The greatest value to advertisers of new media technologies is not the ability to aggregate and buy audiences at progressively more cost efficient prices. It's the ability to work with content producers who can identify their audiences, build databases and loyalty programs, enable direct communication to targeted audiences and motivate them to act in measureable ways. As evidenced by Google's introduction of its Do-It-Yourself App Creation software, targeted to teens and unsophisticated users, both technology and content will become increasingly commoditized into the foreseeable future. Audiences will be progressively more splintered and difficult to reach. The value of media sellers that can successfully reach and motivate audiences will, in this emerging marketplace, become even more valuable.
Although most forecasters, including me, are reasonably bullish on the future of advertising, growth projections remain at or below inflation levels, meaning real growth will be flat to down for the ad business. Many of today's media content producers will find it progressively more difficult to maintain reach, and there simply will not be sufficient dollars in the marketplace to sustain the mid-single digit growth that they require without restructuring their current business models. Even those that can scale their audiences will experience ad costs that decline at an accelerating rate.
Traditional content-centric media sellers will need to have in place alternative business models that generate revenues above and beyond what is available in the share-of-market and CPM game they play in now.
For at least three decades, consultants, economists and analysts have been recommending that media companies expand their focus beyond marketers' advertising budgets and take a more holistic approach to the marketing ecosystem to attract non-advertising marketing budgets. Through these capabilities, content-centric media companies can begin attracting those non-advertising marketing dollars that are targeted to retail trade initiatives, consumer sales promotion, event marketing, social and conversational interaction, direct sales and other "below-the-line" activities. At some point during this decade, commoditization will catch up to even the most protected media assets and those that have developed alternative revenue models will be thankful they did.
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