Op-Ed: Old Media Need Not Die
Last week saw the Tribune filing bankruptcy, the New York Times borrowing against its HQ, Detroit newspapers ending home delivery and an 18% decline in newspaper ad spend. Amidst all this chaos, I wrote an Op-Ed and submitted it to the Wall Street Journal. It was rejected. Enjoy.
Who Will Be The Next Tribune?
Small Changes Can Save Old Media Revenue
This week’s bankruptcy of Tribune Co may well be the first of several large media groups to fall. “Old media” companies have been focusing on the wrong questions and implementing the wrong strategies. The good news? There is still hope – and with a few small changes to how ad inventory is sold and executed, the industry can survive in an ever-changing world.
In new media circles it is considered passé to discuss old media’s advertising revenue woes, as if it were a foregone conclusion decided ages ago. Like most of our world’s current headlines it was one of those things that many people knew was coming but few attempted to address. Some now consider the Tribune to be the first real, hard-hitting casualty and a validation of these cocktail party narratives.
However, much of the commentary about the “freefall” of old media revenue is misguided. The primary reason for the decline of newspaper ad dollars is not the competition from blogs and web content or the bad habits of new generations. There still is demand for thought-provoking newspapers and great TV shows. As such, the ads placed against them maintain real, tangible value.
The real reason that revenue has shifted towards new media is that the internet provides an easier and better way for advertising to be bought and sold. Online advertisements aren’t magical or inherently superior to old media ads. They are prone to the same problems such as fatigue, conditioning, incorrect targeting, and faulty metrics. But online ads have less friction, are easier for buyers of any size to purchase and offer a wealth of other benefits that only the web provides.
Online advertising has exploded in part because it’s simply easier for both buyers and sellers to conduct their business. Old media overlooked this point as they scrambled to compete with web advertising as a medium – newspapers vs. blogs, TV vs. YouTube, classifieds vs. craigslist – when they should’ve been competing with, or at least copying, the processes and technology that facilitate online advertising. As Brian Wheelis, a SVP at the GSD&M ad agency, said: “If you think about the Web as cannibalizing, you’ve already given up and you’re not ready for it.”
For example, offering a primetime sitcom in HD and as an iPhone download is great for appealing to modern audiences. But if ad sales are still conducted by snail mail, is it any surprise that dollars are voting with their feet? That’s why even as newspapers move their content online, with new projects like the just-announced New York Times’ “Times Extra,” digital revenue still fell 3% in Q3 compared to the same period last year.
Jeff Zucker, the head of NBC Universal, said earlier this year that the media industry had to work so that “we do not end up trading analog dollars for digital pennies.” Pricing economics aside, this isn’t old media’s primary concern. You can’t change the fact that the atomization of content creates more inventory and shifts supply vs. demand. What’s important is building systems that can monetize through scale, similar to online search and display ads.
Perhaps a more appropriate rally call would have been “we should trade analog processes for digital dollars.”
Sure, the Tribune had debt issues and a convergence of factors forced the bankruptcy timing. But it wouldn’t have been in this situation if the revenue was there. To its credit, Tribune leaders at least began to understand the process problem and started to move inventory “into the cloud” with projects like a joint ad network, QuadrantONE. The Tribune just didn’t have enough time. How much do the others have?
Tough times like these are said to craft the best startups by forcing focus, ingenuity and passion. When a group of smart, talented people are stuck in a paper bag in a dark damp corner, they engineer their way out. They don’t play by the rules or abide by what the neighboring paper bag opines.
So far most of old media’s efforts to punch through their bags have been lackluster. However, there have been a few shining examples of progressive thinking and action, such as the online video joint venture Hulu.com – which was once referred to as ClownCo by some in the business.
Enter the silver lining. Given the cautionary tale of the Tribune, old media now has the capital they’ve been waiting for – the justified permission to take radical action and act like a nothing-to-lose startup. Over the last two months some Silicon Valley CEOs have used this same capital to trim the fat through layoffs and alter business models without looking like doomed dot-bombs. Media CEOs now have the same opportunity. Will they capitalize on it?
Start making inventory, whether it’s a radio commercial or quarter page print layout, just as accessible, frictionless, mixable and accountable as an online advertisement.
Keep the parts that are special, standardize the rest. For example there are some ad mediums that will never have the measurability or results-based pricing that online ads can deliver. But a search engine ad can never entertain you the way a well-done commercial can.
Focus first on accessibility. Identify and remove the barriers and frictions that make inventory less attractive than a web ad. Make it easier for buyers to find, purchase and execute inventory as part of larger 360-degree campaigns.
This is accomplished by moving ad inventory “into the cloud.” In other words, moving the inventory and processes behind it onto the web, allowing for connectivity and smoother transactions. Inventory doesn’t have to be put into commoditized marketplaces or conform to the rules of some ad network. Nor should old media build multimillion dollar proprietary solutions without fully addressing the issue of scale and interoperability.
Old media must turn to the web and the thought leaders behind it for answers, or they risk becoming the latest punch line at those new media cocktail parties – or worse, a bankruptcy headline.