In Media and Advertising, the Investor Is King and This Emperor Has No Clothes. Jack Myers Think Tank.

Content is no longer King Distribution isn39t King either Creativity Community Relationships Search Technology Platformsamp8230 all contenders but they have all been dethroned by financial investment and procurement decisionmakers who are undermining the economic foundation of our business Money is King and in an increasingly troubled economy this Emperor has no clothesDecisions impacting the longterm health and vitality of the media and advertising business are being impacted by executives who have little at stake beyond shortterm financial goals At the most critical juncture in the history of the advertising business decisions are being dictated by financiallymotivated Emperors who care little about their subjects They care little about the longterm health of media or the marketers who depend on media for their success They do not share the passion for this business that has been the hallmark of generations of industry leaders Jeff Jarvis argues quotin this new age you don39t want to own the content or the pipe that delivers itquot He adds quotIt just doesn39t pay to own the media assets anymore Oh yes you can still milk cash from them But can you get growthquot The answer is Yes We Can if we develop and support new business models that sustain the value of content and the power of the pipeline and if we reject the notion that the primary value of content and distribution ownership is milking shortterm cash flowI39ve argued in past commentaries that Relationships are King and even wrote a book about and own the trademark for quotThe Relationship Agequotamp174 It39s distressing that even as technology is empowering and powering relationships it is synchronously destroying their meaning and value Brand trust is a disappearing myth built on eroding pillars and aging attributes In our current economy corporate equity is only as good as next quarter39s financial performance The recent stock performance of GE proves the point And lookalike generics dominate retailers39 shelves Product brand equity has marginal value in a technologydriven market economy that consistently upgrades product quality while progressively driving down prices Brand equity is dependent almost exclusively on marketing And if we can all agree on one reality it is that marketing is in deep deep troubleCreating and sustaining differentiated and relevant longterm brand equity value through effective marketing is our industry39s most important priority It is the key to retaining the value of media content and media assets The average chief marketing officer for Fortune 500 companies is in hisher position for an average of only 22 months During that short tenure it is virtually impossible to accomplish much more than retain the status quo quotChange agentsquot within corporations have an even shorter life span and rarely gain the support of their colleagues Those few companies that are touted for quotturning the battleshipquot and that win advertising industry awards and front page trade magazine articles often do little more than engage in costly experimentation and headline generating spin Except at a handful of companies fundamental business models impacting marketing advertising and media remain relatively unchallenged and unchanged Marketing executives are increasingly confused by the eroding foundations of the traditional media industry the myriad fragmenting options that present themselves as opportunities and the confrontational competition for marketing dollars among media companies and categories quotCall on the clientsquot is the industry mantra but the proliferation of wellmeant ideas is translating into just one more commodity with each new opportunity and idea no matter how powerful subjected eventually to a lowcostprovider decision overseen by a procurement officer This trend shifts the focus from content to networked content from brand relevance to generic brands from media value to media commoditization Nick Brien Worldwide CEO of Interpublic Group39s UniversalMcCann agency notes the irony quotThe conundrum the industry faces is clients are saying there is no greater way than media innovation to demonstrate value in a new business pitch but then their procurement people stage a reverse auction media buy for the finalists to determine a winnerquot In an interview with JackMyers Media Business Report Brien added quotToday business models are based on efficiencies and business processes All elements of the value chain from beginning to end have to be reevaluatedquot Technology advances efficiency measures and processes but it does not axiomatically deliver greater effectiveness or longterm value Brien also points out quotsmart people get it conceptually The practical elements of success are the real challengequot I39m continually impressed by those few executives who not only get it conceptually but who inspire corporate creativity and the introduction of new business models Apple39s Steve Jobs stands out Jack Griffin has created a new business culture at Meredith Publishing Disney39s Bob Iger fundamentally altered television network DNA when he agreed to distribute primetime content via the iPod and there are others Passionate inspired and inspirational leaders need to retake control of the advertising media and entertainment industry and impose a new philosophy built around a longterm view of their business realistic measurable growth and renewable relationships that shift the focus away from traditional mediaascommodity markets and focus instead on longterm brand equity buildingJust as commitments to the environment require longterm focus on renewable energy and fundamental changes in behavior the media and marketing world require a longerterm perspective and new business models Growth in a stagnant economy will require commitments to deep meaningful and renewable relationships Innovative marketing strategies built around media content and distributed via platforms that are relevant to their audiences can reverse the notion that a marketer39s brand value is being diminished by search engines Inspired management with the runway to introduce new business models can demonstrate that reduced media company revenues do not necessarily mean reduced profits I recently read that railroad company stocks are outperforming the SampampP 500 Traditional media should not be dismissed simply because technology is empowering new cheaper connections to consumers Shareholders equityowners and VCs should embrace an ROI model that values longterm commitments brand equity and innovation There is an inherent danger when investors base success exclusively on 1 quarterly returns 2 cost cutting tactics and a quick resale or 3 a risk management model that demands a 10 to 20 time multiple on investments within a threetofive year window As the economy continues its downward slide pressures for shortterm financial returns will intensify Investors will demand costcutting VCs will seek exits from underperforming assets There is a danger that investors will suck media companies dry and then release them as if they are corporate pollutants for others to clean up As competition and pressures mount for advertising and mediadependent companies there are only two solutions to further commoditize and be the lowcost provider or shift to a longerterm perspective that builds brand equity and relationships designed to generate profits when the economy and business rebound in 2011 and beyond

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In Media and Advertising, the Investor Is King and This Emperor Has No Clothes. Jack Myers Think Tank.

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