I recently participated in a meeting that discussed a company’s media options for marketing.
The options included solutions that were designed exclusively for the digital world. Their cost-benefit calculations were in an entirely different league to earlier calculations.
Previously the company had relied on the traditional media and the online versions they published. The results had been fairly modest considering the costs.
I couldn’t help wondering how many businesses are currently rethinking their choices. It seems that the traditional media is still facing great challenges, even though the quest for a new revenue model has been under way for nearly two decades. Time is running out for the media.
But what if they have been searching for wrong things?
The term revenue model can have multiple interpretations. The media business has tried out various things to solve the problem, such as micropayments and sponsored content. Yet it seems that they have often lost sight of the most important thing of all.
Digitalization itself hasn’t changed the revenue model of the media or any other industry for that matter. Customers – whether they are consumers, businesses, readers, or advertisers – are still prepared to pay for whatever amuses or benefits them.
The biggest change that the digital channels have brought about is the increased number of different options, which has led to a change in perceived value. Many things that once required specialist skills and assets are now commonplace.
Our basic needs don’t change, but the ways we fulfill them do. When cars became available, people gave up horses. However, our need to travel from one place to another has only increased. The declining popularity of newspapers doesn’t mean that people are losing interest in reading – on the contrary. Furthermore, printed and digital content are not at odds with one another.
Media houses often entertain a different view. Recent opinions from the field can be summarized as follows: the content is fine, but the value added tax imposed on printed content is suffocating the business.
I’m inclined to disagree. High-quality content isn’t the solution if it doesn’t stand out from the global news stream and other available content. The government supported broadcasting company isn’t the only problem; the Finnish media houses are competing with the CNN and other broadcasting companies, blogs, and social media.
The main problem is that the traditional forms of media are increasingly copying each other and their competitors instead of differentiating from them. When readers flock to services that serve content faster, cheaper, or more conveniently, it becomes increasingly difficult to attract advertisers.
Media houses have invested millions and millions in digital services. However, such investments are often based on the internal needs and goals of the business. Meanwhile, new and agile businesses have already swooped in, identified a problem that has bothered customers, and solved it.
Media houses still have two cards to play:
- Their balance sheets still allow them to invest
- Their customer base provides a solid ground to build upon
In addition, advertisers are still interested in their customer base. However, completely new methods have to be implemented in order to reach those customers. Even a sizable mass of people won’t attract advertisers if the alternative is a carefully defined target group.
Media houses should make use of analytics a lot more than they do now. By getting to know their readers, they can offer advertisers more tailored target groups, and the results of the campaigns can be measured reliably. This is what Google, Facebook, and others are doing. The same analytics can be applied to developing content and finding ways to stand out.
There are all kinds of tools available for implementing the necessary steps for action. However, the biggest challenge is to change the thinking pattern.
The revenue model hasn’t changed. Instead, the competitive situation and customer awareness have skyrocketed. The golden days of hefty margins may be history. This development has already taken place in other fields of business, so why should the media be any different?
The first step toward a better future is to acknowledge the hard facts. Perhaps the media should redefine their role before it’s too late.