• by Joe Mandese  @mp_joemandese, June 20, 2006

A while back, I quipped in these pages that print was the original digital interactive medium. People have always interacted with print media by turning the pages, and they've used digits -- usually their thumb and forefinger -- to do it.

I used that point to explain how print media were using digital technology, not fingers, to extend their interaction beyond the printed page. But the same thing can be said of all media. As media adapt to digital platforms, the nature and degree of interaction people have with them are changing. And as some industry insiders complain, it's not always for the better.

Let me put my finger on two media: newspapers and television. The rapid migration of newspaper content online has fundamentally changed the relationships between publishers, readers, and advertisers. Organizations ranging from Dow Jones & Co. to The New York Times Co. continue to wrestle with the implications. In the meantime, online players like Craigslist, Monster, and eBay have eaten into newspapers' formerly lucrative classified marketplace, while many national advertisers question the efficacy of print altogether. While newspapers remain the most trusted source of news within local markets, the issue is distribution. The fact is, younger consumers simply don't read printed newspapers. They access them online.

Digital media are having a similar effect on television. As TV programming shifts from static, one-way distribution to a dynamic, on-demand, viewer-controlled mode, it's exposing huge economic flaws in the traditional advertising model. Reach no longer equals the size of a medium's audience. We observed that during the 2006-07 network upfront negotiations, Madison Ave. rejected the networks' push to use time-shifted ratings as the basis of their advertising guarantees. Most if not all buys during the TV upfronts were made on the basis of so-called "live" ratings only. But recent data compiled by Nielsen Media Research indicates that as much as 18 percent of prime-time viewing in DVR households is done in playback mode. DVR penetration is still relatively low in the U.S. and within Nielsen's ratings samples but as it grows, it represents a major correction in the economics of the TV advertising marketplace.

Beneath these shifts are real changes in the way people consume media, and ultimately, how media content is paid for. Veronis Suhler Stevenson tracking data indicates that the amount of time people spend with ad-supported media is dwindling. So what happens when the media marketplace becomes a truly open market for consumers and advertisers alike?

I'd venture to say it will become a much more efficient marketplace for both parties. Consumers might get the content they want, when they want it, and where they want it. And in principle, that's a good thing for marketers, who should care about reaching consumers with media that are relevant. But there's troubling math in that equation. As media become more efficient, those changes will challenge the traditional economics of media companies. Essentially, that means charging advertisers for lots of impressions that may never actually impress anyone. It won't be an easy transition.

And digital media aren't exempt. As content and consumption flow to the Internet and other interactive platforms, online venues will be hard-pressed to convert the old economics into the new. Online media is currently is priced more efficiently than its offline counterparts, but so far doesn't appear to be able to scale the volume of inventory represented by the old media impressions model. The same goes for the nascent interactive TV marketplace, where on-demand and addressable ad models are supremely more efficient than broadcast or cable TV, but they're also a lot smaller.

Meanwhile, the pirates of AAARRR!!! have come ashore for this month's issue, rolling their dice of dark chance across our pages in the form of a flipbook in the upper corners, and adding other interactive flourishes that we hope spur you to interact  or, as Madison Ave. likes to say, engage.