STATUS

Review and Reevaluate F’16

 

A conversation between media consultant Mason Bandrage following his latest visit with Livingston Grim, Publisher, Cronkite City Chronicle

             You and I have been in this media business for a long time, Liv. We’ve seen many changes, but some things are clear, technology has morphed in ways we never imagined, but humans and business structures are still pretty much the same.

            You’ve asked me to review the Chronicle in view of all these changes and the needs of the shareholders in today’s business and media climate. Below you’ll find my report. For organizational purposes I’ve presented it in three sections; Things we know, challenges ahead and potential solutions.

            Before you read on, Liv, know this; I believe the Chronicle can survive for the near future, but there is no doubt serious change must take place. Whether it is simple cost-cutting or more extensive offering of additional revenue generated initiatives, decisions must be made and change implemented.

            For what it’s worth, you can tell your shareholders you’re not alone. I have another client, a television station, with the same issues. Some of the facts are different, but the changes in the media business are structural, not simply limited to your newspaper or my client’s TV station.

 What we know:

  1. The media business has flourished for a century on the revenues from advertisers presenting their products to audiences we assemble.
  2. Retailers also have enjoyed good fortune pursuing this symbiotic relationship and journalism has benefited mightily.
  3. There are two kinds of innovation, sustaining and disruptive. Sustaining simply improves and existing product or content while disruptive meets the same consumer need in a different way
    • Telephones improved with touch tone dialing rather than rotary dialing. But cell phones allowed consumers to dial from anywhere.
  4. Business structures remain the same. McKinsey’s Seven S’s continue to guide executives as they organize and analyze their companies.
    • If there is something wrong in their numbers (the income statements) look to the 7 s’s
      • It’s how a company is organized?
      • How it thinks of itself vis how consumers think of it?
      • They skills it employs and are those skills capable of producing products current consumers want?
      • How the company engages the market? What strategy does it use?

The Challenges:

  1. The Internet has changed everything. Market has shifted from PUSH to PULL making awareness of consumer needs and wants critically important
  2. Technology has simultaneously enabled consumer to meet those needs differently
  3. Consumers can now receive what they want, went they want it, where they want it
    • This means platforms matter
    • Deeper understanding of consumers
  4. The result is declining advertising revenues for traditional media all across the country.
    • Advertisers are still advertising, now they’re just seeking alternate means to reaching consumers
    • And they are seeking data to support the value of their advertising
  5. Making matters worse for legacy folks, digital media providers will take any amount of money for their services. There is no metric that is stable
    • CPM, cost per thousand, had been the standard for half a century or more. No more, too broad and imprecise.
    • Digital providers, mainly start-ups, are so numerous, the money is split too many ways for sustained success
    • All of the money now going into digital has come directly from traditional media.
  6. Change is inevitable and unavoidable for any media organization that is focused long term.
    • Change within an organization is difficult. Shifting the culture to accommodate a new business model is at the core of the problem.

 

Potential Solutions:

  1. Begin to see consumers as tribes or niche audiences, some larger than others, but no longer as one huge group.
    • Advertisers don’t and neither should we
  2. Some good thinking is presented in an HBR piece entitled “Two Routes to Resilience” by Clark Gilbert, a former Harvard prof and now Publisher Desseret News in Salt Lake City, UT.
    • He argues no one company can engage both a legacy world (called CoreCo) and a new technological world (called in this case NewCo) at the same time.
      • Skills are different
      • Culture is different
      • Brands are understood differently
      • How business is measured is different
  1. In short “Transition B” or NewCo is a lead generator. CoreCo or “Transition A” is point to multi-point provider of information, commercial and news.
    • They are both lead generators, the difference is the two way specificity NewCo offers.
  2. There may be a solution in servicing smaller audiences differently, but bundling them for sales purposes to reach the equivalent of the CoreCo model may present an answer.

 

Suggestion: Cronkite/ASU from time to time assigns student teams to analyze and propose changes for traditional media to better engage the future all consumers and Millennials specifically.