The critical Mr. Heaton

The Muppets CurmudgeonsI was told a few weeks ago by a dear friend and industry observer that I’m too critical. His comment was that I was in danger of becoming like one of those Muppets curmudgeons that sits in the balcony lobbing relentlessly critical comments about everything below.

This isn’t the first time I’ve heard that I’m too critical, so I’ve spent a lot of time since then thinking about what he said. Perhaps it’s the biting nature of some of my prose, or perhaps it’s just that, by nature, I’m more inclined to see what’s wrong than what’s right. Of course, maybe the truth hurts, or “critical” is in the eye of the beholder. There’s also the “calling your baby ugly” syndrome. You could, I suppose, say that I come off as angry, and that probably wouldn’t be far off.

Nobody likes to be criticized. I get that and used to run from criticism myself. That was until a friend pointed out that criticism is very often somebody just trying to be helpful. I should welcome and truthfully examine criticism, because I might learn something in the process. I’ve done that, and it’s become a useful practice.

I’m always quick to point out that very little of what I write is what I call “all or nothing.” It can come off as such, if the reader isn’t aware of the thousands of other bits I’ve written that soften the blows. Is traditional media a sustainable business? I certainly think so, but that doesn’t mean that many won’t make it in the future. The idea that any market could sustain a dozen mainstream media outlets was born of scarcity, and that won’t be sustained for long.

One of the first essays I wrote on this journey was called “Is TV News Giving Away the Future?” I published it in May of 2003 and got a lot of heat for criticism of third-party ad networks running TV station websites. When I look at the “false assumptions” published then, most are still in play today, and there’s even a new wrinkle in the concept: Most media company groups now function themselves as third-party ad networks, so a central thesis in my overall philosophy — that third-party ad networks work for the good of the network but not necessarily for the good of the properties on the network — has been ignored completely.

I’ve been saying that the flexibility for revenue growth is at the property (local) level for so long that I’m actually growing weary of hearing myself say it.

So yes, I guess I’m a little angry. Angry not because “my” concept isn’t accepted, but angry because the industry that was my life for so long is walking into a trap, and nobody is heeding the warning. You’d think that my response would be, “well, at least they can’t say they weren’t warned,” but the passion within me won’t let it go, so I pound onward.

Perhaps I come off as arrogant. After all, what makes me think that MY view is the only correct view? My response is that at least I have a view. What’s yours?

If I’m too critical, then what’s the right balance? The opposite of criticism is praise. Am I to offer a few bones of praise as my friends and colleagues continue their trek to the brink? Praise for what? For behavior that fundamentally dismisses reality? “But, Terry, you’re asking too much? What do you expect these companies to do, stop every practice that the industry accepts?” What’s the alternative, I respond? The boat is sinking. How clear does the picture have to be before we jump to a vessel that’s going to stay afloat for awhile?

That vessel is not third-party ad networks. In fact, the new vessel has little to do with even Madison Avenue, which is the real problem in all of this. The advertising industry is in full disruption, but the industry itself doesn’t want to acknowledge the truth. Madison Avenue is very happy to keep us right where we are, for that validates its own illusion. The advertising industry needs a healthy self-examination, but to do so would not be pleasant. Meanwhile, the people formerly known as the advertisers are moving elsewhere.

Cocoa Cola, for example, just finished an experiment with Twitter and the World Cup. The ads delivered 86 million impressions with a click-through rate of 6%. That’s 5.16 million actual visitors to whatever Coke was selling. The company called the results “phenomenal,” because they are. We don’t know what Coke spent on this, but I guarantee you it didn’t cost what traditional advertising would have cost to deliver such numbers. And here’s the thing: Coke didn’t need an agency to handle the “buy,” nor did it need a third-party ad network to deliver the goods. This was easily handled in house. I mean, come on; it’s Twitter!

Twitter is what’s known as a pureplay Web company — those clever little (or big) businesses with no brick and mortal entity in the real world, who have the audacity to ignore Madison Avenue. Online advertising money, even at the local level, is shifting to pureplays, as witnessed by this comparison with Borrell research over the last five years:

Market shares 2004 and 2009

Pureplays, having already taken the overwhelming majority of national online ad dollars available, now have their sights set fully on local ad dollars, and, as pictured above, it’s working. These companies smile all the way to the bank at our strategy, because while we’re diverted “being media companies,” they’re in our wallets.

Gordon Borrell told me recently that he doesn’t think the local pureplay growth is sustainable, because sooner or later, they’ll run into the reality that they have no real relationships with the local business community (“local advertising is sold, not bought”). In that sense, he says, they “need” local media companies to work with them. He’s probably right, or it may be wishful thinking. Look, these people are smart and well-funded. The lack of relationships today doesn’t mean the lack of relationships tomorrow, for even the definition of “local” is changing in our networked world.

What competitive individual can look at the above pie charts and say, “I’m happy with my six percent?”

Our problem is that we think being a media company is enough. It’s not, especially when it comes to making money via the Web. And if you think it’s bad now, wait until mobile skyrockets. Who will provide the best apps for commerce in the local marketplace? You can bet it won’t be media companies. We’ll be too busy providing content. We think mobile is just another distribution vehicle, and making content is what we do. We’re good at it, too. But is it sustainable as a revenue-generator in a hyperconnected universe? I’m not so sure.

Oh we’ll see incremental revenue gains, but they will be paltry compared to what the innovators suck from our markets.

There I go being critical again.

The problem, I think, is that my views are based on behavioral observations. They have to be, because everybody “thinks” they’re doing the right thing. I’m critical at the most strategic of levels, and not only is that the provenance of the media companies themselves, tactics flowing from a corrupt strategy — no matter how well they’re executed — are a net liability. These are the very people I must convince, and that’s problematic when I’m “being critical.” Who wants to listen to somebody pound away at how awful your thinking has been? I get that, but again I ask, “What’s the alternative?”

Tactically, there are some amazing things being done by media companies these days. I know, because I’m a consumer of those products and services. Go anywhere in the U.S. and you’ll find best practices abounding. My difficulty in writing about them is that, at the end of the day, I find myself saying, “So what?” Tactics aren’t the problem; strategy is the problem, and shifting strategy requires a degree of courage not found in most board rooms. There I go again.

So on behalf of myself, let me apologize for being too critical. I don’t do it to insult anyone; I’m genuinely concerned about the future of a dying industry and passionately so. I don’t think there’s time for massaging egos along the way, and I’m sure that’s evident in what I write. Still, that’s the way of business, and I should be more accommodating. I’ll try.

However, to those that I come off as sounding critical, let me ask you this: if you can acknowledge even a grain of truth in what I say, will you please act on it?

(Originally published in AR&D’s Media 2.0 Intel Newsletter)

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