The problems for the media industry finding sustainable business models may very well be with the point of view, from where most media companies are trying to solve the problem. In my opinion this problem is a huge challenge also for the marketing/ advertizing business.
Media companies keep asking: “How to monetize on our content?” That is the wrong question.
Content is an expense, not an income. Editorial (or for that matter user generated) content and commercial content are expenditures. It cost time, resources and money to produce.
Lack of innovation in the business of advertizing and marketing?
The advertizing and marketing business have been fortunate enough working in close relationship with the media industry for decades, without a need for innovation for years. Still the majority of activity and commercial approach on-line seems like a “plain” adoption of print. But we have seen that the business is challenged from various angles:
Nike has implemented a GSM chip in their shoes, registering location, running speed and so forth. This combined with an “app” let people get the data of their jogging pattern and enabled them to share this with co-joggers on a community portal called Nike+(2009).
Ford’s social media strategy is surely shifting from traditional advertizing to make use of social media and monitoring behavior “You need to listen, see how they behave and act similarly” (Scott Monty (Head of Social Media)
Musicnodes is a Norwegian start-up that offers contextual placed music for purchase directly (micro payment). This benefit the artist (higher income per sale), the media where it is displayed (income sharing’s for transactions) and the customer, because they can fetch the music they want, in a freemium/premium model by choice.
All three examples threaten traditional revenues from banner ads. All three examples are mostly driven outside of the traditional marketing and advertisement business.
“Don’t try to bend the spoon. Rather imagine there is no spoon!”
With a perspective where the real value is not in the product, but in benefits for users (and brands) gives media (and advertizement) companies an opportunity to rethink what their offer really is. What added value does one provide?
Furthermore it’s worthwhile to (again) ask the board: “What is the purpose of our business?” – Because: “… it’s not profit. Profit is the result of why this company is in business.” (Simon Sinek)
A purpose for a media company could rather be: “To improve the population’s capability to be an active part of democracy, by providing information and knowledge” For the advertisement business it could be: “solve customer problems, when they have them, where they are and in the most convenient way possible”
In other words: A business that improves people’s ability to take part in the public discourse for media companies, and ease the living for people for the advertizing business. With such a renewed perspective media companies and advertisers will have a whole new landscape of how to reach their goals. One can become a content store, an e-publisher or an online (and offline) knowledge centre, in addition to traditional “media activities”. And if media companies start doing their bit, where would that leave the advertising business, if they don’t start re- thinking?
The marketing and advertisement business will have to get in front of the development we see. In short the whole value chains for the media industry are changing. This leaves advertisers no other alternatives than to take control over the situation and increase their product/ service line far beyond what they used to do.
Cultivate knowledge about your users!
Media companies and the marketing and advertizing business should look closer at what values they are able to create from cultivating knowledge about their users. If so, media companies will be enabled to provide contextual, specific, targeted editorial products to their (singular) users/ commercial customers (brands), in all the channels available: Broadcast, print, web, “pads” and mobile phones. The marketing and advertizing business would get the opportunity to implement a whole new way of doing their business.
This is one way of making use of the term: “Big data“. The more knowledge there is about customers, the more one can monetize on that knowledge.
The key question is: What is the knowledge about our users profile, behavior, actions and location worth, -and for whom? The answers will have to go far beyond content presentation, subscription and advertising models only. “Social media” activities and believing that the “mobile revolution” will be the “savior” is at best a naive approach.
Both the media industry and the marketing/advertising business have to totally change their perspective from where the real values are made and how to monetize on knowledge about their users, far beyond traditional segmentation. They need to know what their customers’ needs and desires are (even before the customers know themselves), and to be able to deliver the answers in the channel/ device at the right time to the right person. The mass market is gone forever. We now have to be able to deliver superb services and products that solve individual, personal felt problems instantly. Tomorrows media companies have to become more than “digital news / entertainment portals? The marketing and advertisement companies that don’t have the answers will have a hard time surviving the next decade.
Who do you believe that will be the ones”owning” the value of customer insight the next decade? The media industry or the advertisement industry?