America Online's (AOL) purchase of Time Warner marks the beginning
of a new era, but there are implications over whether new media is
taking over old media or traditional media is taking control of
cyberspace.
With a stock value of US$350 billion, the merger is not just
about the numbers but it is also about the further development of media
and advertising.
AOL and Time Warner by themselves have faced the dilemma of developing
the new media with attractive content and expanding traditional media's
distribution network.
One concern for advertisers, however, is that penetration does not
necessarily equal expanding viewership as consumers installed with this
broadband media infrastructure may not always pay attention to it.
MindShare interactive business director Andrew Morse said it will still
take some time for the merger to make an impact in Asia, which will see
more of this kind of marriage occurring in the region.
The AOL Time Warner merger will give AOL a greater foothold in Asia,
with the support of Time Warner, noted Mr Morse.
The cross media marriage will provide new broadband distribution
platform for AOL's interactive service and drive subscription through
cross marketing with Time Warner's pre-eminent brands. AOL Time Warner's
brands now include Time, CNN, Warner Brothers, HBO, TNT, Warner Music,
TBS and AOL MovieFone - all these media offer communications focal
points between consumers and the entertainment world.
Given the mega communications platform, one concern for advertisers is
the issue of pricing as one media company now has a range of products
and services and the population reach as well.
In that way, Grey Interactive managing director Vivian Lau said one
single media company can heavily influence the price in the
marketplace.
But Carat Asia-Pacific regional director Alex Abplanalp said
consolidation in media does not necessarily bring up the bargaining
power of media owners.
These kind of vertical mergers are prompted by the competition in the
online business, he said, adding that the most important implications
for advertisers is the bringing together of more value added media
packages to target audience more efficiently. As media communications
are becoming more complex, he media firms need to gear up to develop
specialised units in interactive business.
