Playing Defense When Offense is Required

October 1, 2011

playing offenseThe biggest mistake that broadcasters have made since the dawn of the Internet age is to behave as though they're still broadcasters. This understandable yet myopic view has set in motion strategic blunder after strategic blunder, because broadcasters define business competition as other broadcasters. If I'm a TV station, then I'm one of only a few in town, and that scarcity determines my ability to make money. Therefore, my "competition" is limited to the guys and gals across town with other big sticks in the ground, and this drives any attempts to create new businesses as well. I may appreciate that print, radio, yellow pages and others compete for local advertising, but my eye is on the other TV stations, because, well, that's my "real" competition.

In the early days of the Web, for example, television stations — helped by third-party ad networks disguised as station website providers — decided to build portals of community knowledge around their own brands instead of creating one stand-alone, all-encompassing portal. The branded sites seemed like a logical choice at the time, so the community was greeted by three, four, five or more variations, each built around legacy TV brands. WWWW-TV became wwwwtv.com. What was the natural result of this? Each served only the people loyal to the legacy brand. My viewers "liked" my site, and so forth. We became TV stations on the Web.

This led to the mistaken idea of "driving people to our website," as if that ever had the chance to do anything other than add an extra line of copy to every news report. Make serious money? Not a chance. Besides, who were we serving on those sites except our own viewers, and didn't we already serve them over-the-air and make lots of money off their eyeballs with commercials?

When TV stations examine the competitive landscape online, they look first to what the other TV stations in town are doing. The thinking is that if we're all doing the same thing, then we must be okay, but that's because we're content to be TV stations online. Every station has a Twitter account. Every station has a Facebook page. We've got YouTube channels, and we run blogs. We've piled so much stuff onto our brands that not much of the original branded product remains. We're schizophrenic and confused.

disruptive innovationThe problem is clearly depicted in a Borrell Associates-Harvard Business School slide that I relabeled nearly ten years ago. It's part of a series of slides depicting the growth of the disruption of the Web. The green circle is growing, and it ultimately overwhelms the blue circle. The blue, in the scenario about which I'm writing today, represents a television station, but the important thing to note is the gray area.

The gray represents concepts and technologies from the disruption that are being used solely to prop up the business model of the blue circle. Opportunity lies completely within the green, but media companies (TV stations) are unable to leave the comfort of the blue. The result is the "bolting on" of the new instead of exploring business opportunities deep within the disruption. Of course, the venture capital companies funding the disruption are very happy to see this. In fact, they're counting on it as they sneak inside the local advertising space with sticky, outside fingers.

They're playing business offense while media companies are stuck in the gray area and playing defense, which is why so few will survive. You can't grow by playing defense. It's just not possible, and the argument that local media companies must play offense AND defense today is a trap, because you can't do both at the same time. Playing defense always means somebody else is playing offense, and the problem is that offense is where we need to be.

Clayton Christensen has written about this phenomenon for a long time. After years of study, he came to the conclusion that the only way a legacy player can thrive with a real disruptive innovation is to create a separate business unit with the permission to kill its mother. This is nearly impossible, because it feels so much like suicide. However, it's actually smart business. Steve Jobs echoed Christensen's view when he noted that "if anybody's going to cannibalize me, it's going to be me."

The money available online at the local level is staggering, but media companies have a hard time believing it, because we only view advertising with mass media eyes. This is like looking at the Grand Canyon with a telescope, but it's all we know. It's the old saw about seeing every problem as a nail when your only tool is a hammer. We can do better.

My first efforts to help companies overcome this involved introducing the concept of a multimedia model and recommending an organizational chart that put the TV station on the same product line as everything else. This didn't work, because TV station groups could only see far enough to think of themselves as multimedia TV stations. Sigh.

And today, the NAB has invested in technology that will further enable local TV stations to BE television stations online by streaming their signals 24/7 within their designated market areas (DMA). There's a lot of excitement about this and, I'm sure, a lot of head nodding and high fives in broadcast boardrooms, but the whole concept utterly misses the point about what's really happening in the network. Sure, there may be occasions when people want to watch programs this way, but time is the new currency; do we really think the model of moving an hour's worth of prime-time commercials to personal devices is going to sit well with consumers? The bigger danger, however, is that "broadcasting" via IP weakens any spectrum argument that broadcasters might have in Washington.

The TV model of loading 30-second ads in and around programming is a zombie, and the idea of broadcasting online is a defensive move, not an offensive one.

The essential role of news organizations is changing, but the most destructive element of what's happening in our world today is that the nature of advertising is changing as well. Mass marketing is being challenged by dramatically improving methods of generating leads, targeting customers and direct marketing. Advertisers have become media companies themselves, choosing to put their money in their own content efforts instead of supporting the content efforts of others. And then there's Doc Searls' VRM movement, which turns advertising upside down by emphasizing consumer messages over advertiser messages.

As local media companies, we're involved in nothing — absolutely nothing — that smacks of offense, because our defensive units are always on the field.

It's time to take the ball and run with it.