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. So get hold of your ying and yang. Otherwise, you will miss opportunities to build new businesses and value.
Buying Bebo.com for $850 million boosts AOL's social-networking profile. But it will do little to improve its user engagement intelligence quotient unless it can master advertising without disenfranchising its fickle online communities.
Audience behavioral targeting and data tracking are becoming a more precarious double-edged sword for consumers, advertisers and Google-inspired Web masters. The creation and use of an individual's digital footprints are at the core of exploding online advertising. It is becoming the driving tenet by which business is conducted in the digital marketplace. Eliot Spitzer's fall from grace this week is one of the most dramatic examples of the potentially destructive power of the electronic information system enveloping users of digital interactivity.
With media chiefs finally conceding that their companies are under economic pressure, they are rethinking survival and growth strategies. This has been complicated by the digital sea change altering industry financial models. Core advertising revenue--a lagging economic indicator--is beginning to falter and shift to interactive venues, which also are proving to be recession-sensitive. They can no longer conduct business as usual, and they cannot convert to new markets fast enough to counter losses from a deteriorating economy.
Imagine hearing voices for every written blog on the Internet. Eric Tulin, CEO of ConvoCast, says he has a voice-enabled radio engagement tool that could revolutionize Web text blogging. Because participating consumers register their contact information and permission ahead of time, media companies can follow up with audience members and selectively incorporate comments in promotions.
A funny thing is happening on the way to the recession. Innovation and e-commerce are looking impervious to economic ravages, at least, for now. While retail store sales continue to take a hit, e-commerce continues to thrive. Car production pulls back, but iPhone production can't keep up with consumer demand. The market for tech innovation and mobile interactivity has a relevance that outweighs recessionary concerns.
Pity the poor advertiser. A crippled economy has arrested consumer spending. Television strains to bolster its diminished mass-market might. More accountable online metrics search for reward in an uber-fragmented maze. The business of buying, selling and creating ads is up for grabs. Still, unprecedented opportunity for innovation lurks amid the chaos. TV broadcasts have to give advertisers more online exposure.
Consumers and investors have endured enough media and tech barons to know that trusting visionaries doesn't always work out. Indeed, the public and Wall Street are now conditioned for a steady barrage of announcements from sector leaders like Apple and Google. When there's silence, it's assumed something is wrong. Stock prices drop. The blog machine works overtime with rumors. It's as if the World Wide Web has developed a click-and-download ADD. Well, it's time to get real.
Looking past the sexy draw of the smackdown between media moguls Barry Diller and John Malone is a statistical reality. The real determination is bottom line: Who is better at managing shareholder value, rather than asset flipping?
Contrary to popular belief, the biggest challenge in digital media is not producing or aggregating content and advertising. It is providing adequate frameworks to manage the deluge of interactive content and advertising--making a more efficient, lucrative experience for all concerned.