Lest we forget, it was just a couple of years ago that "free and ad-supported" was the refrain that drove the second digital go-go era after 2004. Apart from the recession, the big difference now is that the offline TV and print businesses that helped underwrite big media's digital pursuits are now under siege. The content-creation engines that built these brands seem to be threatened, and the digital platform is not really mature enough to support media-making as we have known it. But I have to admit I find it hard to take seriously the "make 'em pay" whining of media moguls who just a few years ago were so strident about the ad model.
And in truth, I don't know what they were smoking. Rethinking the ad-driven media model should have started a long time ago. As media investment firm Veronis Suhler Stevenson reported recently, the ad-supported piece of the communications industry pie has been shrinking consistently in recent years so that now the model represents only 24% of the overall $882.6 billion economy. The largest slab of the communications economy is "institutional communications," a 27% share of the market that includes enterprise and business information services, educational services, and data access. Much of the energy in the overall communications and information economy is moving toward marketing, not media. The "marketing services" segment that includes direct marketing, B2B promotions, search, and custom publishing now accounts for 25% of the communications industry.
The fact is that for a number of years now, the value of media in the marketplace has declined, and most of the providers in the market simply chose to ignore or disbelieve it. How did they not see this coming? The shift in marketing budgets from advertising to promotions, couponing, direct marketing, and direct-to-consumer media has been going on for nearly a decade, and the digital channel only accelerated this movement. Search, branded destinations, and email let marketers circumvent the traditional inter-MEDIA-ries and access their customers directly.
More than a decade ago, many of us marveled at the potential threat the internet posed to the familiar media value chain. Brands and retailers now could become publishers ... and they did. After all, if I want a broad-based overview of the quality of the latest book or even appliance, I really don't go to Publishers Weekly's or Consumer Reports' websites. I go to Amazon.com. It has become such a deep publisher of user-generated content that the site now runs banner ads for general consumer products.
This is not a problem that publishers can fix by squeezing incremental subscription revenue out of digital eyeballs. If a publisher's ad clients have themselves become publishers, then clearly publishers have to broaden their own portfolio to follow the money. You can see this reimagining of media starting with some companies: United Business Media's Everything Channel is an example of a next-gen multifaceted tech marketing services company in which content is only one piece. That group has conglomerated traditional publications such as ChannelWeb.com not only with micro-site building and industry research but also industry education and even sales and recruitment consulting. Meredith Corp., the publisher of Better Homes and Gardens and Ladies' Home Journal, bought an ad agency and even a mobile marketing company in recent years.
Remember 1995, when TV newspaper and magazine brands repositioned themselves as "content companies" to underscore their commitment to "platform-agnostic" distribution? Well, guess what? Less than 5 years later we are all "media and marketing companies" now. We're not content engines so much as "audience engines," whose central mission is to connect advertisers with their targets. Some of this rhetoric (and the revenue models behind it such as lead generation, industry research, and custom publishing) has always been there. However, we are also seeing other models fold into this concept. B2B publishers are exploring "appointment events" where attendees come in free but sponsors get guaranteed appointments with prospective clients. Job boards have always been part of the business publisher's portfolio, but now we see them move into professional training (even sales training) and certification.
Let's be clear: These are economically understandable moves. Publishers do have to become service companies that help former ad clients and even users market themselves more effectively. But let's not kid ourselves. We are also entering uncharted territory where church and state editorial ethics issue abound and where every publisher will have to re-evaluate the role that quality content itself plays in these models. If we're all marketers now, then who keeps an eye on the content?