Friday, April 14

Distributed Media: Where is the payback?

Guy Kawasaki in a recent interview said that he wouldn't invest in businesses reliant on Google Adwords revenues. Quite right. This prompted me to think about the NEW advertising market in general.

The advertising model is purported to be the saviour/future of so many online start-ups and more established brands right now. But how long can this last? With media distribution comes complexity for advertisers and media owners:

  • Multiple devices (TV, PC, Mobile, PDA, Mobile Consoles, In-Cars)
  • Complex day-part programming (fragmentation of consumer consumption behaviours)
  • Geo-Local (By country, town, neighbourhood)
  • Irrelevance of Geo-Local (Globalisation driving cross-border communities irrelevant of country i.e. Gamers)
  • Free media (Unwillingness to pay for digital media particularly news)
  • Personalisation (From RSS to mash-ups, open APIs)

    All this complexity presents challenges for established media brands to reshape and realign. So many bloggers are discussing how such brands that carry high cost structures can keep pace with changing consumer consumption? In many cases they don't have to, at least not yet. Because right now, the mass market isn't quite there. Reading news on mobiles, booking hotels from your car, ipTV in the centre of the home. They're all embryonic, for now.

    So there is time for brands to realign. News Corporation, with its string of acquisitions this last 18 months, is making these bold steps. The steps to move from being a "flat", two-dimensional provider of (1)content and (2)advertising. To becoming a multi-dimension provider of (1)content, (3)advertising, (3)customised & personal & relevant on many devices.

    Through these multi-dimensions comes problems for advertisers and media owners. What we know as advertising now (page, banners, text, sponsorship) may not be so easy to "pigeon hole" in years to come. Trying to force banner ads onto mobile devices is, frankly, low-impact, intrusive and not the best use of the medium. But advertorial (be that Video, Podcast, Text) may be a better answer. We're going to have to cope with a 'marketing mix' with complexity like never before.

    In fact, the term "media owner" as we know it could be consigned to the history books, if distributed media consumption pushes the power to "interface owner" rather than content producers. At this point the advertising and control of the audience moves away from producers to interface owners (the new media owners). This happened a long-time ago on TV, where TV stations began buying content over producing their own. The TV station is the interface and the advertising owner.

    Compare this to Newspapers/Magazines. They are both the interface, producers and advertising owners. Radio stations, on the whole, are both the interface, producers and advertising owners.

    For TV, Radio, Newsprint - the interface has begun to move. In digital the interface can't be so easily controlled. In fact, the controllers are a new breed - mobile operators and pure play internet companies. But unlike early TV and Radio, instead of producing content, they're taking it free and paid for from producers.

    The interface owner will continue to control the advertising model...unless we invent a new model.

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