Recent developments in media have challenged leading specialists to comment on the position of old” media versus the “new” media.
In October 2005 Bill Gates (Microsoft) stated that “within 5 years consumers will satisfy their need for information through the internet, leading to decreasing advertising income”
Martin Sorell (WPP) “The media landscape is changing faster and on a larger scale than predicted. Media owners are losing control. Panic is probably the right word”.
The analysis that the media landscape is changing is as old as media itself. Radio would replace the newspaper, TV was the end of radio and the internet was to dominate it all. This belief resulted in high expectations and deep falls. Even the internet crash off late 2000 was based on the assumptions that media spending would shift from traditional media towards digital media.
Well…. people are still reading newspapers, and magazines. They are still listening to the radio and watching TV and will remain doing so in the future.
So what is actually happening here….
A simple explanation could be that consumers are confronted with, and challenged by, just one more type of media and have to divide their attention, resulting in less attention per media type and consequently a smaller share in advertising income per media type.
It is well known that traditional media like newspapers and magazines see their revenues decreasing. Advertising income is shrinking with 1 – 1,5% annually at least for the last decade. About 10 years ago newspapers were confronted with radical changes in income due to a mix of economic development and the rise of competition in the form of new media.
Innovations on how newspapers and magazines should work for the readers have dominated the printed media industry. Change in programming, look and feel (tabloid formats) add-ins, newspaper and magazines for the weekend.
Of course, these were all triggered by the introduction of new and promising possibilities to reach new customers. The publisher’s old concept was just the magazine or news paper and suddenly this was not enough anymore. The information distribution concept should be of a totally new design, incorporation of the different media. How do you do that?
First of all publishers should worry about their company’s performance and profit. Only those will remain that are able to produce an adequate product against affordable costs. (Also known as operational excellence).
Shareholders value must be maintained. This leads to consolidation in the market place.
Secondly publishers should realise that new media create other and perhaps stronger relationships with their audiences.
Thirdly the paradigm shift in consumer involvement. Consumers can react to, contact, no even better, maintain their own involvement and decide on what they want. Interactive media concepts enable consumers to participate whenever they want. This requires a different approach towards business processes, marketing and supporting technology.
This publisher’s dilemma applies to all companies that inform their customers through paper and digital means. The cross media approach can be very effective. On the other hand multiple media channels have to be maintained against a rise in costs for content management and distribution.
Cross media synergy influences customer relations with consequences for both publishing and administrative processes.
Publishers have to choose;
1. Consolidate, cut cost, find synergy in cooperation
2. Innovate, learn from new market developments, shift formats
3. Change the broadcast attitude
A difficult choice, once confronted with decreasing income. Investing in new developments new ways of publishing and relating to consumers may even affect the internal culture of the publishing company. Powers are shifted and people may become less effective.
Publishers, like any other company, will have to define an attitude towards these innovations. Whether to act or to watch, whether to facilitate or to coordinate.
Most of the times true business development is done out side the companies walls. There are actually two leading criteria opposing each other on what the best strategy might be.
Innovations inside the company are frustrated by “old school representatives” mostly for personal reasons, slowing down the innovation process.
Innovation outside the company may result in beautiful new initiatives, but lack alignment with the old business models and thus lead to loss of synergetic effects.
The real challenge is to be able to mobilise the right forces.
The force to mobilise is in fact the customer. Once they get on the move there’s no stopping them. Give them a place to participate. Some kind of portal that invites them to come back, to communicate with the content and its other visitors, but make sure you do it in the right format. Challenge, surprise, interact. Time to experiment?
Changing business models
What does a publisher sell? When you look at the income statements the dominant income stream is advertising income. Second by far is subscription and third is the income from of the shelf sales.
To understand the impact of this publisher’s dilemma it is necessary to understand two things. How the money flows and why.
Attention is worth money. This is what all publishers know. So they try to attract as much attention as possible. Subsequently they sell this attention to advertisers.
To maximise attention publishers use the mechanism of bundling information. You can see bundles of every size and shape in the world of information distribution. A CD is a bundle for instance, as is a newspaper. Even a subscription can be seen as a bundle that maximises attention. All bundles have a certain amount of consumers trust hidden within them.
Is this mechanism still valid?
When you buy a CD are you sure that you like all the tracks on the CD. Are you sure the quality of a newspaper will sustain over the length of you subscription?
In the online environment consumers are changing the way they choose interesting content. They make on the spot decisions on what to read. When they are not satisfied they are gone. Apparently bundling doesn’t work they way it used tot do. The effects on the business model are evident. Less trust is less attention is less income.
When consumers are turning away from subscription based behaviour and prefer to choose their media usage on the spot, advertisers will probably do the same. This goes for all media. Advertising exchange is becoming fashionable. Internet banner and advertising mechanisms are evolving rapidly. Distribution of advertisements in all online digital media like the Internet, the mobile phone and gaming is changing and in an increasingly intelligent fashion. (look for instance at Doubleclick, Right Media or ADSDAQ among others).
Aside the built in relationship (trust) there is the valuation aspect of it all. A subscription holds the promise of future income. But what happens if this built-in trust isn’t enough anymore to maintain the same level of attention.
Look at it from an investor’s point of view. They value a digital relationship/contact – in social network environments – easily at € 15 to € 50 each. Look at Google Adsense as a spot mechanism for advertisers. Many others will follow. Look at RSS type news streams when it happens and when you want it. Or newer developments like Technocrati self organising the information on the net.
The philosophy behind the bundling information will hold its value, but it remains to be seen if publishers, producers and editors can maintain their privileged position in a world where companies and consumers organise them selves in community type environments.
Summary
Means : The publisher’s dilemma is no longer a technology issue. It is the lack of knowledge how to deal with this new phenomenon. It is hard to divide attention between two different ways of working when you should be treating them as one.
Message : Break up the content bundle in smaller fields of interest and build strong communities around them.
Media : Although the market share of interactive media is still under 5% of the total advertising market. The online media are gaining force with a 40% annual growth. When you include all other activities related to online presence, interactivity has already won the advertising war.
No comments:
Post a Comment