video than broadcast television, according to a new survey released by online video ad network LiveRail.

"We polled several hundred under-25-year-olds, and an overwhelming majority are now watching as much or more video content online as on regular TV," said Mark Trefgarne, CEO of LiveRail. "We were genuinely surprised by the results."

Rather than short-form consumer-generated media, Trefgarne attributes this trend largely to an increase in the availability of quality long-form content from sites like Hulu and

LiveRail's survey included over 400 respondents in the 18-24 category and was conducted online via popular social networks such as Facebook and MySpace.

Of these respondents, 53% stated that in an average month they spent "more time watching online video than TV." About 19% of respondents said they watched "about the same," while 28% said they watched "more TV than online video."

According to comScore, frequent viewers are now consuming an average of 273.1 minutes of online video content per month--up from 195 minutes a year ago.

What's more, viewers on LiveRail-enabled sites are spending an average of 51% more time watching video content than at the start of the year.

The average click-through rates for video overlays were 1.2% in the quarter, according to LiveRail. Closeout rates for overlays were 69.0%. Animated overlay click-through rates were 4.2% in the quarter. Completion rates for overlay-initiated video ads were 90%.

In the fourth quarter of last year, average CPMs appeared to be up. Average CPMs for overlay ad campaigns were $7.40. The current market size for overlays, meanwhile, was approximately $138 million, according to LiveRail.




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