If you think Chicken Little is just letting off some steam, think again. This sh*t is bananas, people. And not in a sassy, Gwen Stefani kind of way.
What am I talking about? The massive, apocalyptic upheaval taking place across the media industry right now… the realization of the Chaos Scenario.
[insert melodramatic sound effect here]
Before I inundate you with data points certain to cause heart palpitations, let me pause for a moment to say this: Chicken Little was a total spazz. From his perspective, the sky WAS falling. From mine, it was just a storm passing through. If only he had stopped panicking long enough to find shelter and maybe some galloshes, CL might still be here today pecking away at corn meal, instead of gracing my dinner table all crispy and warm.
Now—back to the Apocalypse!
After posting yesterday’s “The end of advertising as we know it” piece, I sat down to read the March 23 edition of Ad Age, which just arrived on my doorstep that afternoon. What, pray tell, is on the cover? This headline:
Sure, it’s an article penned by the same guy who presented the Chaos Scenario in the first place [Bob, if you're reading this, I think you totally ROCK]. But “I was right!” bias aside, he’s got a real point.
As evidence, I submit Exhibit A: Bloodshed across every corner of the media industry!!!!
- Amid 23% population growth in the past two decades, US newspaper circulation has dropped 20%
- Newsstand sales—the “profit engine of the ad industry”—fell 12% in 2008.
- Gross ad pages have dropped 22% so far in 2009 (and 2008 wasn’t exactly rosy!).
Lest you dismiss these data points as ‘just another victim of the recession,’ consider for a moment the remote possibility that it’s not; that the core issue behind these numbers isn’t circumstantial—it’s structural. To quote Wendy Harris Millard, co-CEO of Martha Stewart Living Omnimedia, “Advertising simply cannot support all the media that’s out there.”
UH OH. That’s bad, right?
- Clear Channel, the fearsome behemoth that some predicted would consume the entire nation like a cancer if not stopped, recently laid off 9% of its workforce, dumped 56 of its TV stations and is now struggling under the weight of $20 Billion in debt—with little prospect of salvation.
- Bernstein Research predicts a 20-30% drop in 2009 TV station ad revenue.
- CBS’s prime-time audience was down 2.9% in the last reporting period.
Meanwhile, the COST of advertising on television has continued to climb:
“The average price of reaching 1000 households with a a 30-second spot in prime time was $22.65 in 2008… but effectively more like $32, because between 150 and 200 of those 1000 households use DVRs to skip past the ads.”
So basically you get to pay more than ever to reach fewer people than ever. Awesome!
Of course, this might explain why “by mid-February, 71% reported having slashed their budgets, and 6% more said the cuts were on their way.”
The inevitable “disequilibrium between supply and demand” has taken its toll on online publishers as well.
- Usage is soaring, but value is in the toilet.
- Average click-through rates online are near zero.
- Consumers have gotten pretty good at ignoring and/or avoiding even the most clever ads online.
- Yahoo, the most trafficked website on the planet (3.5 Billion daily page views), has lost nearly 2/3 of its market cap since last spring.
- Doom. Gloom. And more doom.
So now what? Panic? Take a cyanide pill? Go back and get your MBA?
No doubt, most industry observers (and participants) will find themselves frozen—with that deer-in-headlights look—for some time. Some will indeed panic, drink heavily, and/or send me hate mail.
Which is why I’m here to remind you that everytime a door closes, another one opens.
To some, the glass looks half empty. To me, it’s undoubtedly half full.
Insert 3rd illustrative cliche here.
Here’s the deal, people:
The universe operates in an unstoppable cycle of birth, death, and rebirth. At the moment, we are—COLLECTIVELY (as a species, and perhaps even beyond)—in the throes of a profound and utterly incredible death/rebirth cycle, magnified by the increasing interconnectedness that technology now affords.
The question is, are you going to be the guy whining about how sour the lemons are? Or the one who makes a lot of people happy—and gets rich in the process—making the most delicious, refreshing lemonade?