In a break from historical patterns, the equities research team at Merrill Lynch says the rate of advertising price inflation now trails the overall rate of economic inflation. âInterestingly, advertising growth seems to be tracking real [gross domestic product] growth instead of nominal GDP growth, as it did in the past plus some,â? writes Merrill Lynch ad industry analyst Lauren Rich Fine in a report released early this morning. âThis supports our belief that media no longer enjoys the benefit of above average rate inflation, rather the opposite where increased competition & measurement is putting pressure on rates.â?
Okay, in more comprehensible terms, that’s more of the long tail that’s wapping us in the face as the consumer drinks from the doggie water bowl of increased choice and control of delivery. The pie is bigger than ever but no one can eat all that pie. What kind of empires will future Walt Disneys, Ted Turners and Oprahs carve out for themselves in a world where one kid with a camera has access to the exact same audience they do? (NBC just announced sweeping personnel cuts this very week.)
Manley, for one, isn’t worried.
I think itâs great news. I can easily get by with annual profits in the, um, low-to-mid five figures. And Iâm not the only one. Iâm guessing you can, too. Disney, obviously, canât. It wonât go that far, of course, and Disney will always do better than Iâm doing, and better than youâre doing, but the profit scenario for media companies large and small, even if itâs lower than it has been for a company like Disney, is still more than I (or you) have made at, you know, most of our day-jobs. Where we made media. Profit potential for a Disney is lower precisely because you and I, and hundreds of thousands of others, get to play the game now, and are nibbling at the pie. It will always take a lot more pie to fill up a Disney than it does the rest of us â and Disney will always get a much bigger part of that pie â but they (and their big media cousins) wonât get nearly as much of it as they did before. And we will get a little bit more of it than we ever had a chance to. So, yeah, thatâs a good thing, from where Iâm sitting.