Just as we were becoming comfortable with relationship marketing and direct response marketing, we’re now finding ourselves blindsided with the arrival of what might aptly be called ‘convergence marketing’.
Rapidly emerging and converging media – with expanding mutations and iterations – are at the very hub of a marketing revolution, creating a wellspring of possibilities in the quest to communicate faster and better.
The convergence of Internet service providers with those who provide information and entertainment content, not to mention the consolidation of content-driven media players themselves, is forging a brand spanking new stream of marketing – and guaranteeing a bumpy ride for marketers forced to cope with a complex matrix of fast-changing variables.
Regrettably, many marketers and their advertising agencies – particularly the latter – are caught in a difficult situation. Collectively, they’ve been overtaken by events. And, for the time being, they’re likely to do little more than go along for the ride until things sort themselves out.
Clearly, convergence represents formidable, exciting new territory for virtually all marketers. Witness the AOL and Time Warner deal. After hundreds of column inches devoted to its analysis, there’s little left to say on the subject. But it boils down to this: Time Warner’s supply of content, appropriately packaged for the Web, will be folded in as part of AOL’s service-provider package. In what promises to be one of many such deals, content and service providers have been duly wedded.
The Sports Network (TSN) reports that it is now commonplace for 25% or more of its viewers watching curling tournaments and wrestling matches to be online with TSN at the same time – participating in chat groups or retrieving data. That’s an impressive figure and one that would have been unimaginable only a few short years ago. TV and the Internet are indisputably coming together.
So where does convergence leave marketers – other than in serious need of a good navigational map and a landing strip? Arguably, the air traffic controllers in this converging environment can be found in the corner offices of the larger media management agencies. These shops are currently our best hope – they’re clearly the best-positioned to develop the skills and marshal the resources to guide us. But even so, their challenge is daunting and limited by a number of cold realities.
The fact is, only a handful of Canadian advertisers are currently oriented toward leveraging the convergence of media. And many media management agencies are finding that the critical mass required to warrant heavy investment in skilled people and requisite resources falls short of what’s necessary to make a business case.
To complicate the situation, standardized measurement techniques for new media remain elusive and are not generally reported using yardsticks that jibe with those for traditional media. Thus, media management agencies suffer from a lack of available, credible and comparative measurement tools that enable them to accurately determine what media choices provide optimal delivery solutions. Some say trustworthy measurement is actually deteriorating – if only because there are so many media formats to measure.
The big nut to crack, though, is the ability of media management firms to find agile minds that can be wrapped around the implications and opportunities offered by the convergence of content and service providers. These firms will have to keep two feet in three camps – negotiating with both content and service providers and trying to match their combined offers to the needs of clients.
If that’s not enough to make your head spin, what about the notion of media management agencies themselves developing sales packages for service and content providers and then taking them to market – that is, promoting them to advertisers. It’s a situation that’s rife with conflicts, to be sure, but under appropriate circumstances, a curious possibility.
General advertising agencies, especially those that focus on creative development, are unlikely to be well positioned to take on the complexity of managing convergence. This is, after all, a media-centric game.
It has been predicted that while fees for managing traditional media are currently in the three to five per cent range, we can expect fees for new media planning and buying to skyrocket to 12-15 per cent. This is yet another blow to cost-conscious advertisers and a further challenge to the very media management operations that need the revenue to get on with the job.
Convergence also suggests the prospect of greater polarization of agency services: there will be those that specialize in creative, others in brand consulting, and those that deal with media. The latter is where we can expect to see real change and marketers will want to pay particular attention to the strategic orientation of agencies in this regard. Dealing with a large firm, with solid negotiating and buying clout, will be an even greater advantage for advertisers than it already is.
Sadly, many service and content providers are today bypassing agencies and heading straight to clients’ offices. But there’s little reason to believe the majority of clients are even remotely able to deal with the complexity of the media environment. It’s a pattern that has the potential to leave content and service providers largely unchecked from a variety of perspectives, including pricing.
Multimedia content providers and Internet service providers are just now beginning to sort out how they will sell their powerful, newly packaged potential. Their convergence, and ultimately the incremental nature of their selling methods and their various combination offers, will create impressive opportunities, however cloudy they might seem.
Providing informed advice to clients in this emerging environment is nothing short of mind-boggling, and media management firms are faced with a giant battle just to keep up. Nevertheless, hooking up with a strong and reputable media management agency is the best short-term bet for marketers who wish to wisely and safely negotiate the new flight patterns of convergence.
With some 30 years’ experience in media advertising, sponsorship marketing, direct marketing and public affairs, Peter Case recently established his own communications and marketing consultancy in Toronto. He can be reached at (905) 762-0182.
