Reversing the digital slide

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Reversing the digital slide

McKinsey Quarterly, 2001 nr 4

Policy relevance:

Commission President Romano Prodi stated “the story of the e-Economy is complex, but it is one we need to understand”. This article gives some insight into the on-line media world, comparing it to traditional models of the incumbent media companies.

Main conclusions:

  • All new media models take time to achieve success, but the development of on-line media will be similar to that of their off-line counterparts: acceptance – and profits – will take time to develop (CNN took more than ten years to break even), and only a small number of companies will succeed;
  • An emerging advertising model is contextual advertising, which targets the consumer who plans to make particular purchase and is thus more likely to be responsive;
  • On- and off-line economics are different;
  • Media companies that choose contextual advertising must strike a delicate balance to succeed, to be seen as providing neutral advice accompanied by paid messages rather than as relentlessly pushing their advertisers’ products;
  • For large media businesses innovation means using interactive platforms to help companies reduce the inefficiencies inherent in all of their interactions with consumers;
  • Media companies can improve their value proposition to marketers by leveraging the web’s low-cost, “high-touch” qualities to raise the efficiency of these investments;
  • Media businesses could help marketers test the effectiveness of planned off-line advertising campaigns by providing targeted on-line audiences;
  • To host sites and offer bundled marketing services, media businesses need to have skills in three key areas: ability to define the new value proposition, sales force that understand the new services and transformation of sales process;
  • Creation of tiered propositions for consumers may be the biggest opportunity that media brands have missed so far;

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