From the archives: More than just a disruption

(This article, originally published online in 2009, is excerpted from Ray’s recent book Digital Disruption & Transformation: Lessons from History)

People have been chronicling the disruptive influence of the digital media on traditional media and advertising ever since the World Wide Web first appeared. But no one has articulated the effect so comprehensively or so bluntly as Bob Garfield, ad critic and columnist for Ad Age.

After publishing a piece on the future of media entitled “The Chaos Scenario” four years ago, the curmudgeonly critic became a poster-boy for the doomsayers. Here was someone who’d worked closely with the advertising industry for 25 years (albeit as an observer, not a participant), someone whose livelihood depends on the success of traditional media, and he was using his column in the advertising industry’s bible to declare that advertising was in its death throes.

He has now turned that column into a book – one that balances the bad news with a prescription for surviving the chaos, including examples from around the globe of companies that have successfully embraced digital marketing.

As to Bob’s bluntness, in a video presentation connected to the book, he says the book has two parts, and the message of the first part is “You are doomed.”

“I say doomed,” Bob drolly tells the camera, “because ‘totally and completely f***ed’ didn’t fit on the slide.’” Here is a man who tells it like it is, and he told it like it is in our recent podcast.

Supply, demand and cobblers

“The Chaos Scenario” had its genesis in a presentation Bob made to colleagues at an Ad Age editorial conference. Fuelled, he says, by a night of heavy drinking at the conference, he had an epiphany while preparing his presentation.

After years of observing the rise of the digital media and the reaction to it by traditional media and advertising, he realised that “If these trends continue, it’s not just a disruption, but the doom of the industry.

“It was an end of times story. It wasn’t just the industry – it’s also my own job.  I thought, ‘I’m going to lose my job – and probably earlier rather than later’….This is like the Industrial Revolution, and I’m a cobbler.”

A big part of the problem, Garfield says, was the way traditional media dealt with the web when it first appeared. “In the early days, we simply moved our business model onto the web. We didn’t think about the fact that the advertising dollars don’t make an equal transfer.”

“We ignored the law of supply and demand – if there is an endless reservoir of content (and therefore advertising inventory), it will depress the price of advertising.”

Meanwhile, while media outlets increased their audience, they didn’t generate any income from it. And now, Bob says, there is a growing group of consumers who “believe that ‘content wants to be free’. Ridiculous! Toasters, paper towels, etc. don’t want to be free – why should content want to be free?”

Regarding the plans of publishers including News Limited and Fairfax to start charging for their content, Bob says that “In some pockets, people will make paid content work. Whether they can put the toothpaste back in the tube is questionable.”

He cites the American HBO model, where the pay television network has specialised in high quality content that people will pay for. That contrasts with the broadcast TV model, which has been “to throw mud at the wall and see what sticks – 90% crap and 10% quality.”

Ironically, he says, the pay television model is being undermined by people streaming free video using the same cable that brings cable TV into their house. “People are now using broadband to find programs they used to pay their cable bill for, so the cable companies have been hung by their own co-axial noose.”

From shouting to collaborating

But it’s not all bad news, according to Bob. Out of the chaos is coming a re-birth of marketing.

“Mass is gone, micro is the new reality. Micro offers extraordinary opportunities.”

Bob says businesses need to stop thinking of customers as passive recipients of information and start treating them as “stakeholders, fellow travellers. You need to deal with people as individuals.

“Drop the megaphone – the conversation is no longer about you – and get used to aggregating a community.”

“You’ll be able to get intelligent loyalty and even evangelism from the crowd. You’re not just forging an ongoing relationship, you’re getting collaborators.”

Brands, he says, offer a conundrum in the digital environment. “On the one hand, brands will be increasingly insignificant. They’re a proxy for information  – they signal that they will be there tomorrow, and the product will be approximately as good. In the digital world, we have an infinite amount of information at our fingtertips and we don’t need a proxy, we have the info.

“But the other way of looking at this, there’s so much information out there, that a brand becomes an aggregation tool – suddenly brands have a different function – they save you the trouble of sifting through everything.”

Bob points out that there is an enormous amount of data on customers now available via the Internet – much of it surrendered voluntarily by people. Unfortunately, the skill sets needed by advertisers and marketers in this data-intensive environment are different from those currently running the industry.

“I don’t care how creative you are, in your t-shirt and sneakers. If you’re 30, you better work out what you’re going to do at 35.”

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