Traditional media is getting it all wrong (again).
On December 31st, 2012, MediaPost ran a news item titled, For Traditional Media, Digital Remains Elusive Promise, that looks at the conversion of traditional advertising dollars into digital ones. From the article: "For over a decade, traditional media companies have pointed to digital media as a promising source of revenue growth - but as 2012 draws to an end, it's clear that this promise is still more theoretical than real, while ad dollars continue to migrate away from traditional channels. This is particularly true for broadcast radio groups and newspaper publishers, whose 2012 results have (so far) offered little in the way of digital cheer."
Some data points about traditional media going after digital dollars (according to the MediaPost article):
- Digital advertising revenues for the radio industry is just 4.6% of total radio ad revenues of $12 billion.
- Digital advertising revenues for the newspaper industry is just 14.9% of total newspaper ad revenues of around $16 billion.
It is time to reframe this conversation.
We know the basics: most traditional media publishers' online plays are simply a copy and paste model of their content. Newspapers put the text content online and radio stations either stream their audio or package them as podcasts. In short, the digital version of their media provides no significant advantage over their traditional ways except that it is (somewhat) available in a digital format. The type of data you read in a news item like this will make you think that advertising is dead (and/or dying). It is not. Have you seen this chart: Google Rakes In More Ad Dollars Than U.S. Print Media? ... and that's just Google. Why is this happening? The easy answer is this: Google's advertising is contextual to the end-user's experience. Radio online is not like radio when you're stuck in traffic. Sure, you can skip channels in the car, but with digital, monetizing audio advertising is very challenging. The audience isn't captive. They are "on the move" and doing many things beyond just listening, all at the same time. Newspapers don't fare much better. The digital advertising is placed on a page with multiple display units all vying for the attention of an end-user that is simply trying to read a piece of content. That content is layered in links, other stories, other tabs in the Web browser and more. There is nothing (or very little) truly unique and original in terms how the ad sits on a digital screen to make the user's engagement that much better. In most instances, it's more interruption than engagement.
What does the reframe look at?
The true reframe for traditional media is not easy or pretty. What we are truly discussing here is a new business model. This is not about how a print publisher morphs into a digital publisher, because that is a completely new and different business (and, one they may have little to no experience in). Even the flow, creation and distribution of the content is fundamentally different. Saying newspapers and radio stations need to find a new business model is like me saying to you that your business needs to find a new business model around media. It ain't easy. That being said, here are two areas where traditional publishers of content will need to focus on to keep their audience:
- Direct relationships. The value of a traditional media player was that they "owned" the consumer. Brands that wanted to get a consumer's attention had to got through these media entities as gatekeepers. The raw definition of a direct relationship has changed because of our digital channels. I don't need an editor, publisher or magazine title to get this message to you. I have a direct relationship with you (as you have one with me). Back when I was a music journalist in the eighties and nineties, this was not the case. I needed the magazines and newspapers to get my work out to you. Radio and newspaper organizations will need to figure out what their true direct relationship looks like and how to monetize it in a digital way.
- Media as passive and active engines. A typical display advertisement on a newspaper website is passive. It's there, you see it... not much else. The problem is that this passive advertisement lies in an active digital media environment. This is what makes Google's engine of advertising so powerful. The ads on Google act as active as the user engagement (and, this is why Facebook and Twitter have yet to crack this nut for themselves). If you look at media and advertising as active or passive, you begin to see how mis-aligned the majority of digital advertising truly is. Fundamentally, it's not even digital advertising... it's just advertising on a digital channel.
It's a new day.
While I am bullish on native advertising and real-time bidding, we're still talking about passive advertising in an active platform... and a grandiose way of saying, "advertorial" (for the most part). The truth is that many non-traditional media companies have entered the fray and they are creating levels of monetization and new business models (again, look to Google, LinkedIn and even some smaller, niche players). The struggle for traditional media companies is only going to intensify in 2013, if their play continues to be one solely based on trying to generate the same amount of advertising from their websites. mobile apps and whatever else as they did from their traditional formats.
It's not only going to be ugly. It's going to get uglier. What do you think about this?