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?
The traditionally very high barrier to entry has allowed print media companies to generate profits in the 20 and 30 point range. This on top of the high fixed and variable costs of presses, paper, ink and distribution make for very profitable organizations. The question I would ask isâ€¦
Are media companies willing to make smaller profits, due to a much more competitive and low cost environment?
If they are not, then their brands will die along with their outdated medium.
Coming from the position of a vertical ad network, I think there’s a lot of meat to this post. It is in fact a multi-faceted issue. The points and questions you bring up affect us as honest brokers between advertisers and publishers and as such our goals have shifted from being a direct sales hub towards providing knowledge and education in order to empower clients/publishers around us. We’ve only just started this behind the scenes but it’s now clear that we need a more public approach (via podcasting and blogging for example) to tell our stories from the frontlines. This is important towards creating some sort of consensus of what works, what doesn’t, and how to influence the decisionmakers.
It comes second nature to provide a reputable service but winning the day will take more than technology and solid ad inventory. It is our job to integrate advertisers correctly into this new paradigm, which frankly from a young entrepreneurs perspective *feels* ridiculous because there are so many very smart people out there–making a lot more money that I do–that I naively thought would have sorted this mess long ago. I suppose that I once understood the system as being forward thinking in terms of preparation and research (but not necessarily in terms of action). Should it not then be only a matter of time until everyone pulls the trigger? Come to find out that resistance to change is somewhat greater than I would have imagined at this point in history. I’m okay with that since it allows us more time to climb the ladder. That said, I find it somewhat disheartening that “trial and error” and “risk” are old buzzwords at this stage. Take your national 30-second spot to my door and I’ll give you a new audience and a month of exclusive, premium placements. The logic seems right but the reach isn’t yet for a media buyer to swap those dollars over to digital.
It’s not all bad news though. Progress is being made. In some way the opportunities and access that we share in the digital world is bound to blow the door wide open sooner than later (when all TVs are forced digital maybe?).
The fact that we’re still standing strong during these tough economic times is also a good sign towards future health of our collective industries.
Ahh Mitch. So true.
A coupe of thoughts from someone in the belly of the beast.
As an add-on to the major reasons traditional media companies have a hard time with new media:
– They focus much of their efforts on brand management instead of consumer engagement
– They have excelled in helping people LEARN where as digital media have to extend their content so people can DO and SHARE.
– They use traditional ROI models to justify investments.
– They use traditional partnership / acquisition / evaluation models.
– They have little patience in uncertain economic times.
– Their advertiser clients are asking them to become thought leaders for them in new media, and they don’t have the internal resources to help them.
– Speaking of resources, they are not branded as the place where digital media thought leaders flock to.
– Internal politics. Enough said.
How about adding these factors to the mix:
* Instead of stepping back and assessing their strengths, theyâ€™re focused on their weaknesses. Itâ€™s a bit like sliding toward a telephone poll on an icy roadâ€”if you keep looking at the poll, youâ€™ll hit it. But if you look away from the poll and towards where you want to go, youâ€™re more likely to correct the skid. Of course, it helps to know where you want to goâ€¦
* Instead of building on their strengths, theyâ€™re retreating from them. Why did readers/users/consumers come to traditional media in the past? Because they were authoritative, because they were edited, because they made readers feel smarter. They came for the content!!! So as belts have tightened, what are trad media doing? Cutting back on content and trying to replace it with crowdsourcing/user-generated/repurposed content. Should they be adding the best that new media has to offer? Yesâ€”but the key is â€œaddingâ€?â€”they should be adding it to a strong core of original, high-value, distinctive content. Instead, many are filling their sites with low-value content that isnâ€™t distinct and then wondering why their site isnâ€™t sticky.
* Instead of fostering innovation and encouraging staff contributions, theyâ€™ve created cultures of corporate anorexiaâ€”not enough staff to get the job done, ever-increasing wish lists, little understanding of how good content is created, and a hamster wheel in every pod. Run, little rodent, run! Iâ€™d love to think that a company or two will actually take your advice and put some smart employees in a room with instructions to tinker and experiment. I fear it will only happen if a janitor accidentally locks staffers in one of the â€œwe donâ€™t need this floor anymoreâ€? offices.
And in the interests of creating the most absurd analogy of the day: Instead of building a relationship with the gal they married 20 years ago, traditional media are staying up late at night drooling over that airbrushed, botoxed, brazilian-waxed porn star online and imagining that if only they could have her, they would magically no longer be (a) fat (b) balding and (c) a bit boring. While itâ€™s true that not that every marriage (a) is happy (b) should last, not every new media goo-ga is as hot as it looks at first either. Maybe if traditional media focused on improving themselves and their partnersâ€”building on their strengths, making changes where it makes sense, fostering innovation, creating a supportive and respectful and energized work environmentâ€”theyâ€™d figure out how to make their relationships last well into the future.
Hey Mitch – my comment quickly became an essay, so I’ve posted it on my blog, here: http://www.mikel.org/arch/2008/11/analog-dollars-for-digital-pennies.html.
On a more personal note, and to support my opinion, I don’t remember Hour ever being thicker than when yours and Jamie’s and Buffy’s work (and mine, occasionally) was presented alongside a really thriving news section that used to be good enough to break local news stories ahead of the dailies. I think Jamie’s doing a good job at getting more news in the paper than had been there for a while.
What frustrates me to no end is when I come across traditional media firms trying to reinvent themselves as new media, calling themselves leaders in new media despite all indications of the contrary.
Unfortunately, these firms are so high on themselves, falling back on their 20 years of this and that experience, that they think they’ve seen it all and any advice they’re off is wrong.
I think #6 is as powerful a reason as any. Yeah, the old guard doesn’t get it and let us count the ways.
But, the fact that they gave it away in the beginning is hard for them to overcome.
After declaring something has little value on its own, how can you now convince advertisers otherwise?
Answer (my opinion): compare the apples they know. Eyeballs and shelf-life.
Are 100,000 eyeballs worth less online than in print? Yes, the expenses are less, but the value should be the same or greater!?
Plus, digital eyeballs are more verifiable, interactive and can offer more immediate results.
It’s about teaching the sales staff how to tell the story well. Unfortunately, the sales staff still believes the old company line.
Some great thoughts. From my perspective, I have a couple of things to note
– Online is about real-time experimentation – this is a big contrast to the traditional media where major innovation is generally drawn out over a long period – this lead times enable a lot of behind the scenes refinement
– Perhaps because of low barriers to entry or lower audiences for specific properties/pages but there is currently less money in digital than traditional. This will change but it is a painful adjustment
– Ultimately, it is still a different platform. In the past, you didn’t really get radio companies extend into print, or magazines set up their own TV channel (OK, some have in recent years). It is hard to leave the comfort zone and embrace something different. It will take time to find the best complementary offering
I don’t understand why traditional media should embrace the new media. There are plenty of new media agencies. And it’s their business after all.
The real issue is that the advertisers are having a hard time understanding new media. They don’t see the advantages of the new media and continue to spending millions of dollars on interrupting people with meaningless ads.
The real issue is that advertisers that stick to the ol’ traditional media seem to get ever farther from understanding their customers.
I think this is one of the most important fears regarding new media: if we give customers the oportunity to speak back, what would they say about us?
Seth Godin just posted something on the same matter. The post is this one
It’s really interesting how this will end up…
For some reason, it didn’t publish the link, so here it goes:
I saw Seth’s post yesterday and was going to add the link as an update above, so thanks for taking the time to do it for me.
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