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Companies more and more are embracing new media.Some o the ndings are:f Out o the total marketing budgets around 70% o the

budgets are dedicated to traditional media.Within this segment print plays a signi cant role

f The next 20% of marketing budgets are dedicated toproven new media. (i.e. traditional internet advertising)Companies already recognize them as successfulmarketing channels and need to gain expertise quickly

f The remaining 10% o the budgets are dedicatedto explore innovative new media channels. In here wend all those channels that have ailed to prove theROI to companies so ar, but have a big potential dueto the popularity and innovation they bring.

Networked service ecoNomy

This megatrend re ers to the search companies are doing to nd di erentways to serve a customer with products and/or services that are comple-mentary to the ones they are already providing. The driver behind this trendis the need to capture a higher proportion o the value within the industry.

Reality is that due to the outlook o decreasing margins and tough demandexpectations or the near and mid term uture, companies need to nd howto balance things out. At the end paper is a commodity and companieshave less and less attributes to di erentiate themselves, and additional val-ue added services gives companies the opportunity to do this.

Four di erent criteria have been ound key in the process o selecting products, on that order:

When customers cant nd a di erentiation in unctionality between two products, theylook at which company is more reliable. I all companies are equally reliable then custom-ers will look or convenience. I a company doesnt add any convenience on top o theircompetitors then customers will turn to pricing to make a choice. When customers orcecompanies to go on to this last criteria is when margins are reduced, and is this stage theone companies need to avoid.

Networked service economies are better in nding and adding additional unctionality tothe product or service a company o ers making them more likely to avoid pricing as a di erentiator.

1Functionallity

3Price

2Reliability

4Convenience

10% experimental new media

20% proven new media

70% traditional media

what has chaNged from last year ?

Are the megatrends detected last year still applicable for our cur-rent environment? We believe the majority of them are still valid

with some of them probably reducing a bit the level of severity andrelevance. In order to simplify this report and keep it as to the point as possible we will only discuss changeson those megatrends that have (or might have) a higher impact to our industry. These megatrends are:

REDEFINITION AND CREATION OF BUSINESS MODELS

A year ago we concluded that business models, especially those ones trying to incorporate the digital worldinto them, were still under development. Companies (i.e. publishers) were not sure on why/how/when theyshould jump and embrace digital as part of their solutions. This year we are at the inection point already inwhich companies have a better understanding on what to do and how to do it. The same companies that a yearago were afraid to accept the fast development of digital media are now pioneering revenue models in which

digital media plays a very active (and strategic) role.

megatrends

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over-year. Since 2009, mobile Internet usage has doubled every year. Annual mobile app downloads are pro- jected to grow more than 10 times rom 2010 to 2015 rom 10.7 billion to 183 billion. Eighty- ve percent oexecutives work remotely at least occasionally; 53 percent work remotely requently.

media coNvergeNce

Media convergence can be understood as the mix between computing, communications and content. In otherwords, and as de ned by Henry Jenkins, media convergence is the fow o content across multimedia plat-orms, the cooperation between multimedia industries, and the migratory behavior o media audiences.

Television and internet are merging together more an more nowadays, through your television set you can domuch more things and consume content on a more interactive manner when compared to a couple o yearsago. On the other side, video streaming is making users utilize computers as a replacement or TV, this es-pecially driven by the amount o video content available on the Internet and the ability video streaming givesconsumers to decide what and when to see. This trend is not stopping there, now with the emergence o tablet

computers even things like news are being dealt by social media plat orms like twitter in a way that does notquite replace newspapers, but brings additional value to readers.Media convergence will bring unimaginable opportunities to companies that understand the value and poten-tial o this development. What we are seeing now is just the tip o the iceberg and with every new technologicaldevelopment, more opportunities are created or smart companies to exploit. But we are still not there yet.Even consumers are expressing some level o resistance to convergence. A clear example o this resistancecan be seen in the development o digital magazines. Be ore we started the end use study this year we hadthe impression that digital magazines that were o ering much more interactivity through video streaming, au-dio and interactive content were better positioned to capture the attention o consumers than those that werebasically replicating their printed versions through PDF les digitally. This was actually not the case and con-sumers are not better served with ancy applications or their mobiles or tablet computers. Some customersare happier with a simple PDF version o their avorite publications. Some o the reasons behind this strangedevelopment might be the eeling o having something that has a start and an end.

iNformatioN overload

The exposure we have to digital media has increased exponentially since its ori-gin, especially through social media. This is creating a eeling o overexposure.There is much more in ormation out there, and our ability to cope with it is beingchallenged. It is not strange to hear that people are now taking a step back andthinking twice on how much time they are spending consuming digital in orma-tion. Some o us are having the eeling o su ering some sort o in ormation

overload.

This in ormation overload has triggered the idea o seeing the evolution o social media as a growing bubble(like the internet bubble o the late 90s and early 2000) that has the risk o bursting down. Despite the amazinggrowth social medias have had in the past years, this might have come to an infection point already. Major so-cial media rms that have gone public are su ering rom lack o per ormance in the eyes o the investors, whowere expecting explosive growth rates that were not reached. Facebook stocks have gone down 26% since itstarted trading back in May 2012, Groupon down 66% since their IPO back in November 2011, Pandora alsoshowing a decline o 43% and Zynga down 69% rom their IPOs in June and December 2011 accordingly.

This brings us consider a hype in the digital media development. We believe people are overestimating theimpact o digital media in the short term. Digital media is growing and growing ast, but the main challengesour industry is acing right now have little to do with it, but more with the economic situation and intrinsic chal-lenges o our own particular industry segments. Without a doubt digital media will have a tremendous impacton our industry, and we might ail to see the degree and severity o the challenge that lies ahead o us.