Maybe you'd better lean forward. Presently you will be given
five reasons to consider something barely imaginable: a
post-apocalyptic media world substantially devoid of brand
advertising as we have long known it.
It's a world in which Canadian trees are left standing and broadcast towers aren't. It's a world in which consumer engagement occurs without consumer interruption, in which listening trumps dictating, in which the internet is a dollar store for movies and series, in which ad agencies are marginalized and Cannes is deserted in the third week of June. It is a world, to be specific, in which marketing -- and even branding -- are conducted without much reliance on the 30-second spot or glossy spread.
Because nobody is much interested in seeing them, and because soon they will be largely unnecessary.
Perhaps you are already rolling your eyes. Perhaps you believe that vast structures on which vast societies and vast economies depend do not easily lose their primacy. Perhaps you believe that the TV commercial and magazine spread -- and radio spot and newspaper classified -- are forever and immutable, like the planets orbiting the sun. Good for you.
Now, say hello to Pluto -- the suddenly former planet. Forever and immutable, it turns out, are subject to demotion. This could be grim news for the agency business, which continues its erratic Pluto-like orbit around marketing budgets as if unaware that it has lost its stature -- and its relevance is next to go. In due course, you shall see how circumstances have conspired to threaten its place on the cosmic map altogether.
Video killed whom?
To support the analogy of planetary delisting, we needn't go back 5 billion years to the origin of the solar system. Instead, just think back to approximately the day before yesterday. Remember how they used to talk about "the MTV generation"?
It was shorthand for the post-baby boomers who couldn't be stimulated unless you basically jammed kaleidoscopes in their eyeballs. They had cut their teeth on the rapid-fire editing and visual noise of music video, so all media were obliged to pick up the pace or lose the attention of an entire generation. And just in case the symbolism escaped you, don't forget the first song that ever played on MTV:
"Video Killed the Radio Star," by the Buggles.
Ironic, eh? But not as ironic as this: The latest thing the MTV generation has begun losing interest in is MTV, where ratings fell sharply last year. Short Attention Span Theater has changed venues and is now housed on YouTube. Online video is killing the video star. Over at MTV Networks, the layoffs began in February.
No huge surprise there. Two years ago in this very publication, "The Chaos Scenario" predicted that the pillars of old media would soon come tumbling down. That the MTV pillar had Public Enemy and George Michael and 'NSync posters plastered all over it, and was deemed the last word in modern TV, makes it especially noteworthy -- but by no means unique. Since "Chaos":
- In December 2005, Viacom spun off CBS, the so-called Tiffany Network, lest the broadcast business impede growth and depress shareholder value.
- Just before Christmas 2005, Time Inc. laid off 100 employees. Just after Christmas, in January 2006, Time Inc. laid off 100 more employees. In April 2006, Time Inc. laid off 250 more employees -- the last round of job cuts, the company said. In January, Time Inc. laid off 300 more employees. No wonder. Since 2001, Time Warner's market capitalization has shrunk to $82 billion from $193 billion.
- Last fall, ostensibly to promote their new seasons, five broadcast networks bypassed their local affiliates and gave away new programs online.
- In October 2006, NBC announced a $750 million cost cutback, including 700 jobs and a moratorium on scripted programs in the first hour of prime time.
- In November 2006, Clear Channel -- the boogeyman of media consolidation -- sold to private-equity owners and declared that it wants to unload its TV and small-market radio stations. The sale fetched $38 a share. In 2000, the stock sold at $100 a share.
- The Minneapolis Star Tribune, acquired by McClatchy in 1998 for $1.2 billion, was sold to private investors in December 2006 for $530 million.
- In 2000, Chicago-based Tribune Co. was valued at $12 billion. It then bought Times-Mirror Co. for more than $8 billion. At this writing, with Tribune Co. for sale as a whole or in part, the value of the merged company is $7.34 billion.
- YouTube. Two years ago, it -- much less Joost and Revver and Brightcove and the online-video industry in general -- did not exist.
This is the fourth installment of Ad Age Ad Review columnist Bob Garfield's "Chronicles of the Media Revolution" series in which he explores ongoing technological upheaval across the media and marketing industries. His three earlier installments are:
YouTube Grows Up -- but What Does It Mean?Inside the New World of Listenomics
Bob Garfield Explores the Implications of the Video-Sharing Revolution
How the Open Source Revolution Impacts Your Brands Bob Garfield's "Chaos Scenario"
A Look at the Marketing Industry's Coming Disaster
Garfield's weekly columns and daily blog can be found in the Bob Garfield section of this AdAge.com website.
ALSO: Comment on this article in the 'Your Opinion' box below.
What, me worry?
So what's it like to face your economic mortality? There are some clues in a February speech by Timothy Balding, CEO of the Paris-based World Association of Newspapers: "What we are seeing completely contradicts the conventional wisdom that newspapers are in terminal decline. ... The fashion of predicting the death of newspapers should be exposed for what it is -- nothing more than a fashion, based on common assumptions that are belied by the facts."
Balding's set of facts comes courtesy of the proliferation of skimpy freebies, such as Metro, which are to newspapers what Skittles are to cuisine. His rosy outlook, however, does sound familiar. In the halls of media power, the optimism seems positively infectious. Jack Kliger, president-CEO of Hachette Filipacchi Media U.S. and chairman of the Magazine Publishers of America, declared this spring: "We are no longer threatened by digital media." Perhaps he didn't notice the precipitous drop in readership, what with the industrywide circulation fraud and all. Or perhaps he was busy killing ElleGirl and Premiere, but never mind. He's dug in: "I'm not ready to end up my career watching our industry get marginalized and fade away."
Likewise David Rehr, president-CEO, National Association of Broadcasters, who greeted the National Press Club last October as follows: "Ten months ago, when I took this position at the NAB, I knew that joining the broadcasting industry would be exciting. But after seeing the dynamics of this business firsthand, it is 20 times more exciting than I could have ever imagined." Naturally he's excited. Ratings are plummeting. The networks are bypassing his members via the web. The cash value of stations is in decline. What's more exciting than piloting a plane in a tailspin?
As for the networks, here's Leslie Moonves, president-CEO, CBS Corp., speaking at the Bear Stearns Media Conference: "We've been hearing this for years: 'The network is dead. The network is dead.'... All four networks are going to get CPM increases in the upfront. The business is extremely healthy."
Putting aside for the moment whether there is some creative accounting behind that claim, Moonves is bragging about charging his customers more for less. Please note that pride goeth before the fall -- just as before bargaining and acceptance goeth denial. At that same conference, protesting that DVR ad-skipping isn't so menacing, Time Warner Chief Operating Officer Jeff Bewkes trotted out perhaps the most absurd rationalization ever proffered: "When you fast-forward, you get a quick visual version that is three seconds instead of 30; you could get the same message anyway."
The 30-second is dead! Long live the three-second!
Mass media, of course, do not exist in a vacuum. They have a perfect symbiotic relationship with mass marketing. Advertising underwrites the content. The content delivers audience. Audiences receive the marketing messages and patronize the advertisers, and so on in what for centuries was an efficient cycle of economic life. The first element of Chaos presumes the fragmentation of mass media creates a different sort of cycle: an inexorable death spiral, in which audience fragmentation and ad-avoidance hardware lead to an exodus of advertisers, leading in turn to an exodus of capital, leading to a decline in the quality of content, leading to further audience defection, leading to further advertiser defection and so on to oblivion. The refugees -- audience and marketers alike -- flee to the internet. There they encounter the second, and more ominous, Chaos component: the internet's awkward infancy.
The online space isn't remotely developed enough -- nor will it be anytime soon -- to absorb the advertising budgets of the top 100 marketers, to match the reach of traditional media or to fulfill the content desires of the audience. (Maybe viewers no longer demand their MTV, but what remains of the mass audience is in no hurry to surrender its Los Angeles Times and "Lost.") A collapsing old model. An unconstructed new model. Paralyzed marketers. Disenchanted consumers. It's all so ... chaotic.
The economics of abundance
How long it will be before order is restored is anybody's guess. What is certain is that the Brave New World, when it emerges, will be far better for marketers than the old one. What is nearly as certain is that many existing ad agencies and some media agencies will be left behind. And the reason they will be left behind is their stubborn notion that they can somehow smoothly transition to a digital landscape.