Six Pixels of Separation - The Blog
April 22, 2009 3:43 PM

The Present And Future Of Media – Big Trouble Or Huge Opportunity?

Five very interesting, very different and very scary news items just crawled across the wire (or Google Reader - depending on how "with it" you are). Independently, they are worrying, when placed against one another, they create an even bigger question mark about the present and future of media and advertising.

  1. From The Wall Street Journal: New York Times Loss Widens as Ads Shrink. The gist of it: "The company, which publishes the Boston Globe as well as the New York Times, reported a 27% slide in advertising revenue and said it is exploring alternative business models for its Web site as the decline in print revenue outpaces efforts to slash expenses. Times Co. showed a loss of $74.5 million, or 52 cents a share, for the quarter."
  2. From MediaWeek: Does Print Drive Online Readership? The gist of it: "The Seattle Post-Intelligencer, which published its last edition on March 17, was knocked off the list of top 30 newspaper Web sites in March, according to the latest figures form Nielsen Online. Seattlepi.com fell to No. 32 with 1.4 million unique users, down 23 percent compared to March 2008. In February, the site was ahead of its then-joint operating agreement sister The Seattle Times. Seattlepi.com had 1.8 million uniques, while the Seattle Times had 1.5 million in February."
  3. From Reuters: Yahoo to cut 5 percent of jobs. The gist of it: "The Internet company said economic conditions remained challenging, as revenue from advertising on Yahoo websites and its partner websites declined during the first quarter... But the company appeared to be making progress controlling costs, offsetting the decline in revenues." Along with the additional news that first-quarter profits fell 78% compared with the same period last year.
  4. From BtoB: IDC predicts online advertising will decline 6% this year. The gist of it: "IDC's Ad Report Model predicts that U.S. online advertising will decline by as much as 9% in the first quarter and by 6% for full-year 2009. The report was issued following the release of first-quarter earnings by Yahoo on April 21."
  5. From AdWeek: Twitter Use Soars. The gist of it: "While there were approximately 6 million Twitter users in the U.S. in 2008 - or 3.8 percent of all Internet users - eMarketer estimates that number will jump to 18.1 million in 2010, representing 10.8 percent of Internet users."

Media, advertising and even the digital channels are all facing significant and real challenges. They're not just financial either (it's beyond the economy). The development of new and emerging business models is not keeping pace with the changes and the shifts in the advertising dollars.

If you followed the stories above, some of the most respected and trusted traditional news sources are struggling with issues of debt load (even though they like to blame the digitization of the news), while they push towards some new business models in the digital space. At the same time, some of those traditional mass media outlets that have shifted to digital-only platforms are not seeing the results that they had hoped for (granted, it's still early days). From there, the more established online portals that control a ton of traffic and advertising dollars online are struggling due to the economy (or, more specifically, because the marketers are seeing their ad budgets chopped) which is leading to an overall decline in online advertising (while it's still not as bad as some other channels, it is worrisome). Then, to top it all off, newer digital platforms (like Twitter) are seeing huge growth and usage spikes, but nothing really relevant in the form of monetization or revenue.

If this is a time of creative destruction (and it does feel that way), we're all going to have figure out what's going to get us out of this mess, and how we're going to define and validate these newer business models and advertising platforms - sooner rather than later.

Any ideas?

By Mitch Joel


Comments Comments Feed
  • Posted by Greg
    Greg

    It may be too late for some of these giants after years of biased reporting with an agenda. Report news and information without trying to sway my opinion and let me draw a conclusion. The closest thing to this on my google reader feed is the BBC - not perfect but with less persuasion built in. Selling a quality product may help increase advertising revenue.

    Reply
  • Posted by Jose Leal
    Mitch Joel

    Mitch, I'm glad to see that you separated the advertising problem from the business model issue. I think that media and advertising are becoming irreversibly separated. Advertising no longer needs media to reach its intended audience. As this reality becomes more apparent, I think we will see marketing specific solutions and a move away from propping up failing media businesses.

    As for the media companies they have had there hey day. It’s time for them to step aside and let innovative content producers create the future business models. We can’t continue to agonize over their fait – let’s just move on with it!

    Reply
  • Posted by Rotkapchen
    Mitch Joel

    It's not just media -- it's all business as usual. The shift in economics of 'doing' business has changed so radically with the cost of so many things approaching zero, everything needs to be rethought and reevaluated.

    The good news is that the problems of doing business based on the fundamental principles that served us well for an 'industrial economy' are finally going to be re-evaluated.

    Locking things down into prescribed mechanistic steps have to be replaced with squishy flow. It's the perfect conditions for embracing Design Thinking:

    "The idea of managing something squishy is foreign. Design Thinking is required to operate in squishy-mode." http://twurl.nl/lvlrry

    Reply
  • One of the interesting things about this how much we are actually willing to pay to ACCESS all this great “freeâ€? content. I bet the average reader of this post, for example, spend several hundred dollars a month between their Internet access, mobile and local phone service, cable or satellite TV access, etc. The economics do in fact support a lot of great stuff being created, it’s just a matter of allocation of resources.

    Now, as to HOW that allocation should happen... well frankly I have no idea! But it does strike me that if there isn’t some flow of money to content creators at some stage, a lot of that money being spent on access may dry up as people open their browsers, flip on their iPhones or turn on their TVs to find nothing worth looking at.

    Reply
  • Posted by Jay Zheng
    Mitch Joel

    I think Jose makes a great point on how advertisement should be separated from business model.

    I have talked about how both newspapers and advertisement need to be invented again on my blog.

    They should be thinking along the lines of "what if newspapers had never existed, with today's society and technology, how would you create a device that will delivery news to people?"

    I think Mitch mentioned something similar in one of his blog posts a little while ago.

    Reply
  • Posted by Phil Bertrand
    Mitch Joel

    To say that advertising and media are “becoming irreversibly separated" and that "advertising no longer needs media to reach its intended audience" (re:jose) is to me, completely inaccurate and absurd.
    As a matter of fact, advertisers need media more than ever. They need to understand and embrace these new tools that are revolutionizing media. Difficult task considering new media doesn’t even understand itself. Facebook, for example, will have considerably more eyeballs on it on any given day than The New York Times, The Wall Street Journal, USA TODAY, NBC Nightly News, CBS Evening News, ABC World News Tonight and for extra impact, American Idol, combined. Effectively, it has SuperBowl sized-audiences on a weekly basis. Reason enough for advertisers to trip over each-other for some exposure right? So tell me, why am I subjected to ads offering six pack abs, teas that will make me live forever and "free" trips to Cancun when it is clearly obvious from my profile picture of me sipping a latte by the beach shirtless that I have already been to Cancun, I prefer coffee and clearly need no help with my six pack. Clearly, there is work to be done, and money to be made there.
    Media encompasses all the tools used to store and deliver information. Media distribution tools have escaped the grasp of few to the reach of many. So in THAT sense, advertisers do not need the traditional media giants to reach their audience. The hyper-targeted nature of the web makes consuming information a dizzying effort to say the least. Just look at Mitch's suggested Blogs & Podcasts. To remain up to date with all of those, which I would love to do, I would need to stay up as much as the time I spent 2 consecutive weeks, 12 hours a day, watching the first 5 seasons of 24. So if consuming it is so confusing and exhausting, you can imagine the horror that faces advertising buyers trying to find the best outlet for their advertising dollars. And my point is, players in the online media world aren’t making it easy for them.
    There is amazing opportunity here. All this content needs to be organized and players in the new media arena need to understand the potential they hold. Make it easy, make it smart and advertisers will come.

    Reply
  • Posted by Brian Cockerton
    Mitch Joel

    I think that essentially we are talking about the balance between the marketing and editorial. We are in a phase where the pendulum has swung all the way over to the editorial department. Content is distributed with no regard for marketability. We do it because we can. The technology allows us to broadcast, narrowcast, promote, present, as well as select, filter and choose. Individuals have become their own medium. Kutcher’s popularity on Twitter, Boyle’s domination of YouTube indicates that the individual rather than the media can be in charge of content. TV has been on that band wagon for several years. The popularity of Who Wants to be a Millionaire, American Idol, the Amazing Race, Extreme Makeover - Home Edition, Survivor all point to the individual providing content. Although TV still keeps a tight rein on content through advertising. The same thing happened over and over throughout history. Introduction of the printing press spawned the publishing media, the wireless telegraph spawned the broadcast media, the internet spawned the new technology media which is still trying to find its position within the marketplace.

    The pendulum will swing back when the marketing department catches up to the runaway editorial department. Once we can find an equitable balance between content and monetizing, the new media will take their place among the traditional publishing and broadcasting media. Will this hurt these media by taking away advertising dollars and warm bodies? I think it’s more a question of will they change the nature of traditional media? The answer in my mind is unequivocally yes! Just as the introduction of TV changed the nature of radio, the new media will elbow their way into the market and create great opportunities for some and devastating replacement for others. Those media which are too slow to adapt will certainly end up on the “trouble� side of the equation. Others will find the huge opportunities presented by letting the individual take control of content for a little while longer.

    Reply
  • Posted by Tony Singh
    Mitch Joel

    Newspapers have been in trouble for a while, but the current economic situation has only brought the spotlight on them. They have been too arrogant to change or adapt. People will decide how and what content they want to consume.

    Reply
  • Posted by Rob Cotter
    Mitch Joel

    Media consolidation is an easy way out for lazy marketers. A couple of big media buys and BAM, any company could reach a majority of the general public.

    And I agree with Phil Bertrand on this one:

    "To say that advertising and media are 'becoming irreversibly separated' [...] is to me, completely inaccurate and absurd."

    If anything there are just more nodes to tap. Agencies can buy placement at digital media sites (e.g. NYT), Facebook, other social networks, etc... but will these destinations be the be all hubs?

    We used to visit message boards. We chatted on IRC. We visited web sites for content and those domains typically served as umbrellas for the panoply of "web interactions" that one wanted.

    Now we have the Facebook's and Bebo's of the world, which are certainly popular for social interactions but they don't come close to providing immersive brand experiences.

    The bottom line is that there is room for everyone here. Niche web sites, huge social sites, independent content networks, syndicators, speciality applications, 3rd screen bridges (e.g. Twitter), and the like.

    To me, these unsettled times are positive in that marketers will need to cater to many different channels and especially so now that dozens of countries are scaling up their digital infrastructures. Some companies aren't even going to care about 300m people in America or 30m in Canada when they can look to a billion in India. Clearly there are different cultural values and needs in each territory but the point is that the internet is allowing for transparency across borders.

    But then again, that may be a conversation for another day.

    And PS, if online advertising spends decline further? Brands have no one to blame but themselves.

    Reply
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