14 Media Industry Challenges Explained

In the ever-evolving world of media, change is the only constant. From print newspapers to the digital age, the media business has witnessed profound transformations, ushering in both opportunities and challenges. This comprehensive article explores the dynamic forces shaping the media industry today and unveils 14 key challenges that have emerged in this shifting landscape — and how media companies can address them.

What Are Media Industry Challenges?

New channels, including streaming and user-generated content, along with new technologies, such as artificial intelligence (AI) and extended reality, have disrupted the media landscape even as they offer new opportunities. But in spite of some dire predictions, the media business remains healthy: Global spending by advertisers is expected to hit almost $728 billion worldwide in 2023, up $23 billion from the year prior. However, the industry is still adapting to the digital disruption that has marked the last two decades as the internet and social media have reshaped the market.

Key Takeaways

• The media industry is facing a period of rapid, drastic change, with new channels and technologies emerging.
• Myriad opportunities across media also translate into challenges around managing vendors and personnel and navigating an overflow of content.
• Fragmented media and audiences make measurement and targeting a challenge, though technology offers some relief.

14 Media Industry Challenges Explained

Change has always been a way of life in the media business. Newspapers faced competition from radio; radio had to adapt to the arrival of television; and television had to evolve when the internet was born. This constant disruption brings with it myriad challenges. Below are 14 of the most common challenges facing media companies today.

1. Audience Measurement

Knowing your audience reach used to be relatively simple: Auditing services tracked TV viewers, radio listeners and magazine and newspaper readers. But with audiences atomized among so many platforms today, a viewer can watch a TV show live on the air, the next day on demand or a week later on a streaming service. Measuring website visitors is even more complicated, especially given the ongoing phaseout of cookies, which allowed advertisers to track users and their behavior online. At a time when advertising is increasingly “data-driven,” it’s a major challenge to even count the eyeballs that are exposed to a message.

2. Tracking ROI and Attribution

Data quality has always been a challenge when measuring return on investment (ROI) for media. Making sure data is accurate, relevant and useful is a time-consuming task, but it has become even more fraught lately, as users are more protective of their privacy and regulators have backed them with stronger laws. “Do not track” and “the right to be forgotten” have emerged as principles of data management, with users blocking attempts to collect their usage data on digital channels. Regulations, such as the European Union’s General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA), have enshrined consumers’ rights to have their data deleted and curbed many data collection practices. This makes it harder to trust the audience numbers that media companies rely on to set advertising rates and prove their ROI.

3. Monetization

As a recent Deloitte study notes, “advertising revenue has recently become volatile and crisis prone.” Indeed, more and more media companies are fighting over an advertising revenue pie that’s not growing as fast as the number of outlets competing for it, so they’re looking for revenue beyond advertising. Deloitte singled out ecommerce, merchandising and other revenue models that could supplement the traditional advertising revenue sources. Meanwhile, subscription-based media, such as streaming services, are looking into using ads to boost revenue, carving the pie into even smaller pieces. Even popular platforms that are synonymous with their sector — think Netflix — are struggling to find new income sources in a crowded field.

4. Recruitment and Retention

With the growth of digital media, media companies require more tech-savvy talent, which puts these organizations in a bind: They now compete for talent with tech companies, venture capitalists and other groups with deeper pockets than they have. As such, hiring and retaining top talent has become a challenge, with 71% of media CFOs saying they’ve increased spending on human resources and talent. The industry was not immune to the Great Resignation or the mounting calls for diversity and inclusion. (Ironically, media coverage has often highlighted media organizations’ less-than-diverse staffs.) Additionally, tough economic times tend to hit advertising hard, forcing layoffs. The industry is currently undergoing its worst employment shrinkage on record; job cuts in the sector during the first half of 2023 were higher than in all of 2022.

5. Evolving Market Trends

Disintermediation — the process by which traditional media, such as television networks, newspapers and publishing houses, are bypassed as content creators directly reach their audiences through digital platforms and technologies — is a growing challenge for media companies. This phenomenon, driven by the accessibility and democratization of content distribution facilitated by the internet and devices like smart speakers, has significantly transformed the media landscape by allowing content creators to connect with their audience without the need for traditional media outlets.

This makes for a better user experience, but it cuts back on opportunities for media to reach new audiences and grow their advertising revenue. “Headless” websites — applications that let users navigate directly to specific content without a landing page — also reduce the number of opportunities to engage users, lowering the potential for ad revenue.

6. Business Costs

Media costs are not the straight expenses they used to be, when the two primary expenses were production costs and media buys to place finished ads. Accounting for media costs is more complicated now with marketing spending spread across many digital platforms and creators. This requires more careful bookkeeping and accounting, especially as many creators and agencies are now paid based on results, which requires connecting spending and attribution to gain an accurate view of performance.

7. Social Media Maturity

The internet isn’t free anymore. Social media exposure used to be considered “earned” media, but as platforms mature, they have mastered ways to turn eyeballs into revenue. Even influencer marketing, which began as a barter of free products in exchange for a plug, has evolved into a paying gig. Social media influencer marketing is expected to more than double in use over the next three years, as even “nanoinfluencers” with very small but dedicated pools of followers learn to make their efforts pay. For advertisers trying to make the most of their budgets, it means the business that once went mostly to media companies now must be shared with social platforms, content creators and influencers. Translation: Media companies’ share of the pie is increasingly under pressure.

8. Content Overload

FOMO — fear of missing out — is now a condition being studied by researchers. But its reverse — content fatigue — is also real, and consumers are tuning out. In fact, two-thirds of consumers say they want fewer marketing communications, and 27% say they feel they’re bombarded by marketing messages, according to the Optimove 2023 Consumer Marketing Fatigue Survey. Attracting consumer attention requires media companies to deliver relevant content in the proper context or risk being tuned out, thanks to readily available filters and blocking software.

9. Managing an Agency Roster

The advertising agency industry is growing at about 5% per year, and the number of ad agencies in the U.S. alone has surpassed 88,000 — and growing. Once upon a time, an advertiser would simply hire an agency of record to run all its media activities, but with increased fragmentation, many enterprises now choose to parcel out duties, such as social media or search engine advertising, to specialist agencies. Additionally, large advertisers will often use different agencies for different brands (such as an automaker that hires separate agencies for trucks, vans and sports car lines), so media companies may need to work with multiple agencies for the same company. This means additional management and procurement activity for all parties involved.

10. Algorithms

Automation has been a boon for the media industry. Companies are increasingly using AI to create and personalize content targeted at their customers, gaining their attention and improving their engagement. But the algorithms behind the technology have come under fire for enabling misinformation, or conversely, censoring messages. The rush to leverage conversational AI in search is also disrupting the search advertising segment, as search engines such as Google and Microsoft’s Bing attempt to integrate advertising without corrupting the customer experience or losing the chance at increasing ad revenue.

11. Fragmented Market and Increased Competition

Keeping up with media and economic trends takes a lot of concentration and requires media companies to spread marketing investments across more channels. New platforms are emerging constantly, further fragmenting the media industry. For example, the launch of Meta’s Threads nabbed more than 100 million users in five days. Media boom-and-bust cycles are moving fast, too: Podcasting, which barely registered a decade ago, began attracting audiences with successes like “Serial,” and advertising soon followed. Podcasts peaked during the pandemic, but then fell off a cliff as the outbreak receded.

12. Procurement and Agency Margins

Marketing agencies used to be compensated based on a percentage of their media spending, but that arrangement has gone the way of the rotary phone. The Association of National Advertisers recently felt the need to revise its template for advertisers contracting to buy media, eliminating outdated concepts and adding standards for digital media buys. Agencies today have a number of compensation arrangements, such as performance-based compensation, fees per service and other structures, which require far more accounting housekeeping than paying a flat fee and don’t carry the revenue guarantee of a retainer.

13. Insufficient Communication

Bad communication costs U.S. businesses an eye-popping $1.2 trillion a year overall, according to Grammarly; that’s more than $12,000 per employee. Ironically, the communications business is not immune to that problem. Even small to midsize agencies (with one or two dozen employees) can have 10 to 20 clients; that’s a lot of organizations to keep in contact with at all times. Transparency about fees, charges and customer data has been a point of friction among advertisers, media organizations and ad agencies since the first growth spurt of digital media in the early 2000s.

14. Limited Scope

Innovative marketers — those who set trends in the use of media and champion new channels — tend to set aside a portion of their budgets for experimenting with new platforms and techniques. Portioning off 5% or 10% of the marketing dollars for experiments is not unusual among large organizations, with 10% being the standard recommendation. But with budgets under pressure and atomized among myriad platforms, it becomes harder to justify placing bets on untested strategies. New channels, such as the metaverse, and new social media platforms may suffer as advertisers focus their spending on the tried-and-true.

How ERP Software Can Help

Enterprise resource planning (ERP) solutions can be a valuable tool to manage many of the challenges facing the media industry. ERP systems can help media companies streamline their operations, enhance efficiency and glean real-time insights. These systems integrate various functions, including finance, content management, advertising and distribution, into a unified platform, enabling better resource allocation and cost control. ERP systems also facilitate comprehensive data analytics, helping media companies understand audience behavior, content performance and revenue streams — all of which are vital in a digital media landscape.

Overcome Your Biggest Media Challenges With NetSuite ERP

NetSuite for Media and Publishing Companies helps media companies manage subscribers and advertisers in one unified application suite. This ERP solution seamlessly integrates sales with back-office financial, accounting and order-management processes, based on the experiences and best practices of media firms, all complemented with professional services implementation methodology and configuration services.

The media industry’s challenges are part and parcel of its very nature: It needs to keep up with changes in society at the speed of business. But those challenges can be navigated more easily with the appropriate tools — ones that manage procurement, data and account functions and automate processes to allow for better management of day-to-day processes and more effective communications with all parties involved. This enables organizations to manage the digital disruption of media and react in real time to new opportunities and the challenges they bring.

Media Industry Challenges FAQ

What is the biggest challenge facing the media industry today?

Digital disruption continues to affect the media landscape. New channels and technologies emerge continuously, forcing media organizations and their customers to react in real time to keep up.

What are the challenges of digital media?

Digital media is a dominant channel, but measurement and attribution are becoming problematic as the use of cookies to track users is phased out. Additionally, privacy regulations pose hurdles to collecting behavioral data that advertisers rely on to guide their decisions.

What are the challenges of social media?

As social media hits maturity, its overall rate of growth is slowing down. Meanwhile, new platforms continue to emerge, splitting audiences into more and smaller fragments. Meanwhile, creators are increasingly monetizing their work, adding to advertisers’ costs for what used to be free media.

How does software help media overcome challenges?

Enterprise resource planning (ERP) systems can collate and present information in a single source to provide visibility and enhance decision-making. This can help companies face challenges, such as managing a varied roster of agencies, parsing audience data across segments and improving communication, both internally and with clients and vendors.