An automotive industry insider talking on CNBC about domestic brands
said that dealer over capacity in the US has been a very real concern for a long time. He
said the retail car dealer business has seen downsizing of a few hundred dealers
per year (on average), and according to him, may now accelerate to 'a few thousand closings' a year as the overall business model of automotive retail
changes dramatically. His key point about strategy (as it relates to over-capacity) came last: He mentioned
specifically that the old hard sell-aggressive tactics do not work in today's
competitive environment for the consumer's business. Here's the easy lesson from this: Free markets that allow for lots of competition
show us how demand is or isn't being met. That is how free markets strengthen competition by focusing sharply upon the fine points of demand.
On so many levels of American society, trust is emerging as a
defining and essential characteristic in times that are turning tougher by the day. The example above about automotive marketing is not meant to stand above the trust issues in the banking crisis right now. This crisis of trust is what a society does during what I call a social correction...or what is also known as a period of declining social mood. It is certainly a theme
of mine in both these sites. I think that emphasizing the "trust" issue right now in this way will get our heads out of the sand (and the larger national crisis) and allow us to focus upon very specific challenges in the media vertical right now. It (trust) certainly has been an essential missing ingredient for a long time. Going forward, it must be built into how we engage multiple audiences
of customers(consumers of content and sponsors who monetize content). Media's challenge is on these two fronts and that adds to a larger likelihood for a dramatic shift in the generalized business model soon. (I explain more details behind this thought
in the current post series about the evolving business model in the media
business but it involves separate tasks of engaging consumers of content in a trusting and more revealing relationship that is respected and protected (Trusted). It will also require a revolution in metrics reporting that will quantify what is a growing value placed upon highly defined niche audiences that are priced in way that reflects both changes supply/demand characteristics of the overall content market and one that can deliver better means of engaged highly targeted audiences. Both of these are interdependent but will require so much specialization that they will eventually (IMO) involve breaking media companies into two parts so that the social miracle of specialization can go to work. (it's not so much an "if" but, a "when" because much greater efficiencies are essential in order to compete effectively with the wider market for content brought by the internet and now social media)
The really big picture tells us:
How we value things collectively
(as a society) changes as social mood changes. Social mood measures on average, how everyone
collectively and generally views an uncertain future (either with optimism or pessimism...think of it as a moving average). This,
in turn, drives how we create when gathered in groups...like markets of consumers or even producers of content. The differing kinds of trends that
appear in the two different periods social mood change notably. "Trust" just doubled in value (socially)
to all businesses and consumers as we question so many widely held values right
now. The headlines say it all. This is a key period of social change right now...not just in
financial matters but also in socially shared values.
It is somewhat ironic to me that when confronted with this need for trust and profitable evolution (one that has really been developing a long time), parts of the radio industry most needing change (certain companies whose business is focused on formats geared to minority audiences), use this
developing emotional social construct to point fingers, deflect attention, and arouse suspicion? Actually, socially, it is to be expected. If radio is to emerge as a functioning, profitable vertical in a universe of new media, something must be done right now. Stopping progress because a few political buttons have been pushed by distressed businesses is outrageous. PPM (personal people meters that measure actual listening electronically instead of recalled listening) are an essential first step. I am as outraged at a flagrantly selfish, political move in an electrified election season, as those affected claim to be. The market for electronically measured radio listening is not an option. Electronic ratings measurement must go forward now or radio as a brand risks becoming so marginalized that the name "radio" may soon become an anachronism of something that refused to change so it died off....very quickly.
The information age is here and over the air broadcast is teetering on irrelevance. The circumstances are a lot like the banking problem today was just a few years ago. Problems this big do not just manifest overnight. Radio, like many old media businesses, is in crisis. The improved metrics that PPM offers sponsors is a bare minimum offering to assist during this transition toward another stage of evolution for broadcasting businesses. That just a few competitors out of the entire industry are crying "discrimination" and "fraud" is among the more selfish acts I've witnessed in 20 years watching the industry. The part of the business where measurement created the largest adjustment (and one that intuitively makes a lot of sense) is the very part of the industry that now can only find recourse among politicians vying for attention from an incoming potential Democratic administration, instead of a meaningful quorum inside the industry itself. Can 10 or 20% a the radio vertical in big markets really hold back an entire national industry from competing more effectively with internet based businesses stealing their revenue more everyday! This move ignores the imperatives on old media companies right now. The opportunity to be better marketers of content is now. Trust is essential with sponsors and if lost will be exceedingly difficult to regain (ever perhaps). Trust with listeners is a more complicated subject but in lieu of an answer by the radio broadcast industry, tomorrow's listeners (younger people) are learning new ways to get what they want today in the digital environment...and that is the Era of Choice we are all experiencing. No judge or politician can stop the era of Choice. (More on this in part 3 of the series next week.)
For now, let's going back a few years....
Google's
ubiquitous "click" was the first skirmish in the media "reach" war. They created
a better "reach" metric and sponsors increasingly bought it because it offered something typical ratings did not...proof of interaction. PPM (personal
people meters) in radio are now seeing incredible inside resistance because they
reflect more detailed use patterns that will change how radio is monetized. The
irony is that it will not be long before PPM is seen to not go far enough at
effectively measuring different aspects of engagement.
Trust flows naturally when
transparency exists on all levels of business transactions. Wide open competition usually forces
transparency in markets. Our Congress voted to spend our $700 billion right now
because transparency was lacking and trust was violated for years by a small
industry of broker/dealers. The untrustworthy will now be corrected out of
existence in banking by various means. Social support of this will be overwhelming these next few years as outrage becomes a mainstay of social expression. Many industries across the US will purge untrustworthy/un-transparent business competitors as more is expected in these changing times. Make no mistake, this is an incredibly persistent social trend and not an industry issue in one or even a few businesses. This is the main benefit of seeing and understanding social mood (see my other site: The Root Trend if you are interested)
PPM will eventually be made to fine tune effectiveness of building content but this initial resistance is pure BS. After many decades of using recall, and now, seeing clearly from a year's worth of PPM numbers already that recall elicits very different results from all markets. This change to reporting of actual behavior from reported behavior is like removing a subsidy to a business enterprise after 30 years. Rather than deal with how to compete better, it is much more effective in the very short term to calling it "fraud". And yes, it is possible that such language is the result of politicians seeking attention in election season, I submit that the media industry knows all too well how greater transparency is not optional right now. The larger reality is that PPM shows clearly that how we behave and how
we remember it are two different realities...and this is a common theme across behavioral measurement.
Calling PPM radio ratings "fraud" is indicative of elections and ambulance chasers. It puts iPod, Pandora, and all non-radio forms of streaming music miles ahead of radio. This is an entire era beginning where trust is much more valued and demanded. Seeing that is essential right now. And while the public may be outraged into action by minority broadcasters, for now but, punishment will come later. The market has a memory. Every market has a memory. The problem is that if we think personal recall is good enough, acknowledging this fact is a stretch for an entire industry. This is why I write about social mood's impact upon demand in business. The key is to stand out using this information and not follow the pack right now. Emotional thinking about how great radio was in the good ol days is fine at the museum of broadcasting, but not for everyday business in the digital era.
I will end on some good news: When a new level of trust is established by
media companies with consumers of content (and sponsors too), a new era of cooperation will begin. When distributors of media build cooperative, trusting relationships with consumers of content to produce 'better than ever metrics',
engagement will reach new levels and part of that process will mean better content and a better marketing environment for sponsors too. Trust is something that is earned and demonstrated over and over. Trust is not legal jargon on a contract. Trust is delivering what you promise to deliver and proving it. Think about it.....actual "clicks" made Google what they are today and there is no denying that fact. The PPM brand is a promise and, from what I understand, it is designed to be statistically similar to the diary method used for decades. So the real difference is between human recall and electronic measurement and isn't it interesting that in multiple markets where it exists already we see a common pattern of listening that somewhat consistent. . The rules of the game didn't change. The social weather has... Dave
Next up, Part 3 of Media's Brand New Business Model series in a week or so....
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