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November 8, 2004
What's Doing in the Media Business and Why this Matters to Us in the PR Business
There have been several important announcements in the past few weeks by media companies. CNN/fn, the financial news network of CNN, will be shut down in the next few weeks. The Far Eastern Economic Review will be discontinued by Dow Jones, which will also initiate a Weekend edition of the Wall St. Journal. Sirius Satellite Radio has poached shock jock Howard Stern from Viacom in a five year deal beginning in January, 2006. Double Click has initiated a strategic review with an investment bank, to determine whether its pieces (example: Internet advertising serving) are worth more than the whole in current market valuation. Time Magazine is seeking to reenter the Chinese market through a Chinese language edition, after a five year absence. This is the first season in which the number of cable TV viewers in the US now exceeds network TV viewers in prime time. Supermarket tabloid publisher American Media, owner of the Star, has endured a 25% drop in circulation in the past three years.
Implication #1--Advertising in financial services and technology is not coming back as expected. The business media had built significant infrastructures during the 1997-2000 boom. These are now being downsized or disassembled. That means a smaller news hole in business news, particularly for technology companies.
Implication #2-Media companies are now looking at the opportunity to market to a reader/viewer as an investor, consumer of upscale products/services, technology devotee, cultural connoisseur and science maven. The need to satisfy the "whole person" with one-stop shopping is much harder to achieve in a "continuous partial attention world (phrase courtesy of my friend and cousin Linda Stone). That suggests a more "news-tainment" approach to PR, hard news blended with human interest.
Implication #3--There will be more paid content, less advertising-sponsored free content. As an example, I can no longer watch the NY Yankees on WPIX, a "free" channel, because the games are only available on the paid YES Network (by the way, I am too cheap and don't care that much--but don't take away my hoops, especially the NCAA tourney on CBS). Have you looked at your cable bill recently--i am in trouble because all three of my kids now know how to order pay per view movies. There is no more "town square" effect from the nightly news broadcasts on network--too much dispersion of the audience. Therefore, PR will have to work patiently niche by niche, cable plus trade media plus local media plus business media to achieve an overall effect. And perhaps we ought to consider playing in the paid content segment, with sponsored programming on cable.
Implication #4--Media companies are integrating forward beyond custom publishing, even into creation of advertising as part of Internet sales strategy. Thank goodness they will not offer PR services (clearly a conflict of interest). That trend (Time Warner doing this among others) is leading Double Click to reevaluate its current business model. These same media companies, in search of efficiency, are hoping to repurpose content, without compromising the editorial quality. Note that the NY Times Company has acquired 100% of the International Herald Tribune to create a broader platform for content. To assure product quality and local feel, the IHT has hired a dozen new reporters in Europe, with more to come in Asia. PR people need to rethink their media strategies to consider these cross-platform opportunities.
Implication #5--Circulation is declining in publications where content can be found for free on the Web. The Star has arrested its audience erosion only with more stories on sex (latest is most embarrassing shots of celebrity cellulite, featuring Brittany Spears and Donatello Versace). I am sure that there is erosion in audience time devoted to traditional media, in favor of peer to peer communication, whether via IM or other techniques. For PR folks, this implies directly to on line media (Yahoo News) and consideration of ways to reach out directly to end users of information, whether through employee oriented web sites or finding catalysts who are conversation starters on the Web.
One final thought for the week, as if the above is not enough for the hardiest blog reader. On my recent trip, I was surprised to find a strong preference among Asians for reelection of President Bush over Senator Kerry. They believe the President to be a more stout defender of free trade, rather important if you are trying to develop your outsourcing or textile export business. They also believe Bush to be more open to Asia, less to Europe, as the preferred strategic partners for the US. Is this election result the end of the Western Alliance, as proposed in an op-ed piece in the Financial Times this week? Probably not, but if my trip is any indication of a trend, the US will find a friendlier audience in the Pacific than ever before.
Posted by Edelman at November 8, 2004 8:37 AM
Comments
RE: Implication #1
Have to disagree, or the dot-com mentality is really back in the Valley, with the launches of the Always On, Red Herring, The Deal tech's quarterly, and who knows what else. It shows that publishing companies believe that there is advertising dollars to be made in technology.
RE: Implication #4
Apparently, there are some custom publishing houses that are getting into advertising and public relations. You are right, though. I liked this one custom publishing house, had a lot of respect for the editor of their magazines ... but now would never recommend their company, as how will I know that they aren't going to try and poach my client?
RE: Implication #5
You forgot one of the better ways to reach the public directly - a Blog. It's a way to get the message directly to the public, create a dialogue, and be forthright with customers. It's a way for PR firms to offer more than just offline print media experience, but counsel in smart blogging and online outreach. The key word here is smart online outreach, which sometimes seems to be forgotten in public relations.
Not really surprised by Asia being pro-Bush. It's a little realized fact that they have their own problems with fundamental muslims, and see Bush as an ally.
Posted by: Jeremy at November 8, 2004 9:11 PM
Mr. Edelman -
Interesting that you are addressing the re-election of Mr. Bush. As a young PR professional from Germany who works in the US, this is indeed of concern to me. It seems that European regard with mistrust the global distribution of power in favour of the US, as well as the corresponding self-assessment as superior nation, and the resulting will and claim to international leadership. Ironically enough, two-hundred years ago, a militarily weak U.S. tried to establish an international order based on common rights, whereas Europe was dominated by power politics. For the last 50 years however, Europe rebuilt itself economically while passing on the costs of its defence to the United States. All Western European countries reduced the martial elements in their national identities. In the process, European identity (with the possible exception of Britain) became post-military and post-national. This opened a widening gap with the United States. It remained a nation in which flag, sacrifice and martial honor are central to national identity.
Will this have any implications for PR? Yes, indeed, at least for global corporations. A mini-war has already started when the city of Munich, Germany, condemned Microsoft as "heartless corporation", trying to avoid the use of MS products in its offices.
I agree that the US might find a friendlier welcome in Asia Pacific from now on. However, if this is in the best interests of a world alliance that kept at least the western world peaceful for the last fifty years remains to be seen.
Posted by: Gudrun at November 9, 2004 1:25 AM
Hi Richard,
Interesting blog this week.
An observation and a link for you:
Point one - tech spending isn't coming back because technology has become a more mature marketplace and technology companies have moved from being growth to value organisations. Don't believe me, look at the trend for traditional growth stocks like Intel and Microsoft to start paying dividends like traditional value orientated companies.
The fundemental difference between the likes of GE, Honeywell, Goodyear and Microsoft et al is that traditional industries have delivered in a business. Much technology hasn't provided the promised improvement in productivity (at least over the past six years, it still takes me the same time to type a press release in Microsoft Word 5.1 on my old Mac as it does using Office 2004). Business management in particular will not be fooled by empty promises like 'agile businesses' or buzz words like grid computing, at least for the time being anyway.
This change in market dynamics together with marketing functions within technology companies having a lack of skills (marketing at technology companies is decades behind practices at Unilever, Proctor & Gamble or General Mills) and the lack of importance of marketing within the management team will see a depressed marketing spending in this sector until (if) a 'new, new thing comes along.'
Secondly one of the previous comments touched on this, but I have a blog entry discussing the impact of blogging and aggregator services (what I have called mass intermediation) on the media including the WSJ.com open house week.
The URL is: http://renaissancechambara.blogspot.com/2004/10/mass-intermediationback-in-day-one-of.html
You can see my thoughts here
Posted by: Ged Carroll at November 10, 2004 3:47 PM
It is interesting to see that economics are coming before rethorics in Asia... I think they are becoming trade sharp, and very competitive.
What is the role of american PR in Asia? DO companies tailor their campaign ads to Asia?
Posted by: Ram at November 11, 2004 12:59 PM
Jeremy,
I agree one of the best ways to reach public directly is a blog
To have that dialogue with customers
Posted by: Richard Edelman at November 11, 2004 5:06 PM
Gudrun,
I am huge proponent of the Western Alliance
Seems to me a real opportunity for Bush
To extend the olive branch and get back to where we need to be
Posted by: Richard Edelman at November 11, 2004 5:20 PM
Mr. E,
By targeting and superserving and individual, what we're finding in radio is that consumers are spending MORE time with us - play the music we like and we'll listen longer. Talk about Sports all day and we'll listen longer. Tell me what to think about the news (Rush, Hannity, etc...) and we'll listen longer.
While the town square effect disappears, it's void is replaced a legion of new opinion leaders and tastemakers that as a PR pro, you need to find creative ways to leverage to your advantage.
Posted by: Bob at November 15, 2004 4:48 PM
Bob,
I just worked on the announcement of Mel K's joining Sirius Satellite Radio as CEO. Now I am even more convinced of the potential of the medium.
Posted by: Richard Edelman at November 24, 2004 1:42 PM
Great post! I'm looking forward for more. ,
Posted by: Alexander Kolt at August 30, 2005 2:07 PM