Efficiencies Key To Surviving Media Fragmentation

NEW YORK — Though media and entertainment has shown steady economic growth in recent years, both domestically and internationally, content producers are still keeping a close eye on their cash flow — especially in this time of extraordinary change, where the threat of market volatility feels as ripe as ever. Such attention to detail has a carryover effect on players in adjacent sectors.

“In an industry and a marketplace that is evolving quicker than it ever has, all of our clients are under extreme financial pressure to be able to find efficiencies in everything they do, including their relationship with their agencies,” said Neil Vendetti, president of investment at Zenith, a media-planning agency, in a discussion Wednesday morning at TVNewsCheck’s annual TV2020 conference. “More and more we’re being asked to navigate a complex marketplace with fewer resources and fewer people, and that’s something that we really need to figure out — how to build better efficiencies into our processes.”

In a conversation with TVNewsCheck’s Special Projects Editor Michael Depp, Vendetti also said that the industry must work to improve its technology — and its integration, especially in terms of advancing automation — as clients have grown to expect a techy thumbprint.

“There is a tremendous amount of transactional friction between buyers and sellers, and between agencies and clients,” Vendetti continued on that topic. “I think if we can solve for a lot of that, and prioritize a lot of that, we will be able to meet the demands of our clients, which are not going to become any less significant.”

Doing more with less is the biggest challenge to agencies like Zenith, but Vendetti also reserved time to discuss one of that development’s root causes.

“We look at fragmentation as a challenge, but also a major opportunity, being able to evolve how we’re finding the right consumers and serving them with [relevant] messages,” he said. With so many different broadcasting platforms and services saturating the market, diversification is a must.

However, Vendetti observed that there’s more content being produced and consumed today than ever before, made possible in part by the media industry’s extreme fragmentation. “And the platforms by which people are consuming that content are more and more able to be better targeted and transacted in different fashions to allow us to actually be more effective at finding the right person at the right time, and serving them with the right piece of creative,” Vendetti said.

Thus, execs in every corner of the media landscape would be wise to accept, if not embrace, the industry’s fragmentation, as it doesn’t appear destined to go away, he said. Established viewers have already responded positively to the media-delivery evolution of the past half-decade or so, while the newest viewers just know it as the norm.

“I have three kids; I like to look at what they do,” Vendetti, whose oldest child is 10, said. “Outside of sports, they have no concept that a show is on at a [designated] time. I can’t tell my five-year-old that Paw Patrol is not on now because she can pick up the remote and find it easier than I can. So if you look at that as sort of how consumers and audiences are going to be acting in the future, we need to be prepared for that continued fragmentation.”

Even with the recently emergent delivery services and platforms being so plentiful and characteristically varied, according to Vendetti, viewers still understand that consuming advertising is part of the cost of enjoying content — such as it’s been in broadcasting since its inception.

Even though Netflix remains ad free, Vendetti called the platform “the largest [such] outlier at the moment,” and speculated that it some day could mimic Hulu’s tiered subscription packaging, with premium members paying extra to bypass commercials.

Such a shift would be prompted by Netflix’s growing competition that are building their own ad-supported platforms, pulling their original content off Netflix so it can live on their own new services.

Vendetti noted the similarities between Netflix and legacy subscription-based outlets, like HBO and Showtime, which he also believes could incorporate advertising into their models, but perhaps not as quickly as Netflix may. After all, they’ve already been doing it ad-free for decades.

“Those guys have been very successful in being able to build businesses based on smaller scale and being … subscription-supported,” Vendetti said. “As long as their content is unique and compelling, and they can sustain the business model that currently exists, I don’t see them being forced into a situation where they would have to change it.”

Still, if other content-producing and broadcasting outlets, either ad-supported or non-ad-supported begin “eating into their business,” Vendetti continued, “then I think maybe they would have to rethink it, or start packaging along with some other things.”

Regardless, Vendetti predicts traditional cable will be a thing of the past at some point, with consumers ultimately paying the same amount for a desired slate of streaming services and other platforms, than they do now for cable.

“They’re going to repackage it back up to what [the cost] was, it’ll just be served through a different means.”

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