Last week I read a report saying that TikTok is projected to exceed the advertising revenues of Meta and YouTube combined by 2027. In sales language, that’s 20 calendar quarters from now. An eternity. Putting things into perspective, TikTok was launched internationally in 2017 but only started to get significant traction in 2019, so hardly mentioned in any market research reports prior to that year. By now they have more than 1 billion monthly active users, while 4 years ago they were only in a few radar screens.
Earlier this year we heard breaking news from Netflix stating that they would launch a new hybrid service including ads. The same Netflix that has historically insisted in sticking to the pure subscription-based video on demand (SVOD), commercial-free model. And Disney+ is making a similar move. Both services to be released in less than 12 months from announcement. Needless to say, none of them were previously considered in any advertising-based video on demand (AVOD) market reports. The key question is whether they will just change the advertising expenditure allocation in the coming years, or are they big enough to change the value of that market itself?
In Sales, Marketing, Business Development and other functions that include multi-year planning, we all love to look at market forecast reports, covering market size, key players and competitors, and then we set revenue and market share goals accordingly. Some markets are more mature, or with higher entry barriers, and hence the exercise is less difficult (I’d never say it’s easy). For some other markets, a 3 years forecast can be a brave bet. And the more granular you want to go, either geographically, by vertical, or by customer size, the riskier it is. The TikTok and Netflix cases above simply illustrate market changes that were difficult to predict wearing mid and long term glasses. But there are many others that could result from M&A, a disruptive solution, change in regulations, etc. So, as much as possible, stick to the big numbers, understand the dependencies, and constantly monitor the market dynamics. You never know who’s the next TikTok not shown in today’s reports though already born, and that could turn into your biggest opportunity or your toughest competitor.
FMA Consilium 