C-Suite Upbeat About Organic Growth, Ad Spend

While bearish on organic growth, media executives remain cautiously optimistic about the year ahead, according to a new report from investment bank Jordan, Edmiston Group and Econsultancy. 

Based on surveys and interviews conducted in the third quarter of 2011, just 65% of media, information, marketing services and technology executives anticipate organic growth to be a key business driver in 2012 -- down significantly from 82% a year ago, JEGI and Econsultancy report.

Rather, 77% of executives said they see the launch of new products and/or services as key growth drivers, this year, compared to 76% a year ago.

Among more than 300 c-suite respondents, most cited a lack of talent and expertise in emerging fields as key barriers to growth. As a result, more than two-thirds of all executives from companies with more than $50 million in revenue said they expected to make an acquisition in the next 12 to 24 months.

“This is not unexpected, given that the media and technology markets continue to evolve at a torrid pace, with companies increasingly seeking assets to drive growth and provide new revenue streams,” according to Wilma Jordan, JEGI founder & CEO.

Overall, JEGI is not surprised that executives are feeling optimistic about their businesses heading into 2012, as many forecasters are predicting an increase in ad spend year-over-year.

Zenith Optimedia, for one, projects worldwide ad spend to increase 4.7% in 2012, following 3.5% growth in 2011, while Forrester Research predicts that U.S. Interactive marketing spend will increase 19% in 2012 and grow at a compound annual growth rate of 17% through 2016.

Another theme among larger companies is being big, but acting small -- a response to the need to be faster to market with products, and faster to recognize a potential success or a failure, according to the research.

This impulse is manifesting in a number of ways, from mass restructuring to the creation of discrete product-focused groups that have latitude to make decisions and investments. Mirroring findings from a similar study last year, the gap in valuation expectations between buyers and sellers represents the greatest obstacle to acquisitions, according to JEGI.

In the area of new product development, execs said combining data with technological expertise would likely produce many of the new products offered in 2012.

Commoditization threatens any product built on data or technology alone, but media companies are using both to form and leverage their core strengths into new lines of business.

Larger companies are taking advantage of the innovation of nimble competitors by using their deep and wide store of relationships. They are letting startups pave the way and educate the market, then “fast following” into the space with the advantage of stability, networks and bundled product offerings.

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