Online advertising must undergo a massive change.  Why?  Because the underlying media business model is failing.  It was actually doomed at birth but in the initial land-rush this was somehow overlooked.

The traditional media model, content sponsored by advertising was rolled out online but there’s no secret that it’s not working.  According to Scott Karp of Publishing 2.0, the US newspaper industry was worth approx. US$60 billion offline in 2007.  By comparison its online business was only valued at US$3 billion.  Nothing has occurred over the past three years to alter this, in fact if anything the position has probably deteriorated. 

The problem is that the fundamental of ‘scarcity’ which helps drive the traditional model, doesn’t apply online.  Online advertising space is not finite and that has changed the relationship between brand, media and consumer.  Media’s traditional role was to act as a conduit between brand and consumer, effectively providing a communications infrastructure.  There wasn’t much competition; the barrier to entry was too high.  Conversely, in today’s digital environment, infrastructure is ubiquitous and cheap.  Anyone can create their own media property and millions have.

“You’re almost always going to be able to find inventory, so the buyer has more leverage than in the print category”

 - Jordan Bitterman, director of media for Digitas

We now think of media in three dimensions Paid, Owned and Earned and yet our media department only has the tools to plan for the Paid (display advertising) channels.  Owned (brand properties) and Earned (social media etc) fall outside of the influence of our media planners and yet they are now an important part of the media mix. 

So brands now have a wealth of options; they no longer require the publisher’s infrastructure, and some of the most valuable media options are not controlled by agency planners.  This is starting to cause problems, not only for the media but for our business also.

Furthermore, with the industry standardising almost every kind of advertising space available, any possibility of creating unique advantage has been removed.  Publishers have effectively built themselves a discount-led commodity market. 

And it’s not just the advertising component that is broken as far as the publishers are concerned.  In the race for eyeballs, content has become increasingly generic and impossible to monetise.  No one will pay for content that can be found for free in 10 -20 other places.  As a consequence, mainstream media brands are suffering; they are rapidly becoming invisible as their core product also becomes a low value commodity.   

For evidence of this start Google’s news service up and see how marginalised the media brands have become.  The future of digital media is not online advertising.

Online isn’t delivering the promised results

The online media model is broken and that’s a bad thing for publishers, but it’s not a great thing for brands either.  Although media is now cheap, it struggles for measurable efficacy, so while brands understand that their audiences are increasingly spending time online, increasing their advertising spend doesn’t ‘turn the sales tap on’ in the same way traditional media used to.

Undoubtedly one of the problems is our ability to filter messaging extremely effectively.  We have to by necessity; the rapid expansion of advertising volume has made processing the thousands of messages we receive every day an impossible task. 

Another issue is realising that our online behaviour is more goal-oriented than our use of traditional media channels - anything not related to our goal is quickly filtered and ignored.  And it’s inside this problem, that one solution at least, presents itself.

Uncovering opportunities

While mainstream advertising revenues are declining, some markets are showing a sharp increase in niche publication subscriptions. 

“We are seeing niche newspapers, with strong brands and identifiable products, increasing their subscriptions in contrary (sic) to the mainstream newspapers that are declining.  This tells us that there is an interest in a strong media product, and people are willing to pay for it.”

- Helge Tenno, Future Media Presentation

For brands to actually take advantage of this trend, publishers will need to assist them to create consumer value.  Rather than creating more interruptive advertising, the brand and media property need to work together to create contextual value; advertising that augments the editorial content, rather than fighting it for attention.

So what does the online media model of the future look like?  According to Tenno and others, media companies and brands need to put value at the centre of their thinking.  The intersection of brand, media and consumer is where the magic will happen.  Where consumers become as much participants as they are an audience. 

Tenno picks this as being a subscription driven model but I’m not so sure.  I think it also solves the scarcity issue and puts some value back in the advertising inventory. 

I’m predicting a backlash – hopefully of epic proportions.  I can’t wait to be honest, because for the past few years self-described social media gurus have been treading on my toes trying to convince clients to do this to create ‘one to one engagement’, or do that to ensure they’re ‘part of the conversation’, all supported by…well nothing other than a bunch of followers on Twitter usually.

Why does this bother me? Because when their half-baked strategies fail, which they’re largely bound to, customers are left only with a bad experience and no sensible answers as to why things went wrong.  And that of course means that at some point down the track, even with compelling and fact based arguments for participation, it’s a hard road convincing them to try again.  In effect, it slows rather than stimulates participation in social media.

My first gripe with gurus and consultants is that they’re rarely, if ever held accountable to performance.  Perhaps because unlike the snake oil advice they peddle, they don’t really have a strategy themselves to be around for the long haul.  

Developing a social media strategy isn’t simply a case of pumping existing marketing messages down a new channel.  In some cases social media may well transform ‘how’ you do business, and that takes careful change management, not a fire and see mentality.

My second issue is that they generally take an overly optimistic approach to assessing risk vs. reward.  Perhaps this has something to do with gripe number one and not thinking past their current consulting assignment.  The point is, this is really new territory for marketers.  If anyone tells you that they can guarantee the results of a social media campaign or programme – start running, and don’t look back. 

For every success story like Dell or Zappos, there are hundreds of abject failures.  Which in itself is not a reason to shy away from participation, but it is a reason to make sure you head into each project with a solid understanding of the risks.  If your ‘consultant’ hasn’t at least made an effort to anticipate various problem scenarios and how to handle them, then it’s hard to believe they’ve got your brand’s interests at heart. 

My final issue is the manner in which ‘guru’ status is affirmed.  Having a million followers on Twitter doesn’t actually mean a thing.  I wouldn’t ask my sister for advice on installing a telephone system just because she spends 6 hours a day on calls to her friends.

Being able to download the latest ‘Did you Know?’ video from YouTube or this week’s social media zeitgeist presentation from Slideshare doesn’t really cut it either.  They may be great educational tools, but building a social media strategy or programme takes a little more nous than regurgitating a few pithy quotes off a powerpoint deck. 

Social media is one of the biggest shifts in marketing ever seen.  And for those that take the time to understand how it works, and respect the implications of various tactics, it’s a game changer.  Jump in blind or carelessly off the back of bad advice, and catastrophe is likely to follow.

Yes I’m predicting a backlash and while weeding out the gurus from the actual thinkers isn’t a bad thing, I’m hoping that in the middle of it, our clients don’t throw the baby out with the bathwater.

PS: to those ‘practitioners’ out there that do know what you’re doing.  This isn’t aimed at you - just sayin’.