Originally published May 2013
"We've learned that the best way to embrace change is to ignore it until forced to adapt."
During the past several weeks, and especially during the recent Digital Video Newfronts Week hosted by the IAB, I've been struck by the word "Metamorphosis." Metamorphosis is the single most important concept to understand and drill into the strategic planning of media, advertising, marketing and entertainment businesses.
Financial management… talent development… sales and marketing… IT and operations… content creation and distribution… all need to confront the looming metamorphosis of their responsibilities that will occur in the next decade.
Metamorphosis, simplified, is a biological process involving a conspicuous and relatively abrupt change through cell growth and differentiation, and is usually accompanied by a change of behavior. It's the caterpillar turning into a butterfly… or moth.
"Change" is not a strong enough word to describe the differences between our business today and our business a decade from now. We are moving beyond transformation… beyond transition… beyond evolution... beyond change. We are an industry that is shedding its skin and preparing to give birth to a completely new and different form of life. We can only imagine the future.
The Upfront presentation season has certainly transformed and evolved, stretching from March 2 through mid-May with almost one hundred companies hosting events that range from individual company breakfasts to multi-million dollar extravaganzas for nearly 3,000 guests. But the behavior of media buyers and sellers has remained fundamentally unchanged over the past several decades. Their behavior in the not too distant future will not only change, it will undergo a metamorphosis. Why? In 2013, broadcast and cable networks will capture between $3.0 and $3.5 billion in digital video ad revenues. Between 2013 and 2020, their combined digital video ad revenues will increase an average 25% annually, growing to between $11.0 and $12.0 billion in 2020. The video ad revenues of online originated and mobile sites will grow from $2.5 billion this year to more than $30 billion in 2020.* Advanced business models will not be sufficient – completely new models will emerge.
In his recent MediaBizBloggers commentary, former MTV Networks' chief revenue officer Hank Close comments,
"I continue to be struck by the divide between the TV and digital worlds as regards programmatic buying. When I think of TV networks' stance, I'm reminded of those awful high school dances and the brave few moving their feet, outnumbered by the queue with their backs against the wall, waiting for a better moment that never arrives. It seems clear that marketers will continue to invest more in new data sets and RTB. As video investment gains fluidity across all screens, it will pay to be a TV first mover/learner on the dance floor."
Every leading media agency is investing significantly in programmatic and automated tools for real time bidding and media inventory management. Within a few short years, such powerful analytic tools will be available that these programmatic/automated programs will deliver an advanced decision-making resource that far surpasses anything available today. Programmatic buying will quickly dominate the media marketplace; it will expand to all media options; and it will be a catalyst for a true industry metamorphosis.
Answer these simple questions: what happens to the video business when Nielsen ratings and audience data represents less than 10% (or even 50%) of agencies' video media purchase decision funnel? How does the other 90% (or 50%) inform decisions? What happens to the current media planning process? What happens to media cost and ROI considerations? What happens to programming/content development, distribution and management? What happens to creative, promotion, marketing, advertising, search, social and every single micro-component part of the investment decisions made by agencies and their clients? What happens to the silos within your organization? What happens to relationships with your clients and vendors? What happens to your talent requirements? What happens to your technology support needs? What happens to your business? Metamorphosis!
Talent needs and availability are also in the early stages of a dramatic metamorphosis. My book Hooked Up: A New Generation's Surprising Take on Sex, Politics and Saving the World accurately forecast the cultural shifts led by the first generation to grow up with the Internet and mobile as embedded realities in their lives. Two classes of Internet Natives have now graduated college. While my research uncovered truths about this generation that are now becoming apparent, most executives in the media and advertising business have failed to grasp the behavioral metamorphosis being led by this Hooked Up generation. As they dominate the consumer marketplace -- which they will within a decade – all businesses will need to undergo their own metamorphosis to catch up and communicate with them.
Among all the companies presenting to advertisers during the Newfront and early Upfront season, only Google and You Tube addressed the realities about to confront their clients and partners. Chairman Eric Schmidt dwelled on these realities in his lengthy opening remarks. He referred to this emerging generation as the "C" generation, for Connected. "Video is -- and will be -- the lifeblood of communication. That connection, on a truly global scale, is our future. And that future is already here."
"Connected" does not adequately portray the behavioral differentiation of the Hooked Up Gen. We are all connected. This is a generation of butterflies emerging into a world in which in which they have total mastery over an ecosystem that will progressively confound the rest of us . As Schmidt explained, "Video is becoming a globally shared experience, a universal language, a virtual place to gather and share and laugh and love, no matter who you are, or where you are. The screens might have shrunk, but their power to bring people together has grown. It's not passive; it's participatory. They are not just viewing content; they are creating it, and sharing it with the world. Think about this, it's pretty simple: Anyone can create something that everyone can watch. It sounds simple, but it's actually a profound change. No one understands this more than the people who have grown up knowing nothing but the web."
Ask this simple question: Are you preparing for the future by hiring Internet Natives and empowering them with decision-making authority? Are you placing them in positions that capitalize on their inherent understanding of online and mobile connectivity? Are you embracing them as your mentors and recognizing that they will catapult quickly into senior executive positions? What happens to your business when your clients and consumers depend on Internet Natives for their business growth? Generational metamorphosis.
Futurist Ray Kurzweil, author of The Singularity is Near, and other futurists believe that in just the next decade we could see the equivalent of the past 100 years of technological change. Again, "change" does not do justice to the vision of another 100 years of technological advances in media – all packed into the next decade. In the next few years a cornucopia of mind-boggling advances will alter our lives.
Get ready for the media metamorphosis that technology is about to unleash, starting with the public release of Google Glass and continuing at an accelerating rate into the foreseeable future. The Internet of Things; voice and motion detection and instant translation; infinitely energized always-on devices that are embedded under our skin; three-dimensional projections that incorporate all five senses; non-stop media and marketing interaction controlled completely by the consumer. This list includes only what already exists or is in late stages of development. Technological metamorphosis.
Many companies and executives have progressed from baby steps to giant steps in adapting to the Internet and technological advances. While keeping an open mind and accepting the changes happening all around us, the media and advertising business has thrived by adhering to models that are mostly unchanged since the early years of television. Our industry has known constant change throughout its history and we've learned that the best way to embrace change is to ignore it until forced to adapt – and even then to adapt as slowly as possible. Change has adapted to the media industry's traditions rather than the industry adapting to change.
Many of you reading this will continue along the path of tried-and-true, safe-and-secure, new-but-tested. And because this report reaches an audience of mostly senior executives, many of you will end your careers reasonably happy and content that you have worked hard, adjusted to change, and been well compensated.
But every company and professional who will be part of this community beyond 2020 or 2025 should be, in the words of Monty Python, preparing for something completely new. Prepare to shed your skin and emerge into a new ecosystem. Prepare for metamorphosis.
*Source: Jack Myers Media Business Report, 2013 Media and Marketing Economic Data and Forecast 2010-2020. www.myersbiz.net