New York, NY January 23, 2012 – Media industry executives are cautiously optimistic about 2012, as they expect less from organic growth in the year ahead and more growth to be driven by new product development, acquisitions and entering new markets and verticals, according to the second annual Media Growth Survey (2012 Media Growth Survey Report) from The Jordan, Edmiston Group, Inc. (www.jegi.com), a New York‐based independent investment banking firm, and Econsultancy (www.econsultancy.com), a digital publishing and training company for Internet professionals. The findings are based on research results from a survey of nearly 325 industry thought leaders and influencers (89% of which were c‐level executives), followed up by one‐on‐one interviews with key industry executives.
For many companies in the study, new product development hinges on the combination of core skills and emerging skill sets/ technologies. Larger companies have been focused on “being big, but acting small,” a response to the need for companies to be faster to market with products and quicker to recognize a potential success or failure. This manifests in a number of ways, from mass restructuring to the creation of discrete product‐focused groups that have latitude to make decisions and investments.
#1 Challenge to Growth: Attracting and Keeping Talent
The real freedom for companies to act is slowed by the number one challenge facing most organizations – the ability to attract and keep talent. The survey found that compensation is no ”silver bullet” – independence, flex-time, working from home and other lifestyle related benefits are often the most effective incentives. As the CEO of a Marketing Services Provider noted, ”The key is growing people from within, investing in our own education to develop the experts we need in the digital world, since there aren’t enough as it stands today.”
Companies Actively Looking to Acquire
Larger and mid-sized companies (above $50 million in revenue) were especially bullish about making one or more acquisitions in 2012. Many organizations have been sitting on cash through the economic downturn, and are now ready to put that capital to use to propel growth. At the same time, financial institutions are eager to find ”safe” investments. For companies at the top of the food chain, there are ready funds for acquisitions.
Meanwhile, these conditions are providing a wealth of potential deal opportunities for emerging companies, many of which are quickly entering the market for a liquidity event. The European economic crisis has also driven opportunities for prospective acquirers. The inability of European companies to access credit is driving divestiture by larger organizations and a scramble for exits by smaller ones.
Of course, challenges exist, and senior executives cite an ongoing gap in valuation expectations between buyers and sellers as the primary obstacle to completing acquisitions. Competition for targets is a concern, especially among larger organizations. However, the credit crunch is expected to be less of an issue in 2012.
Companies Planning Divestitures
Divestitures aren’t as common a goal as acquisitions, but are still expected by nearly half of the largest companies in the sample. In many cases, planned divestitures are part of a strategic refocusing on higher margin or protectable lines of business. In several cases, specific divestitures contemplated by interviewees involved the sale of “knee-jerk acquisitions” made during the early days of digital competition and growth.
With more than a decade of experience in the new economy, companies are far more capable of identifying those areas where they can, and cannot, effectively compete.
As one CEO noted, “It’s twofold, isn’t it? You’ve got to recruit and develop the talent that can grow the business internally, but also look for the right acquisition opportunities. Getting the balance right in terms of executive time spent is difficult. In the last year, we focused on internal development. Now, we have better access to capital, so it’s time to look outward and take advantage of our market position and combine that with new ideas and technologies that can come through acquisition.”
Skills for 2035
To end the Survey, we ask respondents a fun, more personal question. This year, we asked respondents to speculate on the skill or trait they would develop in a small child today to prepare him/her for the business world of 2035. Overwhelmingly, knowledge of the Chinese language and culture dominated the responses, followed by a variety of answers that identified hard math and data skills.
For the complete Media Growth Survey Report, click here.