Get Ready For A Turbulent 2019

  • by , Featured Contributor, January 10, 2019

2019 is going to be very dynamic -- read turbulent -- for media, marketing and advertising companies. We will see a lot of changes and disruptions this year in many of the areas that drive our industry, which is likely to make 2019 quite challenging for many.

Here’s some of what we can expect this calendar year:

More problems in retail. Mattress Firm/Sleepy’s, Brookstone, Bon-Ton, Nine West and Rockport were just a few of the retail bankruptcies we saw last year. 2019 has already brought the probable shutdown of Sears.  

Watch out: As the year progresses, we’ll see most big-box retailers slimming down, both in total locations and the footprints of their stores. And, most likely, we’ll see another dozen or so retail firms close down completely before the year is out. A ecosystem with fewer companies to sell things is bad for all advertising businesses.

Macroeconomic challenges. I am not an economist (though many would argue being one doesn’t necessarily make you any better at predicting the future), but it seems to me we’ll likely see a macroeconomic climate in the U.S. (interest rates, capital markets, etc.) that will be worse than what we’ve enjoyed over the better part of the past 10 years since the financial crisis. An economic slowdown is bad for virtually all advertising businesses.



More trade disputes and tariffs. This past year saw the imposition of tariffs in the U.S. and skirmishes in trade between the U.S. and its largest trading partners: Canada, Mexico and, most critically, China. Industries from automotive to steel to smartphones have seen significant impacts from tariffs and lower sales. Those kinds of events are never good for advertising -- and we can expect more of them this year.

To be clear, these factors don’t necessarily make me bearish on advertising overall. However, I do think that some of the players in the world of advertising, marketing and media could be particularly vulnerable to these disruptions. For example:

Agencies. Zero-based budgeting, general corporate cost-cutting and competition from technology and management consulting firms have already hit agencies hard. More swirl in their world can’t be a good thing.

Large, incumbent consumer brands. Retail contraction means fewer channel partners and less inventory on shelves. Couple that with the fast-growing emergence of digitally born D2C brands that sell directly to consumers, and are funded like technology companies to attack and disrupt, not just defend -- and you’ve got a tough year for big brands.

Unprofitable ad-tech companies. A lot of people expect to see consolidation in the ad-tech space in 2019. During the course of this year, we’re certainly going to see a lot of ad-tech assets sold, traded or just shut down, though I don’t know that I would use the term consolidation to describe what will happen. “Consolidation” conjures notions of a somewhat orderly process of some businesses combining to create fewer, larger companies. 

I think  the majority of companies in ad tech today don’t add any real value to the market. So many are either entirely redundant of services provided by others or make all of their money from other intermediary companies just like themselves. 

And, to pile on, the vast majority of ad-tech companies are sub-scale, have offerings that are best described as features, not products, and many don’t have the cash or long-term investor support to make it to 2020. A turbulent year will not be good for the more fragile ad-tech companies.

What do you think? Are you ready for a dynamic year?

2 comments about "Get Ready For A Turbulent 2019".
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  1. James Smith from J. R. Smith Group, January 11, 2019 at 12:16 a.m.

    You nailed a key concern Dave.  We've been working on the concept of "digital turbulence" for some time. It's a bit like the stock markets' volatility indexes. Clients and agencies alike require periods of lower turbulence to ingest and process all the changes in digital marketing.

  2. Ed Papazian from Media Dynamics Inc, January 11, 2019 at 8:09 a.m.

    Good one, Dave, especially about the ad tech companies, many based on theoretical applications of technology, not actual business or consumer needs. I think we will also see a lot of disruption in the OTT arena as everyone in the world tries to launch subscriber -based services that aren't needed at scale as well as subscriber/ad-supported hybrids. There's only so much of the same stuff that people will watch and be willing to pay for.

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