Creative destruction. I love that phrase because it portrays something that everyone can understand, like the beginning of the end or organized chaos.
We all realize technology and innovation are part of the process of creative destruction, because we have seen companies redefine sectors and grow businesses just by adapting to consumer patterns. We have also seen businesses eradicated by ignoring these very same consumer patterns, Kodak, Blockbuster -- you know the names.
My two favorite examples of true creative destruction can be seen in the growth of Apple and Sony. It's funny, you never hear the name Kozo Ohsone the way you hear Steve Jobs. Despite the fact their contributions are vastly different, Ohsone and Jobs are surely equal in one distinct way. The Sony Walkman, which Ohsone and his team created, was the creative destruction that paved the way for the successful iPod and iTunes business model. Sony is just as responsible for our never-ending desire for portable entertainment as Apple is, and I feel lucky to live in a time where we have continued innovations from both companies.
Their devices illustrate the most interesting part of creative destruction in technology -- the change born from consumer demand for true customization, personalization and mobility. I believe it's because they both had one unifying user experience. They could provide consumers a way to have the exact same experience (with the choice of eggshell white ear buds or a canary yellow clamshell case) that could be personalized to each individual's taste.
This also represented a shift in how brands leveraged what they knew about consumers' behavior to produce solutions (or in my company, BrightLine's, case, engaging advertising) that work. When companies or industries don't listen to consumers' needs or observe behavioral patterns, customers are under-serviced, and the companies that serve them can lose revenue or even fail.
In tandem, those that listen and observe consumer behavioral trends quickly became the gold standard. Like most companies, we tried to follow this edict in developing our business model and service offering.
We saw creative destruction when the recording industry failed to react to the rise of digital music and iTunes. I see it again today as the publishing industry is just now developing its strategy as ebook revenues increase and print sales decline.
"Books aren't meant to be read on screens" was chanted over and over again by book publishers. I always give this a thought during my commute as I watch the train fill with Kindles and Nooks. While publishers cry monopoly or blasphemy, I simply say, "creative destruction."
Creative Destruction in Television
I think this is top of mind as I watch a little creative destruction in my own neck of the woods as television experiences the same phenomena. In the last few weeks, we have seen some of the largest networks, television shows and content creators take glaringly opposite positions in the media -- positions that make me feel the traditional television model is evolving faster than anyone realizes.
I always felt we were ahead of the curve in terms of transforming traditional 30-second TV commercials into interactive brand destinations for consumers, but I think we are all just now realizing how quickly the change has become an everyday reality.
A few years ago, one of the largest cable channels gave its entire content library to a digital service in a multi-year deal -- for six times less than the per-year rate it charged a satellite service. Last week, one of the most popular shows on cable had a very public battle about the airing of its finale and one of the largest satellite providers launched a service to skip commercials. What does this all mean?
It means viewers are dictating distribution, and it means the evolution of television is moving faster than the industry. With the biggest network shows on iTunes, does that mean there is little reason to watch broadcast or satellite? Especially since most online broadcasts have a lesser load of commercials or often none at all.
It's no surprise networks themselves are veering into the foray with features that eliminate or skip commercials, and no surprise that content creators are balking at them. They both realize their viewers desire the same experience, the chance to watch the content without commercials.
They are challenging the traditional advertising model, but by adding on cheap online distribution they may also be affecting their own revenue streams. There is the chance subscribers could leave the cable and satellite distributors and their subscriber fees could be reduced to the networks. It's robbing Peter and his whole family, before you rob Paul instead of paying him. I call it the organized chaos that comes before creative destruction.
I have seen traditional broadcasters fight an a la carte pricing model year after year, then create one by putting their shows online, all the while thinking to myself, "Why would networks play with losing viewers to the online audience?"
My belief is that the digital a la carte distribution model cannot replace the bundled distribution model in terms of revenue to networks. I am not sure if anyone knows the answer.
If nobody watches a network because they buy it online, what does that mean to your advertising campaign? This is also impacting this creative destruction as these negotiations have gone on with large financial implications and potentially negative results. For the content creator, the viewer and unfortunately, the user experience.
It all reminds me how others waited for the television industry and platforms to evolve, while we created and implemented close to 500 cross-platform, interactive advertising experiences generating tangible brand loyalty. I believe evolution is fast and that developing real solutions takes a long time. However, I believe if you focus on user experience and always know that performance is the result of good data, you cannot fail.
There have been no changes to the television advertising model for 60 years. The winners in the television space will be those that understand that the outdated modality of the traditional advertising model is really what the argument should be about. We know printed books have not changed since Gutenberg, so the Kindle was inevitable. Television has not changed since Eisenhower.
One of our oldest partners calls us the iTunes of interactive television. My reply is usually a quietly humble, "Thanks that means a lot to me. What makes you say that?"
He laughs and says, "BrightLine accounts for 95 percent of current national interactive television advertising activity. You were right. It's not about if advertising and television will change -- it clearly already happened while we were focused on the latest developments online."
My co-founder, Rob Aksman, and I envisioned a world where advertising was as interactive and on-demand as a gaming experience. Creative destruction or not, we felt viable interactive solutions would have to be truly platform agnostic. That is because we realized early that whatever screen the viewer chose -- this would be the screen on which our experiences had to engage them. It is congruent with our belief that companies should always follow behavior as opposed to fragmentation or creative destruction.
I believe when companies do adapt to consumer patterns and behavior, they can engage this brand affinity by creating television experiences that viewers want to seek out. This allows customers to interact with your brand on their own terms. I guarantee if you focus on the destruction or fragmentation, you may harm your brand strategy more than you grow it.
No matter how the creative destruction (or should I say viewer disruption) concludes in my sector, I believe the viable companies in the television industry will continue to experience organic growth. The same way I believe Sony and Apple will continue to be among the most creative companies in the world, with or without creative destruction.
Be it a canary yellow Sony Walkman or eggshell white Apple iPod -- both these amazing companies realized early that consumers will always dictate and desire true customization, personalization and mobility.
It is how the greatest brands remain the greatest brands; they can not only withstand creative destruction, they thrive in it.
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