Media Companies Challenged to Identify Revenue-Generating Strategies- JackMyers Think Tank

Today even as both large media corporations and emerging entrepreneurial enterprises are challenged to identify revenuegenerating strategies that can achieve aggressive investor demands and lipservice is paid to the demands of changing market conditions most executives remain committed to outdated and dangerous massmediadependent economic models Media companies today even the largest digital media companies are in danger of following the railroad industry model and becoming Industrial Age mass distribution vehicles rather than Relationship Ageamp8482 interactive brand and human connectorsDigital media enable ubiquitous access to TV programs that were historically available on a limited basis at a scheduled time on a single channel But even with content now available 247 365 daysayear the fundamental business models remain locked into very traditional patterns as witnessed by the surprisingly traditional Upfront network TV advertising buying and selling season that opens today TV and advertising agency executives are accustomed to holding on for dear life to oldschool business relationships They celebrate small shifts in strategies and issue press releases almost daily that focus on small steps toward innovation such as branded entertainment while clinging to organizational structures that reward consistency continuity and even failure I have been studying relationships among media companies marketers and agencies for three decades For most of these years I39ve been pointing to the inevitable shift in relationships away from supplydemand market forces that drive commoditized pricing pressures In my 1997 research study Media 2005 Connecting to the 21st Century I wrote quotThe challenge for media companies and for marketers is to understand the new realities of the television marketplace Erosion is not simply a matter of shifting realities The market is totally and irrevocably altered with completely new realities replacing the traditional mass media mentality Media buyers and media sellers are coping with a market of more than 250 Nielsen recognized networks competing for audiences and every viewer forming individualized viewing patterns The challenge is to restructure strategies to complement the restructured marketquotThe message was generally ignored as managers focused on daytoday realities and shortterm economic pressures rather than longterm possibilities Still today that same shortterm focus remains a dominant reality in the media industryVisit the advertising sales organizations within the top 200 media companies in the US including television print online outofhome and radio and you will discover virtually interchangeable structures core messages research measures and strategic priorities In 1997 74 percent of 320 major national marketers I interviewed for my Media 2005 report said cost efficiency was their primary consideration in the advertising buying and planning decisionmaking process Only 26 percent said innovative marketing opportunities and returnoninvestment were the key factors Those same marketers predicted that by 2005 the dynamic would flip with only 43 percent of advertising purchase decisions based on cost efficiency and 57 percent based on ROI and valuebased opportunities Further they projected that cost efficiency would be the primary force for only 26 percent of advertising purchases by 2015But in 2008 I estimate more than 70 percent of all advertising purchases remain dependent on cost negotiations and that an overwhelming percentage of advertising sales executives are performing the same fundamental tasks they performed in 1997 sometimes with the added but secondary responsibility of layering in multiple media and ideadriven relationship building The industry talks a lot about the need for building ROI based marketing partnerships but these remain a microcosm of the business Even online media companies have sales organizations that mirror those of broadcast and cable networks with primary focus on agency media buyers and pricing negotiation Ideas and innovation are part of the equation but they represent only a fraction of the businessIn 1997 49 percent of 320 marketing executives from major national advertisers said quotcompanies such as mine will seek to build longerterm more marketing oriented relationships with media companies with less emphasis on pricingbased media decisionsquot Thirtythree percent answered quotnoquot and 18 percent said they didn39t know Sixtyeight percent of these executives said quotintegration of direct response sales promotion and advertising is a positive trend and I will place greater value on media opportunities that integrate them and organizations that can coordinate and service themquot Only 18 percent responded quotnoquotHere we are more than a decade later with marketers agencies and media sellers voicing the same beliefs and futurelooking expectations Yet the industry remains locked in supplydemand business models that drive toward commoditization with pricing negotiations as the primary focus of relationships If you disagree assess what percent of your sales organization is devoted to quotnegotiation based on audience delivery and pricing modelsquot vsamp160quotorganizational commitment to custom marketing platforms and longterm strategic relationships that reward your brand value and connect your brand to your partners39 brandsquot Agencies and marketers can make similar assessments of their actual financial and organizational commitments to determine where they are on the relationship spectrumOn the surface it appears progress is being made toward the overlyambitious hopes and expectations of marketers in 1997 and that media companies are responding to the changing marketplace realities But the industry cannot afford to wait another ten years or even five to ambitiously move toward restructuring organizational priorities and to shift the emphasis away from a traditional and increasingly outdated pricecentric model While daytoday business realities make this seem unrealistic and naamp239ve rapid restructuring of sales organization structures without losing marketplace presence and revenues is not only possible it is an imperative for companies that hope to grow in the digital ageIn my 1997 study I wrote quotThe younger the age group the less loyalty they have to traditional broadcasters The television season audience quotflowquot and network exclusivity are outdated concepts They are vestiges of 30 yearold network programming strategies that are no longer relevant and that have become destructive to the broadcast network television business To remain competitive networks must develop innovative yearlong and multinetwork original programming strategies They must adapt to the reality that every halfhour every night every program has its own set of coordinates on the media mapquot That was written before Google before TiVo before YouTube It was written years before Fox and now NBC introduced yearlong programming development strategies But even now as networks talk about embracing these ideas as if they are radically creative and innovative they remain locked into the traditions that have drained viewers to more accommodating and friendly environments Sure the top programs continue to perform well but audience erosion is a never ending truth and new models must be quickly developed before the economics of the media business collapseFor more information on JackMyers Media Business Services and Future of Media and Advertising Advisory contact Jack Myers at jmjackmyerscom quotRelationship Agequot is a trademark for JackMyers research reports and Relationship Engine services

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Media Companies Challenged to Identify Revenue-Generating Strategies- JackMyers Think Tank

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