Media Changes Make it Tougher to Reach Consumers, Speaker Says

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NEW YORK -- A combination of brands, brawn, bits and bytes is what it will take to survive and thrive in the new media world, keynote speaker Scott C. Marden told publishing industry attendees yesterday at The Folio:Show here.


The needs of customers and advertisers are shifting, and the next generation's adoption of the Internet will leave many uncomfortable with the changes ahead, said Marden, president of information and media services at The McGraw-Hill Cos., New York.


"What I'm suggesting is that this is a market out of equilibrium," he said, referring to the time spent in each medium versus the ad spend.


Today's landscape differs vastly from that of a few decades ago, Marden said. In the 1960s, for instance, advertisers could reach 80 percent of the marketplace through the three main television networks. It now takes media buys on 100 cable channels for the slightest chance to reach the same percentage of people.


"What does that tell us? People are paying more for less," he said.


Cable TV this year will surpass the networks in ad revenue for the first time. It also will gain a larger share of audience attention.


Magazines, meanwhile, are fortunate to hang on to their 6 percent share of ad revenue even as the sector's spend grew from $107 billion in 1990 to $200 billion in 2003. Thriving magazine categories include lifestyle, home, health and automotive.


Newspapers and recorded music are the losers, according to Marden, as consumer behavior changes. More consumers get their music from the Internet, and many go online for news and information as well.


Marden expects the United States to have 230 million Internet users by 2007. China will match that number by the same year. India will take until 2017 to reach that milestone, though the ad spend in both Asian markets will not match the United States.


Collaboration between brands and customers will be crucial. Marden cited Coca-Cola Co.'s popular music site at www.cokemusic.com. It helps the beverage marketer connect with its audience in a media of their choice.


Taking the brand overseas helps. McGraw-Hill identified China as a key market 19 years ago for its BusinessWeek magazine. China is expected to become the world's No. 2 economy in the next five years. Europe will grow as well, leaving the United States to battle harder for share of mind and wallet.


Marden also said his company has doubled BusinessWeek's editorial staff outside the United States. And it runs distinct covers for different markets to accommodate local needs.


But publishers must keep in mind the evolution of customer needs, he warned. Customers have changed in the past decade.


McGraw-Hill got 65 percent of its revenue from advertising 20 years ago, but only 8 percent today. The rest comes from products such as its Standard & Poor's ratings agency and television, seminar, research and online properties like the recently relaunched site at www.businessweek.com.


BusinessWeek.com particularly is generating new readers for the BusinessWeek franchise. Packaged programs with advertisers like General Electric to include print with online are paying off for the advertiser and the publisher. These include a presence in McGraw-Hill's Aviation Week, Platts and BusinessWeek's print and online versions, all ideal locations for a jet engine maker like GE.


Much of McGraw-Hill's growth comes from non-print sources.


"Every one of our brands [is] strongly Web-entrenched," Marden said. "Our proprietary content is available everywhere and in multiple forms."


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