If Seth Godin is right, the worlds of advertising, marketing, broadcasting, and publishing will fundamentally change.
For centuries, publishers and broadcasters have profited by controlling scarce channels for content distribution. Marketers and advertisers could reach consumers by ably utilizing that scarcity. These practices are as enduring and constant parts of publishers’, broadcasters’, marketers’, and advertisers’ world as compasses pointing north..
In his 1999 book, “Permission Marketing,” Godin notes decades ago, when consumers had access only to three or four TV channels, one or two daily newspapers, and some weekly or monthly magazines, it was relatively easy for advertisers and marketers to reach them and publishers to charge a profitable price for their content.
When only three or four TV channels were available, each with only 10 advertising minutes per hour, less than 1,000 one-minute commercials were aired daily. Even less during prime viewing hours. Chances were good the consumer would see an advertiser’s message.
Ditto print advertising: If only one or two newspapers were locally available and a few weekly or monthly magazines were on newsstands, the consumer could see perhaps less than two dozen new print ad pages per day. These scarcities made it relatively easy for advertisers and marketers to reach and impress commercial messages on consumers.
Those scarcities also kept consumers paying for content access. If a newspaper was the only locally available text source of daily-changing content, consumers willingly paid for it. Similarly, they’d also pay a relatively high price to receive weekly and monthly magazines.
Godin points out how those scarcities evaporated over the past two decades’ explosive evolution of new distribution technologies. The average American consumer now uses a 70-plus-channel cable TV system, sees five times as many titles of weekly and monthly printed magazines on newsstands, and has Internet access.
Marketers’ and advertisers’ messages are easily lost amid over 17,000 one-minute TV spots aired daily, amid scores of magazine ad pages or millions of banner ads on millions of Web sites. Chances aren’t good a consumer will see any given commercial message.
With such a content surplus, the consumer isn’t as willing to pay much, if anything, for most of it. Cable TV systems that in the 1980s paid TV networks to fill their systems’ channel instead now charge those networks for distribution. Some trade journals that once charged readers for subscriptions have switched to free, controlled-circulation distribution. Daily newspapers in some major North American and European cities are experimenting with distribution of free editions. Most broadcasters and publishers have trouble getting anyone to pay for online content.
Godin believes we’re at the start of a fundamental change in the advertising, marketing, broadcasting, and publishing industries. The balance of content supply and demand is flipping the other way. Consumers have access to such an avalanche of content that its value is nearing zero (or is in the microtransaction realm). Advertising and marketing messages get lost in that avalanche.
It’s as if compasses stopped pointing north and turned in other directions, even south. Publishers, broadcasters, marketers, and advertisers have trouble navigating. Many deny so huge a change in their world is possible. Some still believe it’s all a bad dream, an anomaly that will quickly end.
The world can fundamentally change. Just as pilots and navigators know there’s hard physical evidence compasses may someday point south, the model for publishers, broadcasters, marketers, and advertisers can likewise radically change. Just because business was a certain way in one century doesn’t mean it will remain so in another. A century ago, the average household relied on, and owned, a horse. But by 1920, that millennia-old practice ended. Technologies are sparking similar changes today.
What exactly will this mean for advertisers, marketers, broadcasters, and publishers? Four things are certain:
First, the turbulence for these industries won’t end anytime soon. That’s the nature of fundamental changes. Eli Noam, professor of economics and finance at Columbia University and director of its Institute for Tele-Information, offered a striking argument last month:
The information economy is likely to be a volatile, cyclical, unstable mess. The problem is not the “creative destruction” one would expect in an innovative economy, but the structural instability of an economy whose major products have very low marginal costs and hence prices, but are not low-cost to product. The notion that an information-based economy will be inherently prosperous must be revised for a less optimistic scenario.
Second, Godin believes the flip in the supply-and-demand content balance means advertisers and marketers soon must get consumer permission to advertise and market to them.
A corollary is if most consumers are no longer willing to pay much for most broadcasters’ and publishers’ oversupplied content, then those publishers and broadcasters must radically change their services and stop beating a dead horse. If fewer consumers pay for the content newspapers deliver, newspapers should change their service and deliver a different form of content (I don’t have room to explain that here but do elsewhere).
Third, forget more focus groups, tweaking, and price adjustments. Radical changes in service and content are necessary. Harvard Business School Professor Donald Sull says the error most companies make when faced with a changing environment is to try harder to do the same old things, rather than make radical and necessary changes.
Stop asking, “What new price?” Reconsider the very nature of what you sell and what price means. You can’t tweak your way into this new world.
That leads to the fourth certainty. Management guru Peter Drucker put it this way:
The most important skill each and every worker has to have is the ability to learn, because they must constantly re-tool. What you know today will not add value tomorrow in terms of being a productive and contributing worker, whether [you are a] professional or…non-college graduate.
Skills, business practices, or pricing that worked in 1980 or ’90 may no longer work today. By age 30, we think we know how the world works. That can be fatal in a world of changing seas. Bear in mind minor navigational changes — as Godin, Noam, Sull, Drucker, and others point out — aren’t the answer. If enough people don’t pay enough for the content you sell, the problem probably isn’t price. The problem is your company’s direction must change.
Welcome to the riptide!
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