Why the Media Meltdown Matters to Brands

Back in July my colleague Nick Thomas wrote a report entitled: We Are All Media Companies Now: How Brands Can Benefit From The Media Meltdown.  I heavily recommend you read it. As we enter the second decade of the 21^st century its core arguments are more relevant now than ever before.

The fundamentals of media business are toppling as their 20^th century foundations crumble.  Consumers are falling out of love with paying for media and striking up illicit affairs with free content, not just because it is free, but also because it is on their terms.  YouTube, BitTorrent and Spotify don’t dictate when audiences watch and listen, they let them take control.  This is great news for consumers but terrible news for media businesses that have spent years building revenues upon near-monopolistic control of supply of content.  This is the Media Meltdown.

Why all this matters to brands is because the tectonic shifts in media value chains are creating exciting new opportunities for non-media companies to become media companies themselves.  Just as Apple transformed from hardware company to media services company with the launch of the iTunes Store, so too are brands such as Procter and Gamble with BeingGirl.com, Tommy Hilfiger with Tommy TV and Audi with its UK TV channel. 

Why are brands such as these choosing to become media companies?  Because communicating with audiences can be so much more valuable a relationship than a cold, hard sell to potential customers.  Engaging young girl readers on BeingGirl.com with articles about what it means to be a young girl on the verge of womanhood means so much more to that audience than an old fashioned TV ad by P&G’s Tampax (one of the brands behind the site). 

So, you may ask, if being a media company is so effective why are brands just getting in on the act now?  Well the answer is partly that they’re not: brands have been active creators of media since the original soap operas were commissioned by….well, soap manufacturers.  There is however, more activity now than ever before and largely because the Media Meltdown is changing everything:

• Audiences are fragmenting and are harder to target
• Audiences are consuming more content online but not paying for it
• Ad revenues for publishers are down as limitless inventory depresses its value
• Traditional media content sales are declining, but digital revenues are not helping

These dynamics create a double sided opportunity for companies wanting to work with media:

1. Opportunities start to appear where traditional media companies can no longer afford to compete
2. Media companies increasingly need the alternative and additional revenue streams, which means entering new types partnerships that would not have previously been considered.

With media’s first digital decade behind us, the uncertainty and turmoil that surrounds the birth of the second will be challenging times for traditional media companies but exciting times for the next generation.