Media Old World - Media New World

Lets have some stats on the Media company share prices since January 2006

GCap: -30.0%
Trinity: Mirror -20.0%
Emap: -16.7%
Johnston Press: -12.6%
ITV: -7.0%

The migration of paid for ads and classifieds to the digital domain is well under way, it just beats me that this is proclaimed as such big news. Tomi and I in Communities Dominate Brands predicted this back in early 2005.

The City doesn't like what it's looking at. advertising slump and the web revolution has left fund managers spooked about media stocks explores the reality that fund managers are becoming increasingly concerned with traditional media stocks.

What is amazing however is that preparation for this new world has been in some quarters ahem... rather poor. As media starts to flow across platforms and as we start to curate our own consumption like never before this poses real issues for commercial media and broadcasters.

For whom the Bell Tolls....

We are not a media company..... says Marissa Mayer of google

Google's plans to become a "one-stop shop" for advertisers may cause more alarm among media executives. With 44% of the US search market, Google is already placing ads in US newspapers and radio stations as well as on its own site. This is all to satisfy demand from its hundreds of thousands of advertisers, according to Mayer. "We haven't done tests of TV as of yet," she says, "but it is certainly something that our advertisers have suggested they would really like. They want us to be a one-stop shop for them." Doesn't that make Google, a seven-year-old firm valued at $81bn (£43bn), more of a media company? "We're not a media company," she says. "We're a technology company. If you look at why companies are excited about advertising with us, it's the targeting and placement technology we have."

But Marissa Search and contextual search is the new classifieds - thats what the traditional media can't get their heads round. Or have failed to try ultimately at their expense. And TV segmentation and demographics is sooooooo over.

And lets not overlook the mobile, mobile internet element here New business models more disruption

Perhaps the most sombre Edinburgh Festival for years as a nervous television elite gazed into the future

Britain's television industry was forced to take a long, hard look at itself at its annual jamboree in Edinburgh last weekend. In a broadband world, where people under 55 spend as much time if not more online than watching television, just what is the future for traditional linear broadcasters such as the BBC, ITV, Channel 4, Five and Sky?

It's a question that's been lent more urgency by a cyclical downturn in advertising, which has coincided with the seismic structural shift in the way people consume media.

Yep we know that Darwinism rudely arrives in our media ecology and Dumb and Dumber

Back to Miss Meyer

Consider an iPod. At present you can store up to 10,000 songs on an iPod. In 2012 you could carry an entire year's worth of video on it. In 2013 you could store all commercial music ever made on it. In 2019, you would be able to store 85 years' worth of video on it. And by 2030, you'll have all the content ever created in the palm of your hand.

But the question is – What are you going to consume? Well the content you want - which means that people will be into programmes like Lost or the Soprano's or Coronation Street, However - my prediction is that we will start to curate our consumption. If say I were really into horses, either as a hobby or profesionally - what technology could deliver would be a platform that could deliver an experience and value to a particular community which is focused on one topic.

The porn industry has been doing it for years. Shoe fetishists will not be interested in anything else - well probably.

And communities form around passions and interests - the mixture of good content, persistent conversations within the community, search and contextual advertising - trade within the community creates a new socio-economic model...there is of course here the real opportunity propsed in the Telegraphh article that archive starts to become far more valuable and can be monetised when there is a clear and targeted audience which will self-select themsleves for PULL on the content that is of most value to them. Recent statistics from the government statistician, the Office for National Statistics, show that 84% of adults who used the web in the past three months searched for information about goods and services.

Why is YouTube and myspace so successful? The gentle musings of Peter, a British widower, have racked up close to a million views on YouTube. Peter's fans aren't looking for stunning sound and image quality; they want an entirely different kind of entertainment.

Sensing this new tolerance for lo-fi content among its users, Google Video has begun to offer US residents sport, comedy and science fiction from the TV networks. YouTube has hooked up with MTV under an informal agreement. Quoted from TV? It's so over

Miss Meyer again

Apple's iTunes is one of a series of online businesses that have filled a void that traditional media failed to spot, she argued. Others, such as the community website phenomenon MySpace, now owned by Rupert Murdoch's News Corporation, have created "a huge opportunity for self-expression, with people posting blogs every day and uploading videos of themselves".

MySpace has 2 billion users a day and Ms Meyer predicted it is on track to be the No1 site in the world in 18 months. Small wonder Google has just signed a huge search deal with the site.

As for how broadcasters might make money from putting their content on sites such as Google Video and MySpace, Ms Meyer claims the possibilities are legion. She speaks of user generated commercials, paid-for clips, sponsorships, revenue shares and "the coup de grace" - text links. "These are where you watch a video and a text link can show where to buy the clothes or gadgets being shown."

In Net has attracted the eyeballs, now it waits for the cash The point is made that advertisers are really way behind in understanding and therefore making the most of internet useage.

What scares me however is that we are just going to have more interruptive pop ups. Just think if 50% of TV ad revenues went online - what would that experience look like.

Advertising has to become the content and the content becomes the advertising, the advertising becomes a part of the conversation and the conversation is part of the advertising. The more this happens the more accurate metrics will be.

Some still claw back the belief that there are intangible benefits to advertising - like errrrr? But come on how many ads do we see on TV that are in fact any good at all? And is....ANYONE WATCHING THEM?

McKinsey & Co. is telling a host of major marketers that by 2010, traditional TV advertising will be one-third as effective as it was in 1990. The McKinsey & Co.'s new media proliferation study data was prepared for, and delivered to, its Fortune 500 clients.

Trinity Mirror yesterday announced a root-and-branch review which could see the media group's newspapers, including the Daily Mirror, put up for sale.

Yet 60% of marketing $$$ spent in the US still accounts of TV advertising.

Yet Jim Stengel CMO of P&G said TV advertising stopped working circe 1987.... Go figure.

Jeff Jarvis at Buzz Machine mentions the MicKinsey report

According to the report, real ad spending on prime-time broadcast TV has increased over last decade by about 40% even as viewers have dropped almost 50%. Paying more for less translates into a much higher cost-per-viewer-reached — a trend also true in radio and print.

And check this out – Myspace has a higher Nielsen rating than MTV. Ouch.

Back to Jeff Jarvis

Thank a combination of older technologies such as cable, PC computers, cellphones, CD players, VCRs, game consoles and the internet, along with more recent ones — PDAs, broadband Internet, digital cable, home wireless networks, MP3 players, DVRs and VOD– for those changes. And teens foretell an even more radical shift in future media consumption, the report points out: They spend less than half as much time watching TV as typical adults do. Teens also spend 600% more time online, surfing the web.

According to Forrester Research’s most recent North American Consumer Technology Adoption Study, people ages 18 to 26 spend more time online than watching TV and are adopting new technology faster than any other generation. Because of that, they tend to be more receptive to blog, podcast and mobile-web ads.

Now, if we go back to ITV a channel now described as "unwatchable" and a "bargain basement" by none other than Andy Harris a top production executive (quoted form the Financial Times 26 August 2006) Emmerdale Farm, Celebrity (D) Love Island do not have the cutting edge of The Soprano's or even Desperate Housewives. The notion that can reach an entire nation and bring in the millions is over.

But good content will always be watched its simply a question as to how one delivers that content and what role that content is playing within a financial framework.

Even in one community site, there could be many business models at work, revenue shares, splits, direct charge - depending on how that content is being consumed. But there needs to be transparency and authenticity.

Lets take Dogster mentioned in the Financial Times - Wednesday August 30th. Launched in January 2004 – which enables its user to create free web pages to share photos and stories about their doggy friends. The site has an inventory of 10 million opaid ads per month and $50 a pop... calculators out please

Apparently ITV2 will broadcast Entourage, an HBO drama series sponsored by Elizabeth Arden to promote Britney Spears's fragarence. Hmmmm - some people just don't get it.

Comments

[Chetan Sharma]

Great post Alan. Could you please expand on the mobile element? How do you see it evolving in the next couple of years. Thanks

[Tomi T Ahonen]

Hi Chetan

Alan is rushing around the next few days so I'll reply to this for us.

First, where the internet is the sixth mass media and now the first "killer programming concepts" if you will, like games shows, talk shows and reality TV (fifth mass media) were new programming concepts on TV not possible on the previous four mass media (print, recordings, cinema and radio). So first the internet tried to copy existing formats (newspaper front pages for example). But with search and community sites the internet is now discovering its new opportunities. You can't do a google search inside the Washington Post print edition or set up a myspace in the cinema (only using the movie projection media without a web connection or mobile phones etc). There are many other powerful new media formats appearing in the internet space - consider the huge honest real world economies inside massively multiplayer online games (MMOGs). These will TOTALLY demolish the previous media vehicles and push cinema, radio, TV etc to ever more niche advertising opportunities. The time of mass media advertising on the first five media is TOTALLY OVER.

But to your question, what of mobile?

The mobile phone is the newest mass media, the seventh. It is so much in its baby stage, that its new own concepts have yet to be invented. There are almost no services on mobile phones that are not copies or variants of those on the web or TV, radio, recordings, print etc. So mobile has not yet discovered itself. But make no mistake. There are three times as many phone users than PC users. There are more than twice as many users of SMS text messaging than users of any other messaging including e-mail and IM Instant Messaging. Phones are replaced twice as fast as PCs and cost much less. Heavily addicted web users visit the web every day. But EVERY phone user carries the phone within arm's reach every day everywhere - 60% of phone users take the phone to bed with them.

So - first point. For all media owners, they need to understand the power of the mobile phone. Imagine Hollywood if it did not understand TV and tried to ignore it? Or if newspapers had ignored the internet? They'd be out of business today (in the Western world). Secondly, the concepts that work on print, TV, internet - DO NOT MAKE the killer apps for mobile, just like they didn't for the internet. We have to discover the power of the newest mass media.

But how relevant is it? If you "like" or "admire" or "respect" Google or Skype or Myspace or Worlds of Warcraft or Ebay or Amazon - the opportunities in mobile will create MUCH MUCH more powerful global giants than these.

MUCH MORE POWERFUL THAN GOOGLE.

That is waiting on the phone, to be launched by brave new companies. Either existing brands going into mobile like Microsoft went into the internet or more likely totally new entrants. When Google launched there were dozens of established search companies on the web. Why will these be more powerful? Because the content industry on the mobile phone is INHERENTLY MORE SOUND economically.

Every mobile phone user knows that all content on the phone is charged. Most content on the internet is expected to be free. The mobile phone services industry passed the 100 BILLION dollar mark last year (thats as big as the total global music industry plus the total worldwide revenues of hollywood movies including rentals, DVD sales etc; and the total global videogaming revnues, combined)

The first downloadable content on mobile phones was released only eight years ago this Autumn. Ringing tones in Finland in 1998. Ringing tones worldwide today are a 5 billion dollar business, and all recording artists release ringing tone variants of their hits. Ringing tones are calculated in the sales of songs when tabulating the hits on the charts around the world.

At the moment we have hundreds of companies around the world experimenting in the mobile media world to conceive of concepts. When they will appear - and the phone is so far superior to the web that this is inevitable - they will also introduce novel new advertising opportunities. The really big ideas - like Google's search ad words - are waiting to be discovered.

Before then, we have another very powerful engine driving innovation specifically in advertising towards mobile phones. The gulf between desirable content on mobile phones and the ability of (mostly young) users to pay for it. As phones get ever more powerful - beyond the first generation of 3G phones - and we now are seeing crystal-clear TV screens, full-screen internet screens etc on mobile phones - as well as the built-in 3 megapixel cameras, VHS quality videocams, bluetooth, SMS etc built-in (what an iPod or PDA or laptop for example does not match) - suddenly the videogaming, TV content, internet content etc becomes compelling on phones.

So suddenly a third of American youth - and 90% of South Korean youth - post pictures to online community sites direct from mobile phones. In trials from Helsinki to Oxford to now live mobile TV in South Korea - when people have broadcast digital TV on their mobile phone (not the lousy quality initial 3G TV, but the true broadcast digital TV to mobile phones) they use them in surprising ways. The majority of the use is AT HOME. The phone becomes the second TV at home - as it has the built-in digital set-top box. If dad is watching football on TV, the kids can watch Jackass or Spongebob on MTV on the phone. Half of the viewing on TV on the phone (when its broadcast TV) runs over 25 minutes at a time !

The tool is becoming mature. Now the media need to mature with it. Suddenly the content is very compelling. Music for example. Twice as many people already consume music on phones than on iPods - and new musicphones outsell iPods at more than six to one. CyWorld in South Korea sells 6 million songs per month as BACKGROUND MUSIC for its virtual online world on mobile and web. The new media formats are now appearing and they are rich opportunities for targetted and powerful advertising.

But its not that idiotic idea of sending unsolicited spam based on your location as you approach a shopping mall. No. That idea is dead. Advertising on mobile will be huge but it needs to be totally reinvented for this media. Just like still images of magazine ads or small-print classified ads from newspapers did not succeed on TV.

And here the most revealing number. 44% of Japanese mobile phone users already receive advertising on their phones.

ONE FINAL THOUGHT

Its not "ONLY MOBILE". Like we write in the book about the new Generation-C, the Community Generation, ie the youth of today. Like we just heard yesterday at the Mobile Youth Services Forum here in London that I chaired, the youth are inherently multichannel. Your marketing communications - and advertising projects - need to be designed to function in a multichannel environment. Online and mobile (and often in-game, TV, radio, etc)

Chetan, we'll keep on returning to these themese here at this site as you know. This original blog posting by Alan is one of his longer thought pieces that has pieces he's been pondering over in his head for a while now. We'll keep on developing these thoughts and as the news give us good "fodder" when the big media giants stumble along in this space, sometimes with success, more often making mistakes, we'll update the story and give more of our thoughts.

I hope this answers the mobile side for now.

Anyone else reading this - if you're interested specifically on the mobile side, you might want to read several other blogs here over the past year at our blogsite by Alan and me, but also worth reading are my columns around the mobile as the seventh mass media etc. Obviously if you have a research budget, rush to order our book Communities Dominate Brands and you'll get to read a book the vice chairman of advertising giant OgilvyOne, Rory Sutherland calls "invaluable" in predicting how power shifts in advertising; the vice president of Norway's TV2, John Ranelagh says it "identifies the significant issues" for the media industry; and the CEO of the world's largest internet content company, Cybird of Japan, Kazutomo Robert Hori says the book helps "undestand living in the converged world" and how business can survive in it. Or like Stephen C Jones, the Chief Marketing Officer of Coca Cola, who wrote our foreword, said, the book "will end up shaping our thinking" in how advertising and marketing will change into the future.

Thanks for writing Chetan!

Tomi :-)