A bit about the author ...Gerard Smith is a former Planning Director at major agencies in the UK and US and is now an associate at a strategy consulting firm that specializes in scenario planning. He says: 'This is a way of dealing with uncertainty by creating a few possible alternative versions of the world in the future (scenarios), drafting strategies in response and then stress testing these strategies in each scenario, to find those that are most robust. The real thing - full scale scenario planning at an enterprise level- takes a huge amount of time and resources, so is simply not possible for a number of organizations. For smaller scale projects we like to have in place a few thought pieces about the 'future of' various industries or forces for change, to help accelerate the process and stimulate discussion etc. This is one of those. I am interested in ways I might be wrong'.
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Planning for the Future of Media
As media and marketing have evolved together, the future of one has to be considered alongside the other.
Over the last hundred years or so, during three overlapping phases of mass marketing, an ecosystem has developed in which media and marketing have provided each other oxygen: the media by attracting large, passive audiences to content, presented in formats suited to advertising: advertisers by paying the media to ‘talk to’ potential consumers who in turn accept these interruptions as the price for subsidized or free content. In the ad market, it’s all about eyeballs (or ear holes), with prices generally determined according to the Liberace principle–that more is more. This particularly applies when the eyes or ears belong to a young adult, but more about that later.
Infrastructural change has defined and enhanced each of the phases of mass marketing, but the defining change of the fourth phase, the information/communication revolution, seems destined to create substantial challenges as it decouples media from marketing.
The 4 Phases of Mass Marketing
Media and marketing companies have thus far responded to the phase 4 world using a phase 3 perspective, where the internet is another medium – for media companies an additional format for content, and for marketers, an additional opportunity for advertising.
The assumptions for the longer term baked into this ‘incremental’ view are that as the internet matures it becomes less entropic, and consolidation takes place; fewer, branded (i.e. trusted) media outlets remain, many in multiple formats, funded by a mixture of subscriptions and advertising; advertisers learn to adapt campaigns to the digital world, and a new equilibrium is reached.
There is however, a more radically disruptive view in which mass media and mass marketing as currently conceived face obsolescence. The extreme prognosis is that mass media companies are simply early casualties as the information/communication revolution hastens a more fundamental transition, beyond media and marketing, to a re-engineering of capitalism itself:
‘We are living in a period of “disruptive capitalism” because we have changed more than the companies we depend on as consumers and employees. Today, we have all become history’s shock absorbers, struggling to reconcile our new needs with the demands of an exhausted business model. A chasm has developed between organizations and us.’
‘The Support Economy’ Shoshana Zuboff, HBS professor of business administration, 2003
The catalyst for this critical disruption is of course the internet, where information is easily, directly, and for the most part, freely obtained. This radically alters both the economics of ‘content’, and the way that it is absorbed.
In form and function, particularly on mobile devices, it is less suitable for the interruptive, ‘push’ model of advertising (long timelengths, large formats).
It has taken away classified advertising, an important revenue stream for newspapers.
Beyond classified and other information-based ‘instrumental’ advertising–fine for insurance, hopeless for perfume–evidence of online display advertising effectiveness is sketchy, to say the least.
And a potentially unlimited supply of online inventory has caused the price of advertising online to drop dramatically from the price in traditional media (analog dollars to digital dimes)
Schemes to increase the value of advertising by providing richer information about individuals (as Facebook does for example) raise concerns about privacy, and can quickly drive users away.
So for legacy media, reinventing traditional forms to fit the technology also involves a new business model, as content is less supportable with a model based on advertising (notwithstanding that most websites, for now, are based on this).
Legacy media are also increasingly dependent on an ageing legacy audience, even online. This is critical – as those in the cohort most engaged with the internet and related new technologies are not held back by having to unlearn old habits, but at the same time, nor are they a loyal audience that will ‘migrate’ from an old format
The most successful (largest audience) online news sites are aggregators of content largely produced by legacy media, whose long-term viability is in doubt.
For online only content providers, the long-term sustainability of a model based on ad revenue is therefore uncertain, as few will survive behind a paywall.
Ironically, the problem of overcapacity – long the blight of manufacturers – has come to media.
It was originally thought that the internet would make advertising more ‘targetable’, but people (especially young people) don’t seem to want information as much as they want to talk to each other.
And for all the marketing punditry that trumpets the need for ‘conversation’ and ‘engagement’, it is hard to imagine many normal people wanting a conversation with a marketer, at least not a polite one. Conversation by definition requires intimacy, to which the model of mass marketing is diametrically opposed (even in its segmented phase 3 form).
The other hoped-for opportunity for marketers is of course ‘word of mouth’, whereby their brands are talked about - consumers themselves becoming the advocates (movies have long operated on this basis). This might be possible, but it does not apply equally across categories, and even where it does, implies a ‘better mousetrap’ model of marketing where product enhancement that people talk about may be a better investment than a new ad campaign(see below); this was the model effectively adopted by Japanese auto manufacturers, whose otherwise unremarkable products were better made and thus more reliable than their U.S. and European competitors. In this model, marketing becomes so deeply integrated it ceases to be distinguishable as such.
The Better Mousetrap model of marketing
This is illustrated in the schematic below. Categories clearly differ in terms of consumer involvement – for example there are magazines devoted to cars, fashion, wine, food, travel, even cigars, but none for most household goods. Involvement affects how intrinsically likely people are to talk (using word of mouth in the broadest sense), and is represented on the y axis.
The other key influence on word of mouth is the extent to which people are satisfied (and therefore looking for something better or improved) and/or the extent to which they are willing to try something new (we may be perfectly happy with what we eat for example, but because we do it so much, we are always interested in trying new things). This is the x axis.
The combination yields a notional position in the receptivity ‘space’, which will influence the most effective strategy for creating word of mouth. In the top right, if a worthwhile product idea is seeded – the natural category momentum should do the rest (either positively or negatively). Whereas at the opposite extreme, in the bottom left, emphasis will be much more on generating interest in the messaging per se (have you seen that ad/clip/website/toilet paper blog etc.?) or changing the frame of reference, so that what was dull and uninteresting becomes worth talking about.
The upshot is that in categories in the ‘northeast’, marketing can be effectively prosecuted through product improvement and innovation (and hence word of mouth), but those in the ‘southwest’ face a more challenging future.
Incremental shift or radical change?
All of this leaves the complex web of relationships between media and marketing poised on the edge of a very uncertain future. Some questions to consider for those thinking further ahead:
How will the media consumption habits of the cohort most immersed in the internet/social media and least immersed in legacy media change as its membership ages? Will external forces – principally technology - be stronger than lifestage forces? What can the past tell about this? (see below – US media consumption data comparing 2012 with 1992)
Will the development in mass marketing be circular rather than linear? Will its fourth phase be a return to ‘phase 1’ – an era of fragmentation? (something like this already seems to have occurred in the music industry, and some hipper parts of the markets for food and beer
Will the internet inexorably continue to devour our time and attention, or will incipient concerns about privacy and particularly security erode its advance? It is not inconceivable to imagine successive waves of politically and or criminally inspired cyberattacks leaving the online world as a no-go zone