Why would you buy advertising?

It's an honest question, and was the major discussion in an interview I had today with Lauri Sihvonen, a reporter from Markkinointi&Mainonta (a publication dedicated to marketing and communication professionals in Finland) at the Ateljee bar in Helsinki.

Lauri's magazine is a mostly paid subscription publication, but they also drive revenues through online and print sponsorship. His advertisers are trying to target M&M readers to sell their products and services. Let's say that over the next few years, his advertisers were able to collect the information they needed about the M&M readers they wanted to target, and combined it into their own customer database.

Here is the question I asked Lauri: If that was the case, why would someone advertise?

Let's really think about this. In general, companies advertise to:

• Reach New Customers.
• Remain With Prospects Through the Buying Process.
• Because Your Competition is Advertising.
• Because it Pays Off Over a Long Period.
• Generate Store/Site Traffic.
• Make More Sales.
• Because There is Always Business to Generate.
• Keep a Healthy Positive Image.
• Maintain Employee Morale.

I'm sure there are others, but those are the biggies.

But as companies gather the information they need about their customers and prospects, the need to advertise is almost eliminated. If a brand has similar assets to a media property, why wouldn't they just go direct (through content marketing), rather than go through a distributor?

Neither of us had an answer to the question - why advertise? New markets? Possibly. New Product? Could, but why if you already can communicate directly. Credibility? Maybe, but a brand that provides quality relevant and valuable information can quickly develop a relationship with customers/readers. Site Traffic? Content works best.

All that, and it's still an interruptive media choice (not permission marketing), and is almost always the most expensive choice....and...there are more free distribution choices available than ever before (just in case brands don't have the databases they need).

It's Not Just Print

And, as we all know, the move away from advertising has been happening for a while.

Advertising is projected to be down 13% this year. Could be more.

Advertising Age itself just announced that it was cutting its number of issues from 50 to 43 or 44 this year due to the drop in advertising. “It’s pretty horrible,” said editor Jonah Bloom. “If a publication loses 50 or 60 percent versus last year, that’s half your revenue that disappeared! A great quote from someone I was talking to the other day said I’m just kind of hoping if I can get to 15 or 20 percent down, I’ll be somewhere in the middle of the pack. You know what I mean? It’s pretty serious. In our case, we feel like we’ve built a number of non-print-ad-related revenue streams.”

One problem with the online strategy Jonah - online advertising is less expensive and may be better option for marketers than print, but it is less effective each year since 2004, as click-through rates continue to decline.

It's advertising in general that's the problem...all forms. Brands are going direct, both because they can and they have to in order to stay relevant with customers.

So this was Lauri's final question..."If that's the trend, and advertising will never come back, what are media companies to do?"

My answer: If the company is built upon sponsorship revenue, find a new business model, and quickly. Most media brands have excellent credibility, a great database, industry expertise and some have the best journalists. Those assets are a great place to start to offer products and services that are not sponsorship based.

In many markets in the very near future, the look of a non-media brand and a media brand, in terms of their general activities, will be nearly identical. Everyone is a publisher and media companies need to provide products and services to survive.

What say you?

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Comments

[Ardath Albee]

Excellent points, Joe.

I'd love to see some ideas about new revenue models for media companies. I think Tippit is capitalizing on these changes although they started out as a "new media" company.

Also, this post raises another question I'd like to toss out. Why would you buy lead lists?

I'd say it's pretty much the same argument.

[Joe Pulizzi]

I like your thinking Ardath. New Media business models should make for a great blog post.

[Jan Schochet]

Here's a model that actually does two things simultaneously. 1) It publishes good news--not in the religious sense, but real good news, rather than sensationalist horror stories that fill many regular newspapers and TV news stories and 2) does it online only.

I "heard it on NPR." Here's the URL:
www.goodnewsnetwork.org

The founder used to be a reporter for traditional media. Interesting story.

[Engago Team]

In B2B 7 out of 10 deals start with an Internet search.
Thus your leads are in most cases visiting your website.
The problem is only 3% will ever register for a white paper download or contact you directly.
This can be solved by implementing a web service that reveals the company names of your website visitors.
Additionally you can qualify these companies as leads by the visit data: search terms used, pages visited, duration of visits, repeat visit and information about the company and its' business.
Then you can cold call on warm companies as you can find contacts with the Internet Data Mining provided.
Interesting: www.LEADSExplorer.com

[dadaas]

Yea, everyone needs advertising. To promote brand or just to get more people talking about you.