Media and PR need to move up the value chain
posted by Phil Sim on July 2, 2010Over time, most businesses will see their core value proposition chipped away at. Competitors will seek to under-cut you. Technological advances will shift the landscape. Your offering will invariably be commoditised.
The media business and probably to a lesser extent, the PR industry are in that position now.
The media’s core Unique Selling Proposition (USP) was that they could help marketers reach larger, targeted audiences more cost-effectively than anyone else. The Internet has undermined that position on two fronts. Firstly, it’s ability to provide reach has been commoditised – there is a near endless quantity of inventory that has brought online advertising rates tumbling down and applied pressure to offline rates. And secondly, it has been out-targeted by search.
What media companies need to do, especially niche and specialist publishers, like most of the companies that keep our community employed is re-evaluate what is their core asset base in today’s environment. It’s not reach anymore. What is it then?
How do media companies achieve reach? They use their specialist knowledge of whatever subject or industry they are covering to tap into their audience’s psyche and draw them to their offering. What do marketers seek to do – they want to tap into their audience’s psyche and draw them to their product. Snap. It’s a match.
What media companies have as a truly unique selling proposition if they seek to exploit it, is an unrivalled understanding of the audience they serve. Compare a media company’s understanding of its readers with that of an advertising agency. Then think about the rates that advertising agency’s charge and tell me why media companies aren’t in a position to disintermediate or at least undercut Ad agencies. Hire a creative director from Adland and start seriously engaging with the client to either collaborate on campaigns – or for smaller clients – to design and run them.
Most media companies now have a suite of products they can use to reach the target audience – websites, events, mailing lists. Media companies should know how to get the most out of those various tools and can also take advantage of cost-efficiencies surrounding bundling of the various components of a campaign.
This model doesn’t scale as well as traditional media models. Adopting a more consultative relationship with the client, means taking on new customers isn’t as simple as adding a few extra pages to your magazine or loading up some new banner advertising onto your ad-serving platform. But then what media companies are struggling with how to scale right now?
Incidentally, in my view, PR agencies need to start thinking likewise. With wire services, online media databases and so forth, the tools of the trade for PR agencies are now easily accessed, cost-effectively by any business or organisation. Like the media, PR agencies generally have quite a deep understanding of their client’s businesses – more so than other marketing services.
Again, that knowledge needs to applied further up the value-chain. To some degree it is, as agencies move into social media and there is the odd agency who will also do advertising and media buying. However, most agencies aren’t geared to do this. How many agencies employ a creative director? None that I know of.
Indeed, if both the PR and media industries move in this direction together, it’s hard to see where the Ad agency can add any value. And that’s a massive swathe of any marketing budget to be divvied up between the two sectors.
