Willie Sutton, bankrobber
Stephen Hawking defined intelligence as â€˜the capacity to adapt to a changing environmentâ€™. But that is nothing new: Hawking was adapting Darwinâ€™s theory of evolution.
Media is changing, but not intelligently. Change is forced upon media because most are losing money. To analyze why, itâ€™s important to distinguish between the effects of:
1. A global economic downturn
2. Radical change in the publishing marketplace because of the wider use of the Internet
The principles of subscriptions marketing reveal the answer. Marketing is, after all, a simple case of following people to see where they go and then selling them what they want.
The money traffic
The change in money traffic calls for a new marketing effort. A loss-making website must re-vamp its offer to take maximum advantage of developing technological and market-driven forces.
A recession calls for a company-wide focus on effectiveness of expenditure. That doesnâ€™t mean cutting jobs. With the right subscriptions strategy youâ€™ll need all hands on deck.
Change means not letting up on new product development. In tough times, existing products seem to move from â€˜launchâ€™ to â€˜matureâ€™ to â€˜dyingâ€™ faster. That old revenue has to be replaced, as Darwin would say if he was reading this.â€˜Go where the money isâ€™
The saying â€˜Go where the money isâ€™ was invented by the American bank robber, Willie Sutton. Itâ€™s known as Suttonâ€™s Law, and unlike Darwinâ€™s, itâ€™s not just a theory. Itâ€™s good, practical advice.
Suttonâ€™s Law is used in medicine: â€˜First do the experiment that can confirm the most likely diagnosisâ€™ and management accounting: â€˜The highest potential for overall cost reduction is found where the highest costs are incurred.â€™
Itâ€™s all to do with being efficient and effective. But what Sutton actually said was:
â€˜Go where the money is â€“ and go there often.â€™
Sutton understood that effectiveness is an on-going process. That process is about selling subscriptions and memberships to prospects, for example, rather than a one-off product, or an occasional visit to your website to click on an advertisement.
What publishers can learn from bank-robbers
The money is going to the internet. The Internet Advertising Bureauâ€™s annual report showed that in 2009 UK internet advertising revenue was Â£3.5 billion, up from Â£3.3 billion in 2008. Around 20% of that was classified advertising (more about that later).
Publishers must follow that money.
But letâ€™s be realistic. Whatever Darwin and Hawking say, media bosses are reluctant to change because they think change costs money. During a recession, cost reduction becomes more important than creativity and investment. And nowhere is pressure stronger than on a publisherâ€™s websites. So many are losing money that radical changes are afoot â€“ mostly changes in strategy that will involve getting users to pay their way.
The days of the free website are numbered and have been since we predicted it in October 2009.
But cost cutting must go hand-in-hand with creative development: you can reduce costs while increasing efficiency and market penetration. That is apparent when we examine what â€˜marketingâ€™ actually means.
In a real market a man running a stall who is losing 40 per cent of sales year-on-year opens a website selling the most popular items to nullify the loss. Marketing goes online and all publicity is channeled towards the website to capture a new audience and new money.
A new direct audience
Willie Suttonâ€™s Law is to go where the money is and Â£3.5 billion has moved from traditional media to online direct marketing. This isnâ€™t just because of the recession â€“ itâ€™s an unstoppable future trend. Companies want their money to work harder and with subscriptions direct marketing they can measure results accurately. Somehow publishers havenâ€™t understood that because their heads are in editorial and display advertising.
What do we learn from the above facts? First, itâ€™s that companies are advertising on the Internet because people are spending their money there. And neither publishers nor media pundits have worked out the three facts that logically follow:
1. Money is moving from display to classified advertising
2. Classified advertising has moved to the Internet
3. Internet publishing is direct marketing
Publishing has shifted into subscriptions direct marketing and classified advertising, and both are foreign, far-away disciplines for media owners. They are back room activities with specialist, junior managers running the show.
You may claim there are exceptions to that generalisation – and there are. But the exceptions illustrate the cause of all the publishing problems we have discussed in this article.
At a publishing conference last year, I asked how many of the 150 delegatesâ€™ MDs had a background in direct marketing. Two hands went up.
That explains why the publishing industry is in trouble: it takes a direct marketing expert to bring revenue to your website, by first maximising the number of visitors who register, then selling them something from your companyâ€™s ever-expanding, huge list of products and services. But you donâ€™t have a direct marketing expert running the show, do you?
Itâ€™s about turning traffic into money. If you donâ€™t have an autonomous direct marketing subscription expert at board level, you, like the others, are in trouble. Here are the five simple steps to turn things around for the hard years coming:
The five principles of subscription marketing management:
1. Hire a good direct marketing director
2. Agree on ambitious but achievable business plan
3. Make resources available
4. Monitor and measure progress
5. Donâ€™t interfere
Subscriptions Strategy Ltd
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