IBM: Old Media Companies Should Create Chief Consumer Officer Post

by David Goetzl, Feb 22, 2007, 7:00 AM

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In response to the "consumer-in-control" movement, IBM's media-consulting arm recommends that "old media" companies create a Chief Consumer Officer post to ensure that the wills and whims of the target audience remain critical in all content decisions. If the traditional business model has been driven by "pushing" content at consumers, the CCO would work to maintain a focus on a "pull" strategy, in which consumer tastes would play a more prominent role in product development.

How much is at stake for traditional media companies seeking a pole position in the race versus new media? IBM says new media forms will jump from 11% to nearly one-fifth (18%) of total market revenues by 2011.

The examples of user-generated, ground-up content production catching traditional media companies standing still--highlighted by YouTube--have become legendary almost overnight.

A potential solution for avoiding this scenario, IBM says in its new "Navigating the Media Divide" report, is more vigilant monitoring of consumer behavior in order to nimbly capitalize on the seemingly instant changes. Enter a CCO.

"Put consumers at the center of your business and boardroom--create a consumer-obsessed culture and place a premium on continuous consumer feedback" was a headline recommendation that IBM gave in its report. The document looks to advise content companies how to evolve and succeed in a world of topsy-turvy business models.

"We think consumer-centricity may need formalization with a Chief Consumer Officer," the report says.

One of the IBM report's authors, Saul Berman, global media and entertainment strategy leader for IBM Global Business Services, referred to the recommended Chief Consumer Officer post as "a consumer advocate" in the C-suite advising how to stay a step ahead.

"Otherwise," Berman said, "consumers could be going in one direction and you may be chasing them."

"This type of a role could be useful for any organization that's beginning to realize their customers' opinions will matter, and their customers will be heard no matter how loudly they have to scream," said Curtis Bingham, who heads the Predictive Consulting Group and has written about the similar post of Chief Customer Officer.

Bingham estimates that a Chief Customer Officer position was in place at about 40 companies globally in 2004, and has increased to perhaps 150 now, including companies such as Home Depot and Sun Microsystems.

The CCO would also usher in a new emphasis on building databases, information depositories and customer-relationship management programs that can be used to build "predictive models" for developing products consumers hunger for. "Convert consumer data into competitive advantage" was IBM's succinct recommendation.

Plus, the CCO would lobby for taking a slightly less rigid approach to zealous protection of content rights, perhaps facilitating "avant-garde" consumers' desire to reuse and mash-up video and other content. "Give control to get share," IBM suggested.

"If you're a content owner, you have to do all that to maximize value for consumers ... but in a way to monetize it as best you can," Berman said. That could be ad-supported, subscription-based or pay-per-view or via other options.

Other recommendations in the report include: facilitate consumer ability to transfer content from device to device as consumption options increase in popularity, and explore cost-savings opportunities in order to devote a larger portion of investment to experimentation in the new media space.

"Take 20% to 30% out of your traditional business to fund it, even though it might be a revenue hit (in the short-term)," Berman said.

The report says it does not envision traditional distribution channels, such as living-room-centric television, "going into cataclysmic decline, given its resilience among Massive Passives and unparalleled emotionality and reach (even if diminishing). But we do expect palpable change nonetheless."

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