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Reversing the Digital Slide
The on-line media sector is in disarray, and the lesson to be drawn is that off-line business models—founded mainly on interruption-based advertising and on subscriptions—don't work for incumbent media companies in the on-line world. So what are incumbents to do? In the near term, some should consider an emerging advertising model known as contextual advertising, which targets consumers who plan to make a particular purchase and are thus more likely to be responsive. Not all media companies have the specific kind of content that lends itself to such advertising, however, and media businesses must therefore look to other marketing and cross-selling opportunities to increase their revenue.
The take-away: Media companies should be patient: all new media models take time to find their feet. They should also remember that incumbents are better positioned than their pure-play competitors to absorb short-term losses in hopes of finding a long-term audience.
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