Commentary

Digital Media: To Survive, Embrace Your Yin And Yang

The top priority for companies engaging in the digital media blitz is to get used to the uneasy challenge of opposing forces: the meteoric growth and opportunity of interactivity grinding against strained economics. That friction is a core dynamic of this new business era.

Public comments from leading executives of media, entertainment, advertising and Internet companies in recent weeks were devoid of any sense of this fundamental push-pull phenomenon. Most danced around the issue of whether a recession exists--as though recent declining economic indicators had already settled the matter. Others focused on leveraging their brands and restructured assets in an exploding global market, regardless of universal consumer pain.

There has been too little straight talk about the angst created by opposing forces, which will get worse before it gets better. A prolonged, consumer-led recession will undercut advertising and retail-based returns at the same time that media-related companies struggle to restructure and reinvent business models. The result could be tempered, if not ravaged, financial scorecards in the earnings quarters to come.

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Here's some advice to all. It is for media buyers and sellers gearing up for what they think will be a routine upfront advertising market --even as Google is infusing the market with new ways to buy and sell time. It is for the Internet entrepreneurs stunned by the swift shifts in their paradigms and for the content creators and distributors with new digital links to consumers and the same old legacy cost structures.

Get hold of your yin and yang.

There are no quick or easy answers to your problems in an emerging digital market hamstrung by a recession and a credit crunch. You will miss opportunities to build new businesses and value if you fail to understand and embrace the opposing economic, technological and creative forces altering all lives and businesses. A first good step would be to accept that the nature of digital interactivity is all about dichotomy. For instance, the open access that makes the distribution of intellectual property a commodity also facilitates illegal pirating and use of copyright content.

The technology that is spurring electronic commerce, even as recession is stifling brick-and-mortar retail sales, also makes it possible for hackers to defraud cyber consumers. The spontaneity that instantly puts credible information and data into our hands also generates unsubstantiated, even destructive chatter.

The auction pricing, targetable placement and virtual marketplace for advertising that is squeezing increasingly outmoded print and television marketing models is providing all players with more accountable and effective pathways to the consumer. It fulfills the ultimate goal of revenue-generating transactions.

In the interactive digital world, it's all about cause and effect. For every problem, there are multiple solutions. For the destruction of old tenets, there is the creation of new options. The only way to know is to candidly address, analyze and execute.

A good second step is to adopt a positive, proactive studied approach to the rush of technological, structural and financial change. Enduring that exercise makes it easier to recognize that the glass is really half full.

The economic recession and credit crisis are dire, and will have a pervasive, trickle-down impact on all consumers and businesses. But they also will force consumers and businesses to re-evaluate their priorities, processes, relationships and metrics. Just as the economic turmoil poses problems, digital interactive technology provides necessary and constructive solutions.

The customer and advertising pullback taking place will take an especially big toll on print and broadcast. It will push traditional media and advertisers to the threshold of digital options. At the same time, the Internet's wild growth will be clipped by the economic realities from which no new interactive digital business is immune.

A good third step is taming and tapping the opposing forces of economic strain and digital boom; take ownership of what you can control. The most important task is constructing a new rational economic framework for doing business. It is fundamental to everything.

The deals galore that will continue to prevail in realigning old assets and creating new assets hinge on accurate valuations and metrics. In order to reset the flow of money and tap the liquidity that is hiding in the shadows, businesses must devise new credible ways of defining the value and pricing of goods, services and connections. The revaluation process can't happen too soon--whether it is redefining the value of conventional or transactional advertising messages on various media platforms, determining how to qualify audience engagement, pricing a company or redrafting the structured cost of producing and distributing content. Once you get the hang of it, you could surprise yourself. Friction was never so much fun.

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