The President does his annual State of the Union Address, the Governor and Mayor of Indiana and Fort Wayne do their annual State of the State and City Addresses, so how about a look at The State Of Media Advertising?
As we wrap up the 1st quarter of 2018, several items are going on that you need to know about.
First off, the television industry is going thru a transformation similar to what the newspaper industry and phone book business went thru years ago.
The short story is they are suffering. And so they are making changes.
But first let me fill you in on the paper stuff I mentioned.
Phone books have shrunk because of a couple of technology changes. One was the rise of cell phone usage and the dropping of residential landlines. Next was the rise of the web combined with smartphones that now allow us to talk to our phones and have it dial the business we want to call.
Newspapers are an anorexic shell of what they used to be. And again the villain is the internet. It’s not really fair to call the internet a villain, because for us as consumers, the internet is our hero. However, both the phone book and newspapers are only possible if there are advertisers paying to be in those print publications. And they depend on readers reading them. That has dropped year after year.
In Fort Wayne, we had two daily papers that operated under a joint operating agreement for advertising but finally last year, the afternoon paper went to an online only version with the exception of getting a page or two included in the morning paper.
Earlier this month, while waiting for a meeting, I saw a couple of local newspapers in the reception area. It was the Thursday edition and I know they printed it at a loss. Less than a dozen ads in the entire paper except for the classified section. Some sections had zero paid ads.
My industry, the radio broadcasting businesses is well over 100 years old and has had to deal with technology changes. AM radio stations used to broadcast network programs all day and night. CBS and NBC radio networks operated the way that broadcast TV networks do now. As a matter of fact, some of the early TV shows in the 1950’s originated on radio. With the growth of television, and decline in network radio programming, radio stations became more local and they also discovered a new focus.
That local focus included music and records. When I was a kid in the 60’s and 70’s listening to the radio was how we listened to new music. Some stations had personalities that were local celebrities and that was what drew me into a career in radio.
I could continue this history trip down memory lane, but let’s jump ahead to 2018. The internet is no longer the bright and shiny new thing, it’s an intricate part of our lives. This is having an impact on the TV business as mentioned in some stories I read in Mediapost. For example:
Declines in national advertising revenue have occurred in 8 straight quarters. Starting in July 2016 thru this week, advertising revenue for broadcast TV has been down between 1 and 4%.
Why? Well we have more viewing choices and some are really taking off. Netflix and other web based screen options have been posting gains over the years and that has hurt broadcast TV.
Some broadcast networks are attempting to fight back by reducing the number of commercials they will air.
Fox’s Two-Minutes-Per-Hour Ad Plan: The TV Times They Are A-Changin’
Fox will attempt to lure viewers back to their network by decreasing the number of commercial minutes down to 2 per hour and those two minutes will be very expensive for advertisers to buy. This might be a good move, but they are focused on the wrong problem. The real problem is having shows that people want to watch.
NBC created a hit recently with This Is Us. ABC has The Bachelor and Dancing With The Stars. CBS continues with hits like NCIS. None of these shows cut their commercials to keep viewers.
These TV networks are doing more than just reducing commercial time. They are adapting to the technology. My wife and I now watch more prime time TV on our schedule, with the on-demand feature from Xfinity. People can binge watch on their laptops or smartphones. Will the broadcast TV networks survive? Only if they have advertising support or subscription support.
The digital revolution that TV is going thru is also one that newspapers are trying to use by adding paywalls to their online content. But those dollars will never replace the lost ad dollars they used to bring in when newsprint was in its heyday.
Radio is also at risk, but for the most part it is less dependent on national trends. iHeart radio, the owner of over 1200 radio stations in the country filed for bankruptcy protection, but their downfall is not really a radio issue, it was a series of financial decisions that led to them owing billions in loans.
My company, Federated Media which owns WOWO radio and close to a dozen stations in Indiana is a privately held company and we are doing well. We also have a digital division that was started years ago because our advertising partners wanted someone they could trust to help them with the digital marketing revolution.
Which brings me to another Mediapost article and question:
The reasons are numerous. Most of the problems are related to marketing people abandoning something that is working and jumping on the digital bandwagon without fully understanding it. And the digital world is constantly changing.
I keep an eye on this stuff for my own interest and also for the best interest of my advertising partners and even before the outrage over Facebook and privacy issues that are still being sorted out as I write this, I pulled some of my advertising partners Facebook Ads and moved their digital spending to a couple of other options that have been very successful. Contact me if you want to know more.
Here’s the big picture to keep in mind. The technology isn’t going to retreat. And just because something is new and shiny doesn’t mean you should be an early adopter and abandon what is working. But neither should you stubbornly hang on to the old ways and ignore the future.
Want help? Let’s talk.
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