I came across a pretty cool piece put out by the Jack Myers think tank talking about how a lot of digital media content companies are trying to generate revenue the same way traditional broadcasters have, and how that is a dead end.
Advertising is simply not a sufficient revenue model to sustain content companies into the long-term future.
For the foreseeable future, the pool of available advertising dollars will be stagnant. There are new media alternatives virtually every day and ad budgets are splintering into micro-fragments. Advertisers are being pulled in multiple directions. Dollars are seeping from traditional budgets into search engine marketing, event marketing, cause-related marketing, merchandising, experiential marketing, location-based marketing, public relations, conversational and word-of-mouth marketing, social and mobile media, and consumer and trade sales promotion. This year's national television Upfront market could be a bell-weather for determining advertisers' continued appetite for paying significant cost increases for eroding audiences.
In the past few decades, only a handful of media companies recognized the imperative of brand-creation and even fewer made the commensurate investments in organizational resources to support them. Most investors in digital media companies remain dependent upon the transactional advertising business model, expecting to build wealth by capturing a growing piece of a shrinking advertising pie. Many are being confronted by the reality of under performance and unachievable growth requirements.
Check out the full article HERE