The Chaos Scenario – Part 2

6a00d83452c78269e2010534db323e970b-800wiIn the previous blog, we introduced The Chaos Scenario, Bob Garfield’s thought-provoking book that says the sky has already fallen on the traditional relationship between media and advertising.

This blog is set up as a Q&A. It is NOT verbatim. It is based on the sense of the long conversation Bob and I had. Bob has gone over all the text and said — and this IS verbatim — “looks good to me.”

The Broadcast and Cable Model

John: You seem pretty tough on ‘old’ media. There must be some bright spots. Take TV, for example. What would you do if you were in the TV business?

Bob: Broadcast and cable TV need to start by rethinking their model. Here’s one idea.

I would buy HBO because they are the only one who can make a fairly seamless transition to online distribution. In the short run, they will be the only game in town for high production, quality programming.

John: You mentioned they could put an HBO app on the iPhone at $5.00 a month or even less.

Bob: I really like their chances – especially at $5.00 a month.

John: What about the internet?

Bob: Online, two business models make economic sense. One is å la carte, like HBO that we just discussed, and the other is a micropayment using an internet EZ-Pass (electronic toll reader) or something like it.

John: Google just announced plans for facilitating micropayments, so it will be interesting to see where this plays out.

Bob: Right now, micropayments are totally theoretical – no one can get it to work yet – and the cost of building out the infrastructure is huge.

Then the question becomes is it worth 1 cent to look at a page of the NY Times?

John: All right, how about broadcast media? What about radio? What do you see for them?

Bob: The way it is going right now, there is no hope for radio. Its future will last as long as it takes for digital technology to work in the car – quickly, easily and safely. The only thing radio has going is ‘local’ and that won’t last long the way they are behaving. Public radio has more of a chance because people are writing checks directly.

John: It will take at least 10 years for safe in-car digital technology to get to the mainstream. What can radio do to prepare?

Bob: Be the news, information, cultural hub for the community, using text, audio and video.

The more local, the more targeted, the higher premium you can command.

John: Is radio doing that?

Bob: If they aren’t, someone else will.

John: Already TV news channels and newspapers are moving into the space. This could get very competitive.

Ad Agency Model is Broken

Now, what about ad agencies? How should they adapt to the chaos?

Bob: The agency’s principle problem is that compensation is tied one way or another to the size of the media buy. It’s been a shell game for the past 20 years. That model does not transform to a digital world.

John: What should they do?

Bob: They need to figure revenue streams based on consultancy. And, a consultancy model doesn’t scale. Which is why the chaos scenario is so disruptive.

If it were my agency, I would try to figure out a way to get a long term contract, focus on strategy and be able to quickly pull together an extraordinary team for production. Look at McKinsey, not Omnicom.

John: That’s a huge change. A lot of people won’t want to hear this.

Bob: It is very challenging. After all, how do you bill for an idea? It’s disruptive.

What Will Garfield Do?

John: OK, let’s ask how this affects Bob Garfield. You write a book in the digital age. Isn’t that the old model? And, you make your living writing for a ‘magazine’, a business where they are dying like flies.  How do you plan to avoid being a victim of the chaos?

Bob: If I’m even a little bit right, I’m 100% f**ked. My Plan B is not to learn how to be an MRI technician. It’s to be a scavenger feeding on the bloated corpses of at least two industries – media and advertising.

John: That’s a lot of feeding!

Bob: Businesses in chaos need help. My job is to draw attention to the change and then suggest ways to transform. One of the most powerful tools is Listenomics. It’s already working at Dell, Lego and even Comcast.

Business must listen to and engage the new consumer. They will be more profitable if they do.

John: It’s hard to change the old way of doing things. But, the proof in your book is amazing. Lego turned their company around when they were written off as ‘old school’. Dell is making major headway.

And, even Comcast started listening, but only after you started a website called Comcast Must Die. It’s one of the funniest stories I’ve ever read.

Tomorrow – Part 3. How Listenomics can help you and why Comcast must die.

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