Trading "analog dollars for digital pennies" is exactly how the traditional media sees the new online channel. If they focus on selling online advertising, they're only getting a fraction of what they used to get (or are currently getting) when compared to print, TV or radio. The problem with this terrible analogy is that their "analog dollars" are plummeting and instead of looking at the "digital pennies" to add up and add value, most media companies still see it as table stakes.
The lesson is simple: stop comparing this new media with the traditional channels. New media is driven by powerful, interactive and immersive content that the consumer actively navigates verses passively receives. If we've seen anything in the past five years it is that this comparison demonstrates one thing: traditional media channels don't understand new media and that they don't want to (or are afraid to, or they are not sure how to).
What could a traditional media company do to stop this type of shortsighted thinking?
Here are the six major reasons why traditional media is having such a hard time with new media:
1. They would have a hard time opening up due to fears that people might say bad things about their advertisers. In turn, the major fear is that those advertisers would stop working with them. They need to embrace the power of peer reviews and all the trust and loyalty that is does, in fact, bring.
2. They are still trying to optimize the monetization of their traditional channels. The same ones that have been around for more than one hundred years, yet they expect the new digital channel to turn some kind of significant or similar profit even though this new channel is hardly ten years old.
3. Their sales staff and business development team are still struggling with how to understand the channel. The clear value to the advertiser and the complete offering is still murky. It's hard for them to sell something that is different and that falls outside of their level of confidence and expertise. If the sales team don't have total confidence in what they are selling, you can be sure that the advertisers know it, feel it and smell the fear.
4. Their content producers don't want more work. They're not being paid more, but are expected to understand everything from Blogs and Twitter to online video and Podcasting. While the media companies do offer training, the overall vibe that Journalists are giving off is one of resentment. There's a feeling that the Publisher is just trying to get a lot more content out of them for free, while at the same time their photographer friends are being used less and less (or being let go entirely).
5. Their infrastructure is not built for digital. These companies have spent the past eighty years investing in printing presses, newsstands, physical distribution channels and more, a shift to a digital end-product is confusing and messy. It puts everything they have known to date in question and forces them to re-look at everything, including their own value and existence.
6. They gave it away. When online advertising first came out, most traditional media companies offered it for free or as a value-add, or gave it very minimal pricing just to warm advertisers up to the opportunity. While that is a sound business strategy, it's also a dangerous one. Advertisers are very resilient to pay for something that was once free and they have an even harder time paying more for something than they have become accustomed to.
Here are six questions that traditional media companies can answer and brainstorm on:
1. What more can you offer than just online advertising?
2. What can your digital properties do to enhance your client's traditional advertising?
3. What can you - as a media company - do to make your advertiser's online property more efficient and effective?
4. What if you could not offer your clients any form of advertising on your property, but instead had to look at alternate ways of bringing them online from a Marketing perspective?
5. What kind of existing online channels are working, and is there a way for you to partner with those spaces to bring a more holistic online program to your advertisers?
6. Who is going to do this type of work in your organization? Can people either be trained or do you need to find new people?
Final thought: why don't traditional media companies create a new physical area (how about an office space away from everyone else) and set-up those interested in the above challenges and questions. Let them spend a few months tinkering and experimenting. Let them make mistakes, try out new models and be dramatically different. Bring together the content producers, the sales team and the business development folks (bring in some Digital Marketing people too). Let someone from IT play with them as well. The final result can't be any worse than the current state of the industry (check this out: Forbes - The Newspaper Guild's New Pitch: Survival). At best, they'll discover how much real work will be needed for their company to grow, adapt and turn some real profit in the new media world.
What other questions do you think traditional media companies should be asking and brainstorming on?