Futures: Industry Leaders Cite Integrated Tech, Content Delivery

by Steve McClellan, Oct 4, 2012, 5:57 PM

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Closed digital networks, “collaborative consumption” and “functional integration” are just a few of the big developing trends cited by industry CEOs in the media-marketing space at a Thursday Advertising Week session moderated by New York Times advertising columnist Stuart Elliott.

Tim Armstrong, CEO of AOL, noted what he called three “mega–trends” developing in the industry today, including the growth of closed networks offered by industry giants like Google, Apple and Microsoft that aggressively market both devices and media platforms to consumers.

“That’s a massive change within the industry,” he said, where content and devices exist within “ecosystems” created by individual companies. Armstrong also cited the movement of traditional marketers into the technology space -- such as Nike with its FuelBand service that allows consumers to track their physical activity with a wrist device called an accelerometer. “Offline companies are getting better and better at technology,” he said.

He noted the rise of trading platforms at agencies that effectively allow “brands to become publishers on big platforms.”

Bob Greenberg, CEO of RG/A, the agency that developed FuelBand for Nike, talked about companies like Amazon and Apple that “have the consumer surrounded by products and services,” a tactic he described as “functional integration.” That was the idea behind FuelBand as well, he said. It is not only a product, but also a measurable media platform with a community of FuelBand users that totals 7 million.

Nike has created its own ecosystem combining products and a media platform. “Technology has disrupted everything,” he said. Clients are both excited by the opportunities and “terrified about how to make change happen.”

Time Inc. CEO Laura Lang said she sees a “profound shift” in media consumption behavior -- a shift where mobile may be the biggest game-changer. At Time Inc. going forward, the company will “have no primary platform to tell our stories.” Instead, the company will be prepared to deliver content that consumers want, wherever and whenever they want it. “But we need better consumer data to do it," the former Digitas CEO said.

Social media also presents an opportunity for publishers to be “curators” for consumers, Lang said. “Who wants to go through a tremendous stream of social commentary?” she asked. “We can help curate."

Dan Rosensweig, CEO of Chegg, the online textbook rental company, said the basic idea was to help students avoid bankruptcy upon graduation from college by helping to cut their costs. “We saved students $1 billion in textbook costs over the past year,” he said. The company is part of the “collaborative consumption” trend, he said. Netflix does something similar in the entertainment space, and other online companies are emerging in other sectors such as home rentals and driver services.

Rosensweig also used the term “disruptive” in describing Chegg’s business model. Lots of colleges and universities don’t like it, he said, because it potentially draws revenues away from their own bookstores.

Josh Sapan, CEO of AMC Networks, said that technology and the resulting media fragmentation have transformed TV’s business model. The old model was about “who wins and who loses,” primarily based on Nielsen ratings. But with literally thousands of viewing choices, he said, that model is “now eroded and all but disappeared.” Technology, he added, “has turned foes into friends.”

Conventional wisdom used to be that the more a TV program was repeated, the less value it had. Now, services like Netflix are seen as potential ratings boosters because they expose viewers to programs they hadn't seen and drive audiences in bigger numbers to future seasons. Social media, added Sapan, gives viewers an outlet to talk to fellow fans about programs. Networks, he said, “need to create communities around the stuff they air and treat those communities preciously.”

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