[Business Insider] Here are 5 stories that will shape advertising and media in 2019, from Snap facing a reckoning to streaming wars heating up

This post first appeared as an article on Business Insider

 2018 was a tumultuous year for media and advertising. It might look tame compared to 2019.

A lot's happened in the past 12 months. Digital-media companies started to hit a wall, and Facebook battled one public-relations crisis after another. TV viewers cut the cable cord. New kinds of consumer companies challenged 
conventional marketers.
Those changes will spill over into next year, as media companies and brands fight for their place in a future where strong brands and relationships with consumers matter more than ever.

Here are five storylines to watch in 2019.

Streaming wars will heat up

Trying to catch up to Netflix with its 58 million US subscribers and estimated 2018 content budget of $12 billion-plus, media-and-entertainment conglomerates AT&T, Disney, and
 maybe Comcast are planning to launch their own streaming services to capture cord cutters who prefer watching shows on internet-connected services over linear TV.

But it won't be easy. People are already drowning in entertainment choices: A PwC study found that on average, Americans have access to about four pay-TV services but regularly watch only two. The legacy companies also will have to dig deep into their pockets to build these new services and the customer-service infrastructure that go with them.

"As consumers, we're developing expectations for functionality," said Analisa Goodin, founder and CEO of Catch&Release, which helps brands find user-generated content. "The platforms need to address those. It's not only the content. They don't have the advantage of being in conversation with the consumer."

Moreover, the legacy companies are going up against not just Netflix but also the tech giants Amazon, Apple, Facebook, and Google, which also are building massive content offerings. And by encouraging viewers to watch their content online, the TV companies may fuel the cord-cutting trend.

Bottom line: The odds seem stacked against the legacy players.

Facebook will hold on to its edge through Instagram

The social network has had one bad headline after another in 2018 as it suffered a string of scandals and public-relations nightmares. Facebook acknowledged that its September security breach was 
worse than it had previously disclosed, at least in terms of the data that was compromised. A group of advertisers sued Facebook, saying it knowingly defrauded them about the amount of time users were spending watching videos on its site. By the end of the year, leading industry ad executives were starting to go public with their concerns about the platform.

It'll cost Facebook a lot to fix its internal problems, and on top of that, the digital-ad market itself might slow, 
Pivotal Research's Brian Wieser predicted.

But don't count Facebook out just yet. It still has a powerful asset in Instagram, which is ramping up with 2018's rollout of IGTV. "We're seeing lot of publishers increasing investment in Instagram and IGTV and monetizing it through branded content. It gives them a way to find new budgets," said Nick Cicero, vice president of strategy for Conviva, an online-video-analytics company.

Of course, this week's
 Instagram-feed snafu was a reminder of how even a loyal fan base like Instagram's can't be taken for granted.

More digital-media companies will slim down or go away

If 2018 was a brutal year for publishers, many observers believe it's just a warm-up for 2019. The reckoning hit everyone, from legacy magazine publishers like Time and Conde Nast that couldn't make up for lost print dollars with digital revenue to digital publishers whose business models overrelied on Facebook.

Facebook turned out to be a fickle distribution partner, and it, along with Google, consumed most of the digital-advertising growth. New media companies like BuzzFeed and Vox Media have tried to branch out into areas like subscriptions, e-commerce, and events, but rarely have those become as meaningful sources of revenue as advertising.

Investors have cooled on putting new money into media, so companies that aren't making money will eventually be forced to drastically cut costs or change strategy to survive, or they 
will get sold. A lucky few (Time, Los Angeles Times) got snapped up by benevolent billionaires. But the appetite for digital-media companies that are losing money and are ad-driven is low, and it could get worse if a recession hits. Case in point: Univision has been looking to sell the Gizmodo Media Group properties for six months, and no deal has been done.

2019 will be a year that reveals who has the strongest brands and most diversified business models — or at least the most patient owners.

Snap will face a make-or-break year

EMarketer made headlines when it predicted in March that Google and Facebook would lose share of the digital-ad pie for the first time this year, as Amazon and Snap were growing faster than expected, fueling hopes that Snap would be instrumental to breaking the Google-Facebook chokehold on advertising.

But the Snapchat app was wracked by a redesign that users hated, high executive turnover, and competition from Instagram. By the end of the year, its stock was down to a paltry $5 a share, employees were going without bonuses, and the
 company was talked about as an acquisition target.

Daily active users have declined, and advertisers are cooling on the app. They want an alternative to Facebook and Google but continue to doubt Snap's uniqueness and value on campaign plans versus bigger social rivals.

Despite its challenges, Snap still has a big opportunity with advertisers, Cicero said. But it needs to get marketers excited again.

"People want options to place media, and you can't spend all your money with just two companies," he said. "You want to experiment, and your customer is using multiple platforms, so it's still really important as part of the mix. It's important for Snap to come in and have a friendly voice and overcommunicate like they did in their early days. You haven't heard a ton about new and exciting things at Snap in a while."

DTC companies will shape-shift

Direct-to-consumer companies are on the rise, and they're taking a nontraditional approach to advertising, focusing on strong customer service and performance-driven marketing and often eschewing agencies, instead doing a lot of the work themselves. In doing so, they're changing how agencies, publishers, and other consumer-product makers work.

DTC companies need their ad dollars to lead to sales, and they don't have big ad budgets. So to win their business, media sellers like NBCUniversal and Simulmedia are catering to them. Consumer-packaged-goods giants like Unilever and Nike are applying DTC lessons to their own businesses. As media companies get deeper into the subscription business, they too are obsessing over the customer experience.

Meanwhile, some see a shakeout coming as Facebook advertising, which is the core of most DTC companies' marketing, gets unaffordable. Some will grow by getting distribution in major retail chains like Walmart or opening their own brick-and-mortar stores. The term DTC will lose meaning as the line between it and legacy brands blurs — but the bar for customer experience will have been raised.

"Digitally native brands are gradually chipping away at the CPG market share," Alex Hamilton, head of innovation at Isobar, 
told ExchangeWire. "To ensure they remain competitive, we're likely to see more CPG brands adopt a DTC model in 2019." 

Topics: Technology