In December 1862, President Abraham Lincoln wrote in his second annual message to Congress:
"The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise with the occasion. As our case is new, so must we think anew, and act anew. We must disenthrall ourselves, and then we shall save our country."
Nearly 150 years later Lincoln's words are equally relevant not only to the state of the nation but to the state of the media and advertising business. It's perhaps inappropriate to compare the trials and tribulations of the media industry with the confronting realities faced by President-elect Barack Obama and those of President Lincoln during the Civil War. But we cannot help but connect Presidential actions and decisions to our own day-to-day challenges. The "dogmas of the quiet past" that offer comfort to media and advertising executives will be proven inadequate to the stormy present and future we face. The media and advertising business is struggling with both a cyclical economic downturn and a systemic overhaul of the industry.
Supply and demand economics are shifting from a marketplace with a history of great demand and limited supply to an oversupplied market with shriveling demand. Audience reach can be aggregated through myriad media sources at steadily declining costs-per-thousand. The idea that marketers will increase ad spending in economically depressed times is as outdated as the idea that Americans will go further into debt to sustain their lifestyles and spending patterns. And while marketers might very well rely on traditional media in troubled times, what happens as advertising executives approach next year's budget decisions with their businesses still in a free fall? Where will they turn?
Marketers and media companies are troubled and faced with a conundrum. How do you deal with the realities of a depressed economy and falling sales? How can management both meet short-term revenue demands and invest in the future? How do we "disenthrall ourselves" from the models and business demands of the past when we depend on these models for our day-to-day survival? And how can we possibly invest in new strategies and approaches when there is not sufficient budget to support the barest minimum of what we require day-to-day to meet our most basic goals?
Managers must define and implement two separate and distinct strategies.
First and foremost is to identify the survival tactics required to maintain revenues and profitability for the next 24 to 36 months. At the same time, you must design a vision for the future and begin putting in place the foundation on which to build that vision.
Companies emerge from recessions with visionary products and services that meet their customers' future needs, not with products and services that meet the needs and business models of the past. Yet you cannot escape the reality that investing in the future is unlikely to be justified in the current economy.
So the fundamental question is how can your business invest in the future when you cannot sufficiently invest in meeting your immediate business requirements? There are a few answers.
- First, reevaluate your immediate business goals. Whose goals are they – those of management and customers or those of Wall Street? If your company's goals are being defined by Wall Street, reassess them and if they are unrealistic in the face of the economic downturn, redefine them and be as conservative as possible.
- Build your 24-month business plan around dedication to meeting the core short-term business needs of your most important customers. What are the core assets and tools required to deliver on your customers' needs? Prioritize these assets and analyze their costs in the context of their value.
- Which of these core assets are also consistent with your long-term business vision and therefore should be maintained and which can be reduced or eliminated?
- Do you have a long-term vision?
- What new investments can be made that both contribute to your short-term goals and serve as building blocks for your future?
- Do you have the dual-management team in place to maximize immediate revenues and to put in place the foundation for your future? The skills and competencies are usually very different.
- Are you investing in cost-saving and revenue-generating technology and partnerships that can support short-term sales goals and enable you to shift resources to long-term strategic needs?
For at least two decades I have asked the same question of executives: "How much of your business today is built around traditional media pricing and research models vs. how much of your business is based on innovation, ideation and differentiation?" The typical response, 90% vs. 10%, has been consistent for the past 20-years and remains true even today. The 90/10 model is acceptable for media and marketers who follow the Wal-Mart model of every day low pricing, but even the dynamics around a sustained focus on traditional business rules are changing – with increased dependence on technology to deliver cost efficiencies. And traditional models are no longer acceptable for companies that seek to generate premium value for their products and services. Immediate investment with partners that represent the future – partners such as TiVo and a handful of others – will prepare you for 2011 and beyond. If your long-term vision is to shift from 90/10 to 50/50 or 60/40, you need custom solutions that enable you to transition from here to there whilesuccessfully managing through this depressed economy.
Jack Myers consults with media companies, agencies and marketers on defining business solutions and implementing visionary business models. He can be contacted at email@example.com.
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This post originally appeared at JackMyers.com.