Thursday, April 2, 2009

OnlineSpin: Attention For Sale

Last week Dave wrote "TV Everywhere Might Just Work."

Rob Graham wrote in response, "I think that one of the questions that needs to be asked outside of the technology is, how will this type of programming pay for itself?

I rarely get an opportunity to watch live TV programs and as a result catch up on programs I wish to follow through my laptop. One trend I've noticed as of late is that there seems to be very limited or missing ad inventory to accompany the programs I'm watching.

While I'm not complaining about not being able to see the same create 5 times in an hour, I am cognizant of the reality of the programming needing to get paid for at some point.

Case in point: I watched a few episodes of '24' on last evening and didn't see a single ad during the entire two hours.

Is it possible that Fox has absolutely no inventory (including promos) to share with me? Granted times are tough and the money may not be there right now but anybody planning for future video content distribution has to ask themselves where the money is going to come from."

Thursday, April 2, 2009
Attention For Sale
By Dave Morgan

Like many of you, I've been spending a lot of time lately thinking about how media is transforming -- and trying to understand what this means for the future of the media industry. The Internet, the digitization of media and the explosion of electronic distribution channels are changing the economics of the media industry right before our eyes. At its simplest, media is changing from an industry driven by scarce distribution to one driven by scarce attention. Now that the consumer has so many choices, controlling distribution no longer means that you control audiences. The consumer (or viewer) is the present and future center of the media world.

This is why media companies are suffering from such extraordinary audience fragmentation, having to work so hard to capture audiences and even harder to keep up their ad rates. Certainly, the maintenance of ad rates is also under extraordinary pressure from the current financial crisis. But what I think is clear to most, is that if media companies don't solve their "audience problem" (or "business model" problem) by the time this crisis is over, their businesses will probably be over anyway. Thus, it is critical today for media companies not only to structure their businesses to survive the crisis over the next two or so years, but to structure them to be competitive in what will certainly be significantly altered media landscape that values audience attention, not media distribution. Here's some of what I think folks should expect from this new media reality:

  • Smaller mass media. Audience fragmentation will not only continue, but accelerate. It will be harder and more expensive to truly capture and keep audiences' attention.



  • Heavy, inflexible fixed cost structures mean death. Not only that -- but the inability to move nimbly and develop, test, measure and adjust new media products to audiences in a constant and dynamic way will also mean death.



  • Exposure-driven ad model dies. In a world where media distribution is scarce, so are audience exposures. In a world where media distribution is plentiful, audience exposures become plentiful as well and very, very cheap. This is why MySpace, Facebook and Twitter are killing the CPM-driven model of the current display ad model in the online world. It is only going to get worse. In a world where attention is scarce, value shifts away from the exposure and toward either unique sponsorship (athlete or sports team) or performance (Google AdSense). Anyone stuck in between will die.


  • Subscription relationships become even more precious. Where attention is scarce, those companies that already have access to both the attention and wallets of audiences have a perishable opportunity to hold or expand those relationships, but they will need to move quickly and aggressively. Whether these efforts look like Jeff Bewkes' "TV Everywhere" strategy or sports teams giving season ticket holders free hot dogs and preferred parking, it is incumbent on media companies to find ways to hold existing subscriber relationships, at all costs. The advantage that such relationships give companies over their competitors is enormous, particularly when times are tough. Just look at the ascendancy of cable programmers and their dual revenue streams, relative to broadcast networks and their ad-only models. 
  • Audience re-aggregation becomes critical. As audiences fragment, it become even more important for media owners to participate in scaled offerings to advertisers. Whether this means more consolidation and more ad networks across different media, scale becomes more essential and in the future it will likely only be achieved through "re-aggregation" plays that combine access to audiences from multiple properties for sale to advertisers and marketers.

    As you can tell, I think that our media future is going to be all about audience attention rather than media distribution. What do you think?

  • Dave Morgan is the CEO of Simulmedia. Previously, he founded and ran both TACODA and Real Media.

    Online Spin for Thursday, April 2, 2009:

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