Walmart

The future of emerging digital media and its impact on marketing

By

Chandana Chatterjee

12/18/04

Innovation in information technologies has thrust humankind into an era of democratic media in which almost everyone can have immediate access to news and information, and become creators and contributors in the journalistic enterprise. As a result, news now moves in unconventional ways with unpredictable consequences.

In the dawn of Web 2.0, viral marketing is presenting a new medium for brand exposure and a new definition of marketing. Recent advancements in technology in general are driving and facilitating changes in consumer/business behavior; RSS is simply one manifestation of that.

* The shift from Web 1.0 to Web 2.0 and corresponding availability of new applications such as blogging, podcasting, wikis, RSS, microsites, etc. is emerging.

* All of these technologies are experiencing phenomenal growth. There have already been 5 million podcasts in 2005, which is up 500 percent vs. 2004 . Flickr currently has 19.5 million photos online - an 80 percent increase over June of 2005. Wikipedia is now "hit wise" the number one reference site on the Web.

* They all map to the "whatever, whenever" model: customers want - and expect - personalized, culturally appropriate information at their finger tips at any time.

The strategic environment in the current years has been the decline of broadcasting models and the rise of narrowcasting models. With the advent of cable television, catering to small group's specialized audiences have emerged from seasoned networks like wild life, 24 hour news channels, and home shopping channels. The TV industry is frantically trying to figure out how to combine broadcasts, internet movies and home videos all into one package. TV will ultimately be on-demand all the time with broadcast TV eventually being phased out. Whether this takes 3, 5, or 10 years is beside the point. TV is better experienced on-demand and advertising will evolve in this new world. On-demand will lead to more, not less, TV revenue. New technologies around targeting long-form advertising will drive this growth. Digital media will force the entertainment industry to rethink current business models and perhaps usher in a special tax to compensate artists deprived of revenue from Internet media distribution.

Broadcasters are looking to user-generated content as a means to reconnect with today's tech-savvy youth. Delivering original, compelling ideas for young audiences is a constant challenge, which is why the concept of user-generated content (UGC) is so attractive - let them do it themselves. We are seeing ordinary citizens reaching out to millions without the need to operate or buy air time from broadcasting stations. We are seeing them create electronic magazines without the need to operate a printing press. With inexpensive tools using a computer and an Internet connection, these citizens are becoming publishers and broadcasters themselves.

Of greatest interest is Kim and Mauborgne's assertion that the innovations which enabled these companies to succeed with a Blue Ocean strategy did not depend upon a new technology. Rather, each company pursued a strategy which enabled it to free itself from industry boundaries. For Dell, that meant mass production of computers sold directly to consumers per each customer's specifications. Quite literally, each sale is "customized." For Starbucks, creating a congenial environment within which to socialize, go online, or read while consuming coffee. All of these Blue Ocean strategies created new or much greater value for customers. Their emphasis is on the quality of experience, not on the benefits of a new technology. Blue Ocean Strategy could also explain why on demand is the future of every business -why UGC is the start of an already over-hyped and rapidly turning red ocean of Web services.

Some view digital media's disruption of traditional information consumption and distribution patterns as little more than an economic shakeout reaping short-term havoc on media companies and creating new business opportunities for the next generation of communications giants. Under this scenario, companies like Google, MSN, and Yahoo! displace local newspapers, television, radio, and magazine publishers as the dominant gatekeepers of our media experiences.

Chris Anderson argues in "The Long Tail" that products that are in low demand or have low sales volume can collectively make up a market share that rivals or exceeds the relatively few current bestsellers and blockbusters, if the store or distribution channel is large enough. Anderson's theory is that the Internet, because it so easily offers an unlimited choice of goods to billions of people, is transforming a consumer culture based on big hits and best sellers into one that supports more idiosyncratic, specialized niche products. "Hit-driven economics is a creation of an age without enough room to carry everything for everybody," Anderson wrote. "With online distribution and retail, we are entering a world of abundance. And the differences are profound."

Anderson's premise, once accepted, one will see long tails everywhere. For example, YouTube could be like the long tail of video - people get to see new content which would never sell at any traditional bricks and mortars store and YouTube has the opportunity to make money off all of this Long Tail content. Microbrews become the long tail of beers, for example. Blogs are the long tail of journalism. Even porn has its version--the increasingly bizarre porn fetish sites that could be profitable only on the Web. The Long Tail essentially describes the mass servicing of micro markets, which is primarily made possible, even cost effective, by the delivery system of the Web itself.

But the notion of dominance is obsolete in the connected society. Individuals exert unprecedented power over how and when they access information and with whom they share it. In this sense, digital media is profoundly disruptive to the interests of any institution premised on power and control. What we know, the information we could access, once depended on where we lived. In the connected society of global nomads, our social capital can expand through vast personal networks spanning the globe.

Contagious marketing takes viral marketing a step further by paying attention to the conversations between people, nurturing them, and using them to develop collaborative communities," says Perry Klebahn, a consulting professor at Stanford who was formerly the head of sales and marketing at retailer Patagonia.