'Convergence' Poised To Trigger New Tech Ad Boom

by , May 31, 2006, 8:46 AM
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The ad industry stands to benefit broadly from a coming wave of "convergence" in digital media, according to Randy Browning, PricewaterhouseCooper's (PwC) leader for technology, information, communications, entertainment, and media research and analysis. "This will create pretty significant revenue in the near future," Browning said.

Although he acknowledged advertisers' own efforts--"We're spending a lot of time on advertising and working with a lot of companies right now who are exploring new advertising models... All the big agencies have new media divisions trying to figure out how to do this"--Browning ultimately pointed to coming mergers and acquisitions among tech and media firms as the main drivers.

Browning made these predictions while discussing a new PwC report released on Tuesday titled "Technology Executive Connections," in which Bill Cobourn, PwC's global technology industry leader, stated: "Executives see M&A as a means of capturing entire beachheads. To be a player in today's integrated technology landscape, they must quickly take advantage of others' core competencies." On the question of what convergence exactly is, the PwC report says "convergence" is "the effort to bring together computer, phone, recording and broadcast technologies within an all-digital environment enabling new, flexible uses of products and services."

"The results of our recent studies are telling, because they're pointing to a lot of M&A activity over the next few years," Browning said. "We're looking at a world where telecoms are getting into paid television, and software companies are making sure their content is on the devices, and content companies are strategically choosing to distribute and sell their content through all these different channels." Overall, Browning painted a picture of an inevitable revolution: "Broadband is finally of a quality, speed, and penetration, particularly here in the U.S., that people are now able to do what they were talking about 5 or 10 years ago."

Meanwhile, ad execs hope the prevailing subscription service model will soon wane in favor of free, ad-supported media--perhaps because of customer discontent. "People are going through subscription burnout," asserted Andy Lipset, managing partner of Ronning Lipset Radio, speaking at an event hosted by Banc of America and Interep at the Grand Hyatt in New York City on May 10th. "The telephone company's looking for X amount of dollars; the cable company's looking for more--you've got all these things coming after you. And eventually, as everyone is reaching in their pocket for five dollars, it gets to the point where the consumer says, 'enough is enough.'"

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