Archive for February, 2010

Profits vs Quality

February 23, 2010

Media companies always look for the right balance between quality and short-term profits. Quality requires big investment in several areas: production, good supplies, research and innovation, distribution, customer service and on top of everything… people.

When recession arrives, managers tend to cut expenses. Some of the “cutting” is healthy: in fact, the crisis are excellent excuses to get rid of inefficient people and innecesary burdens. But the danger is to cut to much, to destroy the organization’s muscle.

When the crisis arrives, the goals should be i) short-term survival, and ii) to arrive at the end of the crisis helthier and stronger than rivals. Companies that “at the end of the tunnel” have not not big debts, preserve the prestige of their brands and keep their teams happy and motivated have good option to capture a big part of market´s growth. In times of crisis, managers should have drive and inspiration to keep the balance: they should reach the financial targets while protecting quality.

Media Companies and Advertising Income

February 16, 2010

The 2009 figures about advertising income in Spain have just been published. Total advertising expenditure decrased 14,8 percent. The crisis have been stronger in consumer magazines (-34,9 percent), sundays (-33 percent) and film exhibition (-26,5 percent). But other traditional media also felt the pinch: tv decreased 23,2 percent, daily newspapers 22,1 percent and radio stations 16,3 percent.

However, the most negative fact for media companies was that advertising in media decreased 20,8 percent while below the line advertising only decreased 9,4 percent. This difference could mean that advertisers are paying more attention to the effectiveness of their ad investments.

Media companies need to be more attractive for advertisers: they should point out to the quality of their audience and the power of their brands and contents to reinforce the commercial messages’ credibility; they should also sell advertising packs through several media outlets (print, audiovisual and online); and they should use more innovative marketing strategies when they deal with possible customers.

Good news for on line advertising

February 15, 2010

Although Internet enjoys most of the time -consuming media, the problem of making that time profitable remains unsolved. The most profitable business model has not been found. Editors, managers and shareholders keep asking: how can we make money of all these readers? Different strategies trying to make users pay directly for on line content have been implemented, but the results are uncertain.

According to the Report “2010 Deloitte TMT Predictions”, Internet will enjoy 15% of total investment in advertising by the end of 2011, whereas nowadays, the figure is 10%.  Obviously, newspapers and magazines will suffer the increase of on line advertising investment.

The growth of advertising investment in on line media means that advertisers are starting to take the risk, and trying to be where people are. Although much has to be done in terms of advertising formats on line, the fact of increasing the presence on line is a sign of maturity in the advertising industry.

Radio Networks and the Internet

February 9, 2010

Radio stations and networks have been a very succesful business for the last 80 years. In most developped countries, they got between 6 and 11 percent of total media ad sepending. They managed to keep low production, marketing and distribution costs and they were able to face the entrance of new strong competitors like TV.

In some way, the success of radio stations and networks has been based on their humility: on the one hand, they did not ask the listeners’ total attention; usually the audience is involved in other activities -eating, cooking, driving, walking…- while listening to the radio programms. On the other hand, managers of radio companies do not ask for high rates to the advertisers.

But the Internet has changed the rules of the game. Radio companies’ strenths have become weaknesses: Internet is not as portable as the radio; the users of Internet can not do other activities at the same time; radio is about sounds and Internet is mainly about texts and images… All those reasons are behind the lack of adaptation of radio companies to the Internat Age. The future of radio stations and networks depend on the ability of leaders in radio companies for sorting out such difficulties.

The Future of Consumer Magazines

February 2, 2010

Consumer magazines were the first and only mass media during the XVIIth century. But next century newspapers took over as the most influencial media both in Europe and America. Then, after the First World War, radio stations became more popular than magazines. The same happened with TV channels after the Second World War.

More recently, magazines have lost a new battle: now Internet has more niche products, gets more advertising income and attracts more users.

Magazines have low entry barriers and, because of that, there are more titles in the market than ever before -in spite of i) the advertising crisis and ii) the increasing number of subsitutes.

Editors of consumer magazines should be very innovative to sort out those problems. They have highly valuable assets: their brands. They should take advantage of them to create new products and services to attract new readers and advertisers.