Monday, April 13, 2009

Q: What’s Happening To Print Media And The Ad Agencies Who Propped It Up?

It all started with a fundamentally flawed notion: advertisers will provide a 600-plus percent subsidy of the cost of delivering printed content to “readers” (be they subscribers or in a doctor’s waiting room) as long as ad agencies can manufacture metrics (alchemy) to support the assumption that “readers” see and respond to those ads. Costs of production of the media content going up? No worries, charge more for the ads! Can’t do that? Create more room for ads! It’s the real estate model done all wrong; real estate values are predicated on scarcity; a magazine / newspaper, with the proper motivation, can always print more pages…

So now, see here, and then see here, and then see here, and then…well, you get the idea: print newspaper editions are dropping like flies. It’s the same for magazines, where the model is slightly different (higher affinity interest x less frequency = greater ad spend) but the outcome is becoming the same…shall I pepper you with more links or do you get the picture? (I thought so…)

What is at the heart of all this? The confusion of the roles of media and the ad agencies who assigned them a zero value. Information is free and should be free. What media does is add value to information. It weights information, effectively ordering it for us; it adds context that derives from the back-story. The media filters, for sure (“fair and balanced” is just like beauty). We need media to process, sift, and package information so we can more easily digest it. It’s not just news: it’s prose, poetry, criticism, analysis, anything that communicates anything. Newspapers are the most susceptible to the breakdown of the model, and we know magazines are coming next. (What about “broadcast” TV? As the Jamaican’s say, “Soon come, soon come.“)

The notion that content of any kind should be free is ludicrous. A magazine or newspaper must charge what it costs to produce. Net readership will plummet, but this new reality of vastly reduced readership numbers is what the real reality has always been; the ad industry has always been loathe to acknowledge it and re-tool accordingly. I get the NY Times online for free; I’d gladly pay full fare for it if they made me do it. Same for the Economist and Wired; I subscribe to these magazine but this cannot cover all their online costs as well. I already pay Comcast, HBO, Sirius Satellite Radio and National Public Radio for access to value-added content. The BBC imposes a tax on subjects to cover its costs, and it’s really quaint: “The annual cost of a colour TV licence (set by the Government) is currently £142.50. That works out at less than £12 per month - about 39p per day for each household.“ (Read the entire license fee explanation.) And, yet, I get the BBC online for free. Why not charge me the same $210.92? I’d happily pay…or, if I thought it not worthwhile, I wouldn’t.

Where are ad agencies in all this? Exactly where they have been; in the role of evaluating the best fit between a brand and where it wants to be seen. But the metrics will have to change dramatically. It is already clear that the notion of “newspaper” is rapidly evolving...maybe too rapidly for some.  And, as we have seen, many agencies tragically don’t get it. Agencies have the responsibility to show brands where they should be seen and how they should be experienced, to support their core strategies. This means acknowledging the new rules of the new game, on the new playing field.

Are you ready?

Addendum: Read also this excellent posting about the newspaper model from Pop! Tech by Tim Leberecht. And share your thoughts!

New Addendum: Rupert Murdoch agrees with me! (Well, he agrees that a free online model is flawed and can come to no good…read about it here from the Guardian Online…QUICK before they make you pay for it!