By Dennis J. Donovan, Principal, Wadley Donovan Gutshaw Consulting
This article examines trends influencing the geographic deployment of digital media operations. Digital media is a relatively new industry. Embryonic stages of the industry are generally traced to the mid-1990s (the rise of the Internet with search engines like Netscape) to the late 1990’s (e.g., sixdegrees.com the first truly social media site in 1997). A breakthrough year was 2002, when more information was stored in digital rather than analog media. From that point forward, the industry has grown rapidly and has exploded in the last six to seven years. In this article, we address the following:
- Industry definition/major players
- Growth trends
- Talent requirements
- Existing geographic clusters
- Paramount location criteria
- Site Selection decision making process
Industry Composition
According to Statista the industry is defined as audiovisual contents and applications that are distributed directly over the Internet. This includes digital video content, digital music, digital games for varied devices, and electronically published written content.
Digital media does not neatly fit into a particular industry classification. To monitor this sector from employment and number of facilities standpoints the following NAICS codes are most applicable:
The industry is composed of both established media/communications companies that have embraced digitization and new companies devoted exclusively to digital media. Illustrative digital media companies include:
Growth Trends
The digital media industry is experiencing robust growth. Today, books, music, video, and video games are readily accessible on nearly all devices from almost anywhere in the world. As a result, the industry’s global revenue approximates $293 billion according to Statista Digital Market Outlook. By 2025 the market is projected to increase 41 percent to $414 billion. Existing market size and compounded annual growth rate by region are shown below.
Due to strong growth, we expect a high level of location activity by companies within (or new to) the industry. Geographic footprints will need to be expanded to capitalize on new business opportunities associated with rapid growth.
Talent Requirements
As reported by the Balance Careers representative digital media jobs include the following:
- Social Media Manager
- Web Content Manager
- Digital Media Specialist
- Content Test Specialist
- Game Designer
- Media Planner
- Blogger
- Digital Engagement Specialist
- Brand Coordinator
- Content Coordinator
- Content Writer
- Graphic Designer
- Digital Content Editor
- Social Media Communications Strategist
- Digital Photographer
- Public Relations Specialist
- Broadcast News Analyst
- Technical Writer
- Marketing Coordinator
These positions require both direct experience and underlying skills including communication 9e.g., client relations, collaboration, engagement, writing), marketing (e.g., demographics, digital media testing, email marketing, social advertising), content management (e.g., content management systems, content curation, image management, and project management), and soft skills (e.g., multi-tasking, handling criticism, critical thinking, and teamwork).
Information technology skills are also in high demand within the industry. These include:
From a site selection perspective, gauging talent pool breadth/depth for digital media skills represents a significant challenge. The aforementioned specific skillsets are not reported by published sources, such as Bureau of Labor Statistics. Consequently, a three-tier approach is required toward labor market viability is required when identifying potentially suitable locations and selecting the best alternate. This approach is highlighted below:
We have identified broad job categories that are most applicable to digital media. These are listed in Exhibit One. These can be used early in the process to begin culling locations. Areas that have sufficient critical mass in these occupational groups should have the potential for displaying at least a moderate presence in the specific skillsets. Concerning to latter, illustrative job posting sites that are geared toward digital media appear in Exhibit 2. These can be “data mined” once a manageable number of locations (i.e., the longlist) surfaces.
Existing Industry Clusters
Nationally digital media employment employs roughly 2.2 million people. Reflective of a highly concentrated industry, four states (California, New York, Texas, and Washington) account for over 46 percent of digital media employment. Twenty-one states have at least 25,000 employees in the digital media industry. These are shown below, along with their location quotient (U.S. = 1.0, a higher ratio signals a more robust concentration of industry relative to total employment).
Not surprisingly the industry is clustered where media, communications, entertainment and technology (especially Internet related) have a long-established presence. Of course, there are minor clusters including areas where company founders had strong ties to the location and started their companies in these communities.
Paramount Location Criteria
Talent availability is the overwhelmingly most important location criterion when siting new digital media operations. Breadth/depth of the talent base is largely determined by the industry ecosystem. Consequently, the following should be accorded top weighting when deciding where to geographically deploy digital media entities:
1. Roster of digital media companies:
- Number by headcount size
+ All
+ Within the pertinent sub-sector (e.g., gaming)
- Companies new to the area
- Expanding companies
- Start-ups
2. Skillset Depth:
- Number resident skills by position (e.g., graphic designer, digital content editor, Adobe Illustrator)
- Ratio of skillset base to number positions company will need to fill (an important measure of potential applicant flow/selectivity)
- Competitive demand by skillset
3. Talent Pipeline:
- Colleges/Universities with digital media curricula
- Annual number of graduates
- Depending on location look at the immediate metro or in some cases up to a 100-mile radius
4. Quality-of-life/Transferee Appeal:
- For recruiting (regional or national) experienced talent
- For recruiting recent college graduates
Entrepreneurship Support Such as Incubators and Accelerators
In short in searching for a new site most companies prefer to locate in an area featuring a robust, dynamic, and growing industry ecosystem. This is critical not only for staffing but also to enhance innovation, creativity, company culture, and brand reputation.
Another important consideration is sub-labor market. In many metros only a proportion of the respective workforce can be recruited from a specific site. It is therefore key to determine: (a) where requisite skills reside, (b) what competing employers are close to those residential concentrations, (c) what is the best transportation access to these clusters, and (d) what is the commute propensity (e.g., half hour or 45 minutes maximum) for these workers. This will then lead to identification of the optimal sub-labor market. The search for an available building (or new construction) should thus be confined to the best sub labor market.
Once a manageable number of qualifying metro areas have been identified it is conceivable that geographic variation in salaries exceeding 20 percent could be in play. This is especially true when comparing areas with a more modest industry ecosystem vs. the behemoths.
Of course, labor costs also come into play but only after ascertaining if there is sufficient critical mass to sustain first year and future hiring requirements.
Robert Half has published national averages for digital media jobs. National median salaries for the representative positions are as follows:
When evaluating shortlisted areas for salaries it is important to understand what compensation packages comparable employers are offering. Then determine what salary level will be required (e.g., could be mid-point or above) to recruit/retain a top-quality workforce.
Beyond talent pool, ecosystem, and cost additional factors that figure prominently in the site selection equation for this industry include:
- Annual turnover (due to competitive demand)
- Office space availability
- Air service
- Broadband (especially if there will be work at home any significant distance from the office)
- Natural disaster risk
- Tax practices/rates
- Government business climate/fiscal status
- Access to major customers
- Electric power reliability
- Potential incentives, especially payroll tax rebates and upfront grants
The Decision-Making Process
Here we highlight a multi-phase building block approach toward selecting the best long-range location for a new digital media office or Center of Excellence (COE). A four-phase process typically applies:
I: Discovery
1. Rationale for the new center
2. Fit within the existing geographic footprint
3. Staffing level by position:
4. Budgeted salary levels
5. Pay for performance
6. Other operating requirements (e.g., office space, air service, utility redundancy)
7. Criteria weights:
8. Workplace Model (a critical assumption):
- Predominantly physical office (nearly all employees onsite full-time)
- Local hybrid
+ In office 3-4 days/week
+ Work at home 1-2 days a week
- Small physical office, bulk of employees remote (can reside almost anywhere)
- Predominantly physical office with few critical positions staffed remotely
- Predominantly local hybrid with a few critical positions staffed remotely
9. Timing (e.g., new facility start date)
10. Project team members
11. Confidentiality protocols/project code name
II: Location Screening
- Geographic search region delineated
- Desktop research to generate longlist (e.g., 6-10 areas)
- Request for Information (RFI) issued to lead economic development agency in each area
- Longlist ranked/scored
- Shortlist (2-3) chosen
III: Field Based Due Diligence
(shortlisted areas)
1. Orientation by Economic Development Organization
2. Interviews undertaken
- Comparable employers
- Other entities
3. Sub labor market tours
4. Quality-of-life tours
5. Office building
- Preliminary discussions with building owners
- Tours
6. Preliminary incentives offers received
7. Comparative statistical matrix summary
8. Digest of interviews
9. GIS commute shed maps
10. Scorecard rankings
- Qualitative
- Quantitative
- Composite
- Top location and best back-up selected
IV: Final Commitments
- Office Space
- Real Estate
- Other due diligence (e.g., legal)
Before leaving this section, commentary on physical office vs. remote. There is no one size fits all. WDGC observes that the bulk of companies requiring significant headcount scale will opt for a local hybrid model (three to four days a week in office, one to two days of work at home), and a small proportion of critical skills remote (if not found locally). This model seems to balance primary employer/employee preferences such as spontaneous innovation, social interaction, work/life balance/flexibility, company culture and productivity.
Of course, start-up or smaller enterprises might consider the core office/remote work model. But once a certain scale is reached that model should be re-examined by weighing relative pros and cons. Perhaps no change will be necessary, but it makes prudent business sense to at least explore other geographic deployment alternatives.
Conclusion
Digital media is a relatively new, fast paced, changing and rapidly-growing industry. Where to accommodate growth requirements will be pivotal to future success of any business in this field. Industry ecosystem/talent availability will drive site selection decisions. The desired size of an ecosystem/talent pool will in part be determined by the scale and composition of requisite headcount. Not all operations need to be in one of the existing mega hubs. Equally as influential will be the preferred work site model (e.g., all on site or a hybrid of on-site/work at home).
By following a systematic decision-making process such as the one outlined above, the new location should enhance future success of the proposed operation. And a parting word about incentives: consider them “icing on the cake.” It is far more important to enter a market that will sustain talent requirements. Incentives should then be viewed as enhancing the assets of any favorable potential location.
About the Author
Dennis J. Donovan is a founder and Principal of Wadley Donovan Gutshaw Consulting, LLC based in Bridgewater, NJ. The firm has been advising companies on geographic deployment for four decades. Past clients have included companies within the media: communications, entertainment and technology industries.
