• by Michael Drexler , August 20, 2001

This is a wake up call to all traditional media. The Internet is gaining, so take heed or some serious consequences may lie ahead.

Virtually all of the major media have been experimenting with their Websites, trying to develop sufficient revenue streams from advertising and e-commerce. And, many have been frustrated with the general lack of success these efforts have produced. So the inclination to turn a deaf ear to the Internet is somewhat understandable. But let me point out a few things that I hope will cause traditional media to at least take notice before they’re faced with an even bigger problem.

First of all, it must be recognized that media can’t simply replicate themselves online. If nothing is really different why would I need to go online? When an offline medium transitions itself online, it needs to add elements that make it genuinely needed as an interactive product, offering a significantly enhanced benefit from its traditional form. The personal computer is not a magazine, newspaper, television set or portable radio and is used for different purposes at different times and sometimes under very different conditions.

In other words, Marshall McLuhan was probably right when he put forth the proposition that changes in the way humans communicate is what shapes our existence. In other words, “moving from one era to another is brought on by a new mode of communication which causes some sort of significant change in society.” With the rise of the Internet it is probably truer today than ever before.

I remember the early days of cable television, when the broadcast media paid absolutely no attention to the little upstart that Ted Turner, Kay Koplovich and Bob Pittman spent years beating the bushes about, proselytizing to every advertiser that would listen. The broadcast networks took little heed and probably didn’t spend more than a few minutes in the boardroom talking about it back then. The fact is, broadcast dismissed cable TV for years before it dawned on a few of them that maybe owning a cable network was a good insurance policy. But it still wasn’t taken seriously even as cable began to wrest more and more audience share away from the broadcast networks. Then, a couple of networks figured out that there was a potentially new revenue stream there, with a different financial model that could also be beneficial in conjunction with their broadcast operations.

Certainly, I don’t need to remind any broadcast network that cable has now captured almost a 50% share of viewing and network ratings have decreased dramatically. And, it’s finally been recognized that a cable network can even be used as a repeat platform for distribution of some network produced shows after or during their run on the networks.

I sometimes wonder how long it took for silent movies to come to grips with talkies, radio formats to come to grips with television, newspapers and magazines to come to grips with TV journalism and cable news networks. Most recently, I’m wondering how long it will take for newsweekly magazines to figure out what’s going wrong.

The fact of the matter is that the Internet is slowly encroaching on all traditional media and if they stubbornly refuse to concern themselves with the online marketplace and examine their position, the day will soon come when more critical action will be required. I know this because the research is beginning to tell us so. Even if the numbers are not entirely accurate, and there are those who try to dispute it, the Internet is taking time away from every medium.

According to Lyra Research, about one-quarter of adult Internet users (18 and older) have cancelled subscriptions to general news magazines and almost the same percentage has cancelled their subscription to business and financial publications. Surprisingly, about one-fifth have also eliminated their lifestyle, special interest magazine subscription. The online study of Internet users also shows that on a net basis, 12% have decreased their TV usage, 5% have decreased their newspaper usage and 3% have reduced their over-the-air radio listenership.

I’m not verifying the validity of these numbers, only saying that this and other studies are pointing in the same general direction among Internet users. In fact, Scarborough Research, in its first national Internet study, also showed an alteration of general media usage leaning towards a decline.

Another sign to be watched by traditional media is on the advertising side of the business. Dot-com companies spent wildly two years ago (both offline and online) before the crash. And, while click-through was the basis for establishing performance for the online space, that too has changed. Today, impressions are fast becoming the benchmark of online performance, which is also leading the concept of branding by many companies to the Web. This is beginning to provide further evidence that traditional companies are slowly coming online. In only the last year, it has been reported by Jupiter Media Metrix, that the number of current Fortune 100 companies advertising online has increased by 21%, demonstrating a sea change in the advertising strategies of the biggest companiesAnd as broadband penetration continues to increase the appeal of the Internet will be considerably enhanced and the growth among traditional advertisers will accelerate with many new creative applications.

Finally, I must say its quite interesting to note that Viacom with its cable interests is now in charge of CBS, and AOL with its Internet interests is now running Time-Warner. So traditional media better pay more attention or they might find themselves owned by the new media they chose to ignore.

- Michael D. Drexler is Executive Vice President at Mediasmith, Inc., an integrated Interactive Media planning and buying company. During his 41 years in advertising he has been Media Director of Ogilvy, DDB and FCB as well as Chairman of TN Media.