MINNEAPOLIS, April 7, 2016 /PRNewswire/ -- Media businesses need more than just big audiences, they need provably engaged audiences in order to achieve lasting success and higher valuations, according to a new industry report issued by Cherry Tree & Associates Investment Bank.
"For many years, the legacy media success formula was grow your audience, charge advertisers more, and count your money," said Cherry Tree Managing Partner Jim Dolan. "Today, digital media are very good at creating huge online audiences, but they have difficulty demonstrating engagement. And that means advertisers won't pay as much on a per-person basis."
There are dramatic variations in advertisers' willingness to pay, Dolan said. Digital media routinely receive cost-per-thousand pricing 80% lower than legacy media. The report notes that so-called legacy media – newspapers, magazines, broadcast TV -- are beginning to show more audience engagement but still are suffering audience erosion. Digital media, delivered mostly online, have the opposite problem – big audiences but often low engagement.
"To really deliver success to owners and investors, media operators need both numbers and engagement," Dolan said.
He said the old numbers-only success formula was based on longtime media scarcity and limited choices for consumers. The new success formula recognizes that digital-age plentiful media choices are better for consumers but pose difficult new challenges for media operators, Dolan said.
The report discusses how engagement can be created and measured, and suggests strategic directions for both legacy and digital media operators in order to achieve higher market values.
The Cherry Tree report also includes concise insights into nine segments of the media industry, valuation metrics for 144 public media companies, and statistics from 54 recent media transactions. The report can be obtained from www.cherrytree.com/research or can be requested by calling 952.893.9012 or by emailing email@example.com.
Cherry Tree & Associates, LLC, is a private investment banking firm headquartered in Minneapolis specializing in serving entrepreneurially-managed middle-market companies. Founded in 1980, the firm provides financial advisory services for buyers, sellers and companies seeking growth capital, and provides fairness opinions and other valuation services.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/cherry-tree-report-highlights-new-media-challenge-audience-engagement-counts-as-much-as-audience-numbers-300248022.html
SOURCE Cherry Tree & Associates, LLC