The media landscape is changing. Chances are that the debates around new channels, new formats, and new technologies to better reach and target customers haven’t escaped your attention. But in this post we will not debate whether Buzzfeed or New York times have cracked the code. Today we will talk about a larger impact of this shift. So what is the bigger impact and why is it worth exploring?
Media connects advertisers with consumers. In other words, any change in media will have an impact on how brands reach consumers. Even more important, this will have an impact on which companies succeed in reaching customers today.
One of the most exciting places to observe the changing media landscape was the recent Dublin Web Summit. What stood out amongst the talks and discussions was the theme of branded content, or as it is also called, sponsored content.
Sponsored content has significantly gained in importance over the past years.
A number of media outlets have established units that are dedicated to developing independent content that is sponsored by brands. They all want to tackle the same challenge. Their customers, namely the advertisers, need to become relevant again. To achieve this, they need to develop content that matters to customers. Why? Because customers just don’t listen to advertising any more. This is perfectly illustrated through the emergence of ad blockers. Ad blockers endanger the revenue model of content being cross-subsidised by advertising. Yet one undeniable thing is often forgotten in the debate about ad blockers. They are just a symptom, not the cause. The cause is that consumers are overwhelmed with advertising. To be more specific, they are overwhelmed with meaningless advertising. Just think about the last ad that you really remember. Then think about the total number of ads that you are exposed to on a daily basis. People just don’t want to listen anymore. They have less time, and less tolerance for meaningless messages. Maybe a large chunk of advertising was already meaningless before. But the multiplication of the number channels and formats has also extrapolated the number of messages.
TV stations of the past used to have a built-in audience. Their names were well recognized, and as the total number of tv channels was somehow still limited, it was fairly predictable at what time and for what tv show they could reach us. It wasn’t hard to guess whether the Seinfeld addict or the sports junkie would be there target viewer. And we had limited opportunity for escape, except may be for a short stroll into the kitchen. Accordingly advertising on tv guaranteed high visibility while being only accessible for spenders with big pockets. On the internet, access is cheap. As a result, the supply of “channels” is endless. And so is the amount of marketing messages. This leads to an over saturation. As YouTube star Casey Neistat puts it, in particular younger people today have a well developed “Bullshit Detector”. They are hypersensitive to what is bullshit and what is real. As he explains, they have three tabs open on the computer and are quick to switch when a commercial is on. This lets the old, single-tasked, limited-choice channel-zapping on tv look like a juggler with just one medicine ball. But what does it really mean? Simply put, when customers don’t listen anymore, then brands don’t sell anymore. Today, a key success factor for companies is the skill to break through the Bullshit Detector. The debates at the Web Summit revealed two ways of achieving this: One way is through technology. The multiplication of channels and formats means that each message has to be adjusted for the audience of a specific medium. At a cocktail party you dress differently than at a street art festival. The dresscode on YouTube is different from the one on tv or in print. Each channel and format needs a specific targeting of the message. And then it is increasingly difficult to get noticed when the Street Art festival went from 100 guests to 10.000 guests. Content management systems as well as algorithms help content creators and advertisers determine customer’s’ interests across channels. Buzzfeed and Netflix are just two media companies that excel at this.
Therefore it’s no surprise that sponsored content units of media companies such as the Washington Post are called “Lab”. The name “Lab” fits very well, because as panels with the Guardian, Washington Post and The Onion showed, at their core these labs built on technology. The technology helps media companies and their advertising clients understand what customers want. These companies dive into their content management systems to see what types of content works in which channels. And then there is a second way. This one builds on authentic content that resonates strongly with the advertisers’ brand. If we look at the sponsored content of The Onion, it’s not hard to realize that not all brands have the courage to go that way. These advertisers take the risk that part of the audience will not get the joke. However for that part of the audience, which gets the joke, it helps the brand to become relevant in this ocean of rehashed content. Likewise Casey Neistat’s Nike video, “Make it Count” demonstrates how authentic content can build audiences. The story of this video is by now well known. Here it is once more in a summarized form. Casey Neistat was commissioned to produce a classic advertising video for Nike. One of those, which are nice to watch, with famous endorsers and beautiful pictures. You know, one of those where a brand can’t go wrong. However Casey didn’t feel like it. Instead of producing a classic advertising video, he “burned” Nike’s advertising budget. He used the money to travel the world in just one week, while creating some video footage from his unscripted travel. At Nike’s cost. Now you would think that at least Nike’s products were featured. Nope! You have to look hard to see any Nike products in the video if any at all. However what is key to this video is its message, which strongly resonates with Nike’s brand. “Make it Count”. Which is a kind of a translated “Just do it”. And not surprisingly the video is among the most viewed Nike advertising videos ever. As Casey Neistat says , “trying these things is what makes Nike great.” and in reverse, he thinks that MTV’s bureaucracy and stodginess makes it irrelevant. This comes back to what we explored in the last post. Companies who want to catch their audiences through authentic content have to find the sweetspot between processes and creativity. The fact that we still see so many advertising videos, which resemble each other shows how difficult this is for organisations. In a way, this second way builds on humanity vs technology. Now the interesting question for every investor is; which ones are the companies that are able to break through the bullshit detector? When companies are required to acquire new skillsets, then it’s seldom the legacy players who win. This implies that there is an interesting shift happening. A shift of the playing field from those who used to be able to reach audiences to those who can reach audiences today. The companies that had the tools to be heard in the past are not the companies that are being listened to today. Maybe the legacy brands with the biggest pockets still win because they have access to the technology that helps them assess what are the most relevant topics. However, the example of banks desperately fighting for the trust and respect of Millennials shows that both legacy cultures and legacy IT infrastructures can be a burden for older players. From an investor perspective this comes back to the sustainability of a competitive advantage based on technology vs one based on a strong and authentic brand. However, as a consumer I clearly don’t mind being exposed to fresh and authentic content.
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Also published on Medium.