New Media & Marketing

Media 2.0 & Marketing ” The understanding that the network is the platform, that the economic rules are different, and that now the user has a value¨ Tim O´Reilly, What´s Media 2.0” Ralph D. Haiek Presentacion UTDT Abril 08

1. Proliferation Of Media 2. Media 2.0 3. Marketing & Attention Economy

Media Fragmentation • 40´s: Radio, Newspaper, Magazine, Cinema, Theater, Poster • 50´s: TV, Long Play • 60´s: Tape, Satellite • 80´s: CD, Walkman, Video Game, Personal Computer, Video Cassette, Mobile • 90´s: DVD, Internet, Email, PDA • 2000: HDTV, Itunes, Skype, Pods, Blog, Wikipedia, RSS, You Tube, IPTV

Station Centered The Good Old Days of Corporate Media We will decide what you want & need • Central editorial control • Government regulation (censorship) • One-way communication • Limited channels of information • Blockbuster & Top 40

User Centered Unlimited Choice: Any Time - Any Place - Any Way

+18,000,000 auctions 200,000,000 blogs 4,000,000 articles >100,000,000 videos (10 languages) (65,000/day) “The workers 1.5 million should 33,347,000 profiles residents appropriate the means of production” Prosumers

One-to-many to many-to-many online media catchup with traditional outlets

Web 1.0 = Web 2.0 1. Media 1.0 estatica 1. Media 2.0 participativa 2. Sociedad de Información 2. Sociedad de Redes 3. Capacidad de producir y 3. Capacidad de crear distribuir informacion comunidades 4. Cultura escrita 4. Cultura visual 5. Barreras de entradas 5. Personalizacion de los bajas, pero oligopolio en contenidos, amateur clasificacion y contrario a masivo recuperacion de info Web 1.0 was Commerce, Web 2.0 is People Ross Mayfield

without even leaving, we are already no longer there

Mass Media Value Dynamics Blockbuster strategies emerge due to the natural Attention economics of mass media: production is costlier than attention, so the dominant strategy is to invest in Attention attention (marketing cost wars), and economize on production (quality erosion). The result is a smaller and smaller number of concentrated players, who are forced Attention to invest more and more heavily in marketing as attention becomes scarcer. Attention Infra Production Distribution Marketing Retail Attention structure Attention Attention Attention

The Blockbuster Effect Example: Jurassic Park Merchandising: $50m Revenues Value TV Syndication: $50m Demand Output Video: $405m Box Office: $480m

Media 2.0 1. When there were only a handful of content choices, there was plenty of attention — and attention could be bought through marketing. 2. When there were only a handful of distribution channels, and the cost of entry was high, a handful of players could profitably compete for a slice of the attention pie. 3. Digital & Network technology has lead to an explosion of content and distribution channels, 4. The proliferation of media is destroying the economics of Old Media, which depended on a finite media universe. 5. As a result there is now too much media competing for too little attention, 6. Becoming more and more difficult to choose which of the infinite number of content choices are most worth their time, 7. Which on turn is a playground of opportunities for new micromedia players A recast of Umair’s argument

Micromedia disrupts the media landscape – Creacion de Valor reside en capturar la atencion escasa – Retail & distribution no son drivers de la creacion de valor, debido a que las barreras de consumo de medias son bajas: – Unlimited supply of TV channels, newspapers, radio stations, everything over IP, etc – El contenido de nicho es valioso (Hypertargeted, microdifferentiated) – New market spaces emergen para controlar como capturar el valor • …espacios que van a ser dominados por players que puedan realizar economias de escala en produccion y distribucion (no marketing) para eficientemente alocar la atencion escasa

Media 2.0 Value Chain Production Micro Re Production Aggregation Attention platform construction Production • 5 primary value activities – Micromedia platforms • Technology – Reconstruction – Production • Personalization • Human capital – Attention – Aggregation • Intelligent distribution

Snowball Example: Blog Syndicated by Yahoo News Micromedia revenues Value Syndicated by Slashdot Demand Output Syndicated by link aggregator Published on personal blog

Connected Consumption Los Mercados son Conversaciones • No es nada nuevo! • Un Ejemplo contracultural desafiante del mass media homogeneity: • Underground + DJs: Electronic Music 1. DJ pasa una selección de temas 2. Audiencia revela preferencias y satisfaccion con sus pies: informacion privada se hace publica. 3. Consumption externality: Tu baile reduce mis costos friccionales (transaction & search) 4. Los temas que maximizan utilidad agregada (Hits) son eficientemente revelados, and value creation is maximized… • Music listeners are a connected network – DJs realized it, the music industry didn’t…

Snowball Example 2: DJ Club Track Republished by Major Label Micromedia revenues Value Remixed, re-edited Demand Output Gets played at clubs, lounges Club music track

Edgeconomy: Markets + Networks + Communities • Trust is at the heart of value creation. – Relying in networks because we know them more intimately and in turn they even know us. (Tribu) • Light beats heavy – Lightweight models are possible because interaction is cheap - and utterly they dominate heavyweight business models • Open beats closed – Destroyed barrier to entry (to the public) means good stuff can be found, amended, corrected; it can live longer & in context • Free beats paid – Isn’t about subscriptions. It’s about tremendous economic pressures for atomization and unbundling

Niche Products on the long, tail-end of the demand curve often add up to a substantial market James Taylor

Why Marketing Value Shrinks • Simply… – As competition explodes for attention from newer, cooler, hotter content, attention becomes relatively scarcer, so marginal marketing costs don’t diminish in scale, but begin to increase in scale instead • Even more simply… – As attention becomes scarcer, it becomes more costly … – …and so economies of scale and scope in marketing erode because returns fall – …while production becomes more abundant and less costly, and so can realize greater returns • Marketing Value shift: – Media 2.0 dominant strategies are based on economies of scale and scope in production, distribution, and search – Which can realize superior returns to relatively abundant and cheap production resources by efficiently allocating scarce attention

The Attention Economy Media explosion means that competition for attention becomes truly intense, attention becomes relatively more expensive than production. These economics create competence traps for media incumbents in a 2.0 world: since attention is now relatively scarce, economic advantage flows to whichever players can allocate attention, not production, most efficiently. But media incumbents, have spent the last century largely developing exactly the opposite competences, by using blockbusters to allocate production resources, they´ve developed competences in buying attention, in marketing, branding, and star power. These competences become traps in the Attention Economy: Incumbents throw more and more dollars into marketing, star power, and branding, and less and less dollars into production, Each marketing dollar chasing a smaller and smaller return on attention, just to keep margins constant. This is the reason Hollywood (& other Media´s) marketing budgets have exploded in the last 20 years.

Marketing 2.0: The people formerly known as audience • Google. Builded world top brand by refusing to play by the traditional rules of branding. – It doesn't actively advertise much, if at all • Implicitly investing in consumers - instead of advertising on them, which ends up imposing costs on them. • Listen-first culture, not Sell-first: – a decision to listen to consumers – instead of talk at them. • The difference is not the product, is the relationship. – Google is distributed, not centralized like media before. Google works to model the human idea of relevance

• Olivetti ni siquiera se acerco a una computadora o a un wordperfect • The Revolution clasificados hace 100 años, no inventaron Los Diarios, dueños de los will not be Televised eBay, ni Craigslist, (los verticales de clasificados mas grandes del mundo) • Los noticieros de TV abierta no inventaron CNN. • Los canales de TV de Cable no inventaron YouTube (el sitio de videos de Internet mas grande del mundo) • Las discograficas no inventaron iTunes (el portal mas grande del mundo de musica online). • Ni los bancos ni las tarjetas de credito (ambos con cientos de años), no inventaron PayPal (el banco online mas importante del mundo). • Las telefonicas y dueñas de celulares no inventaron Skype. • Kodak, dueño del mercado de fotos (recuerdos), no invento Fotolog. Guido Grinbaum dixit 3 de los TOP 20 sites Argentinos son producidos por jovenes, sin antecedentes ni recursos

Credits All economy theory in Media 2.0 from Umair Haque - BubbleGeneration Slides • Media Fragmentation compiled from Gustavo Machado • The Good Old days - Future Brands • Rupert Murdoch - Linette Webb 2006 • Carl Marx - Future Brands • On line media catch up - Linette Webb 2006 • Tribal-verbal - Future Brands • Noam Chosky - Art Gustavo Machado - quot;The Noam Chomsky Web Site.quot; 2006 • John Lennon - Art Gustavo Machado - John Lennon Ofﬁcial Web Site.quot; 2006 Photos: Slide Unlearn - Price WaterHouse Coopers reports Slide Web 2.0 - Lynette Webb Slide Listen - Price WaterHouse Coopers reports

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New Media & Marketing

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New Media & Marketing — Presentation Transcript