Post No. 3
OK, so now you understand a little about filtering (see previous blog). But how does that translate into Unlucky Reasons for Mainstream Media Freakout #2 and #3? Just a reminder - here they are:
#2. Users are moving to digital quickly - but ad dollars aren't.
#3. Digital users are actively, aggressively looking for authentic content. They become dissatisfied when its not there.
First – why in the world are ad dollars not moving to the web fast enough to keep mainstream regional media happy? After all, they own the most popular local web sites in just about any region in the US. In Detroit, millions and millions of unique visitors each month, and millions of page views each day! What’s the problem here?
Don’t get me wrong – ad dollars on the internet continue to grow every year locally, regionally, and nationally, at a significant pace. But when you look closely at the kind of ad dollars involved in placing major marketing ad schedules on local TV stations and daily papers – and then compare what the going rate is for banner ads on their web sites, the profitability of web ads for the advertising industry is not significant enough to sustain the expected year to year growth the media properties have come to expect.
You can look at this any of three ways. Either 1) the cost of web ads have been an absolute bargain and should really be much higher to be aligned with the marketplace; 2) television and daily newspaper ads have been ridiculously overpriced compared to the value they offer; or 3) web ad prices are about right because the cost of production and distribution of web content is much, much less than for the broadcast and newspaper counterparts.
I happen to lean toward the third option. But that’s probably of little comfort to terrestrial regional broadcasters and daily newspapers who are trying to transition to web-based economic models while holding on to their still profitable traditional TV stations and pulp paper machines.
The problem is that those Big Media have shareholders. Most are publicly held. They’re expected to reach gross profit and revenue goals year to year. And generally those profits and revenue goals are expected to rise or get greater in each succeeding fiscal year.
So there’s the conundrum. There’s the cash squeeze. Audience and readership is trending to their web sites. The ad dollars going to their web sites is dwarfed by what they charge for ads in their flagship high-overhead traditional media operations.
But that's just a piece of the problem - which leads to Unlucky Freakout Reason #3:
3. Digital users are actively, aggressively looking for authentic content. They become dissatisfied when its not there.
The operative word, as I said in an earlier blog, is “looking” for authentic content. Remember the song 100 Channels and Nothing On? Back in the day, everyone laughed knowingly at the song’s premise. We laughed because we had days where that was true. But we also laughed because it seemed like lunacy at some level – just a ridiculously unlikely yet inexplicably common circumstance.
Flash forward to today. It’s unlikely that a laughably credible song like Ten Billion Channels and Nothing On would be a hit, because there's no truth to it.
There’s a big difference between watching and looking. On traditional live TV, we watch. Sure, we browse through a few (hundred) channels at times – but ultimately we usually make a decision to watch something. And then what do we do? We wait for whatever it is to come to us (including ads).
But the DNA of a web or Video on Demand user is different – way different. They’re actively, voraciously looking for content. They’ll make sometimes scores of content and site choices in a relatively short period of time. Because they’re not passive users, they don’t look for things that don’t appeal to their aggressive appetite for content discovery. And since they know they have a truly unlimited range of content options, they never settle for less than that which satisfied in the short term.
And guess what generally doesn’t appeal to that appetite for content on the web? Advertising that does not meet their interesting and aggressive content criteria.
Sure, there are notable successes online. Mortgages. Insurance. Certain kinds of retail. Remember the question isn’t “Do I hate advertising”. The question is, “Does advertising involve authentic, constantly changing, provocative content?” If the answer is “no”, the advertiser loses in an active medium like the internet.
More on my 7 Unlucky Reasons for Mainstream Media Freakout next time….