As someone who avidly follows online conversations about marketing, it seems that everywhere I go online, marketing professionals are trying to figure out how to incorporate online marketing to their integrated marketing communications strategy. But it seems like over 75% of the time the buzz and excitement seem to hover around one online phenomenon: social media marketing. Though I’m a huge fan of social media, I’m surprised that so little of the online discussions I see are directed towards the most exciting change that the internet brings to marketing: a complete transformation of the business model of so many industries.
This is why I picked “What Would Google Do?” by Jeff Jarvis for my assigned book review for my Internet Marketing class (part of my MBA at the Sauder School of Business, UBC). Jeff is not a marketer, and doesn’t speak like an MBA. But his book is easy to read and does a good job of exploring what the world would be like if many traditional industries adopted the business models of Google and other successful Web 2.0 companies. It’s business as we know it turned on its head.
Jarvis’s book has two sections. The first one lists the “Google Rules”, like the new, interactive relationship with the customer. This is the world where a bad review on Youtube goes viral and can live to haunt you for months on end, as United Airlines learned last week (see my last blog). Other rules include the new architecture built around the link, collaboration and the new economy built around free-to-users and sponsored and mass niches vs. mass media.
The second section is an exercise of applying elements of Google’s business model to different industries like media, retail, manufacturing, finance and public health. Like Jarvis, I was also a journalist, so I would like to give you my points of view on his pitch about the changing media business model.
Media 2.0
Jarvis imagines newspapers that really don’t have much of news or paper anymore. Instead of monopolizing the right to write news, he imagines news sites as a platform where people can find information created by thousands of users: blogs, social media sites, etc. He advises them to learn to listen to what people have to say. Namely, to allow collaboration and two-way communication –an area in which traditional mass media outlets have done very poorly. He recommends forgetting the idea of a mass market and focusing on niches.
He does not clearly state how the revenue model would work (would users pay?) but mentions advertising. Earlier in the book, he titles a section “free is a business model”. With that he refers to giving content away to users and charging advertisers.
But this may be easier said than done. It’s true that many of the traditional media giants have had a terrible time adjusting to new media. At most, giants like The New York Times have a web site with lots of videos and interactive graphics; they link to blogs and allow comments on their articles; they also have discussion forums, which encourage public discussion on a topic like Room for Debate. But in essence it is still controlled by its own journalists and it’s pretty much business as usual.
But in the middle of the Great Recession and a foreseeable decline in readership, media companies are facing decline so rapidly, that they are beginning to realize that they must reinvent themselves or die. Some have died or are agonizing. Conde Nast has shut down some of its publications this year and two of the biggest business magazines, Forbes and BusinessWeek have slashed employees and are looking to cut costs further after losing a third of their advertising spend this year. According to industry experts, advertising won’t return after the recession.
The problem with free
There are two issues about Jarvis’ suggestion for media that I believe may not be viable, at least for the time being. First of all, free content won’t necessarily bring in enough revenue, especially because online adspend fluctuates so much during bad economic times and online advertising is increasingly being spent on social media sites. This trend away from media websites and onto social media sites is understandable, considering that people are spending more time online and less on webpages like newspapers. As a GenYer, I admit that I’ve found out about more breaking news from my Facebook newsfeed than from newsmedia sites this year. Low ad revenue is even making an entertainment hit like Hulu to consider switching to a subscription model. News companies, including the New York Times, have been looking to replicate the success of the Financial Times in charging for content. Funny enough, Google is planning to create a tool that will help newspapers charge for content.
The second issue is that as traditional media outlets lose power, other sources will have to emerge to create a sense of “official” and “credible” information. Though blogs are increasingly becoming a trusted source of information, Google search results can be baffling. It is hard to discern between the true and the false in a Wiki. Government and other institutions will have to find a way to become trusted sources of information in a sea of disinformation. Having been a journalist, I remember the rigor of our research. Granted, not all journalists are ethical in their sourcing or framing of information. But when you say “I saw it on CNN” or “I read it in the paper”, it sounds like fact. That’s not the case of saying “I saw it on this blog that Amy had posted on her Facebook profile”… or worse yet, a RT (re-tweet) on one of the 2,000 feeds you are following on Twitter… I believe that the need for a credible voice will continue to exist. The question is whether media companies will be able to continue being that voice. To do it, they will have to transform and adapt their business models in order to resonate with a younger, more diverse and geographically disperse online audience that loves free stuff.
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