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5 Problems Digital Media Needs to Solve

2010 April 21
by Greg Satell

Is Digital Media taking over?  Not according to the data.  With digital at 12% of global media spend,  88% still goes where it always went.

The web is the most rapidly adopted technology in history, spreading across the globe in less than a decade and gaining penetration even in areas that are desperately poor.  It’s hard to think of a more transformative technology.

That’s what makes the relative failure of digital media that much more astounding.  It took 15 years to break 10% market share and will probably take at least another decade to reach the current levels of TV.

As Much as Things Change, They Stay the Same

What’s really startling about the media revolution is how well “old media” has held up.  Time Inc. is still the biggest magazine publisher, network TV still tops the ratings, and Disney still dominates children’s entertainment.

How many digital brands have shown anything approaching that kind of lasting power?

Of all the major portals from a decade ago, only Yahoo! remains as a serious player.  MySpace and Friendster, while it’s too early to count them out, have seemed unable to ride the social media wave to profitability.  The list of digital roadkill is endless.

The difference between failure and survival is the ability to continue to evolve after some initial successes have been won.  While digital media will march on, it’s still an open question whether most digital brands will still be here a decade from now.

5 Problems Digital Media Needs to Solve

1. Know Your Clients: One of the most frustrating things for marketers about Digital Media is how little new media professionals know about the traditional media that makes up nearly 90% of advertising activity.  Many digital media advocates seem to assume that the entire marketing world has been asleep for the past 50 years, just waiting for them to come along.

Make no mistake, the world’s premier marketers got to be that way by knowing their jobs well and adapting to new challenges effectively.  If they are uninterested in what you are selling, there is probably a reason beyond “they have their heads in the sand and will come around eventually.”

A typical frustration encountered by media auditors is hearing how a digital supplier achieved “superior” results though optimization, yet those results coincided with a TV campaign and decayed when it went off air.  The result was a laughable ROI calculation and a complete loss of credibility.

2. Prove Results Beyond Direct Response: Most of the past gains digital media has won have been at the expense of direct response marketing.  In fact, the 13% share drop of US newspaper revenues explains virtually all of the increase in Digital Media (and newspapers have historically been highly dependent on classified advertising).

Forrester Research, where the rosiest of digital scenarios are sure to be found, recently released a report, US Interactive Marketing Forecast, 2009 to 2014 (pdf).  In their survey, when they asked what budget will be decreased in order to fund interactive, the largest response by far was Direct Mail (40%) followed by Newspapers (35%).

The only display advertising medium that the marketers surveyed planned to decrease in any significant amounts was magazines, coming in a distant third at 28%.  No other activity showed much response at all to the question. Moreover, as I wrote before, there is good reason to believe the downturn in magazines is cyclical.

I should note here that I have some problems with the survey, but it is striking that a report that so clearly advocates a digital point of view shows so little progress for digital as a brand building medium.

3. Know Your Consumers: One of the major barriers to bigger display budgets for Digital Media is a lack of data about audiences, especially digital video.  While the number of views is easy to count, there is very little understanding about who is viewing, their psychographic characteristics, product consumption preferences, etc.

This is a relatively easy problem to fix and certainly the possibilities of Digital Media are enormous in this area.  However, a better understanding of how marketers make decisions is required.  Traditional media companies have built up decades of wisdom and experience in this area.  Digital Media still has to learn.

4. Effective Frequency: As I pointed out in an earlier post, one great advantage that Digital Media does have is the ability to control frequency.  In traditional media, that’s where the bulk of the money is wasted.

Unfortunately, there is very little understanding of what levels of frequency are effective for different digital tasks.  Traditional media worked for decades to gain a thorough understanding of frequency. Digital Media still has to start.

5. How Precise to Target: In traditional marketing, targeting is mainly an efficiency issue.  Money is spent on media that has a higher proportion of a certain kind of consumer than others.  In actuality, they are reaching far more people than are targeted.

In Digital Media, however, ads can be shown to only those that are targeted.  While that can prevent wastage, it can also exclude viable consumers and influencers.  If Digital Media is to service mass marketers effectively, a more sophisticated view of targeting will be needed.

We have to be careful what we wish for.  When our ability to meet media targets exceeds our ability to evaluate marketing targets, those targets become meaningless.  Consumers are often more complex than we give them credit for.

Those Who Adapt Will Survive

While many in the digital world take a “they’ll come around eventually” point of view, some of the smartest players do not.  Yahoo! has built a very strong display advertising business and even Google seems to be steering their business more towards brand building.

Media is like any other industry.  In order to be successful, you need to fulfill needs that your customers actually have rather than the needs you think they should have.

Before you can educate your clients, you first need to educate yourself.

– Greg

17 Responses leave one →
  1. April 21, 2010

    And it was probably sunny in New Orleans before Katrina hit too. Present data is bad a predicting looming radical structural shifts.

  2. April 21, 2010


    Thanks for sharing your perspective.

    – Greg

  3. April 22, 2010

    Good article, it will be interesting to see how twitter and facebook move through the next 5 years. They could very well disappear as well. With inovation comes this life cycle, go back to the automotive boom, the same disappearing of brands occurred, not typically out of a lack of quality but mearily a lack of size/marketing reach. The same ability to adapt and keep pace with the flow of ideas is ever present. Finding the economic engine is clearly the task at hand for facebook and twitter. But google did it and I would bet the farm they are still crushing the market in 20 years.

  4. April 22, 2010


    I definitely agree about Google, they are way past the point of no return and continue to roll out great new products (I’m using Chrome as I write this).

    What’s also interesting with Google is that they handle failure very well. I was at their campus a few years ago and they were touting a new system of selling magazine ads. They got it wrong and as far as I know it’s been scrapped. However, the way they are able to fail quickly and cheaply then move on says a lot.

    Finally, another striking thing about Google is how dominant they are globally, in seemingly every language. They have built strong positions in many countries that haven’t even begun to hit their potential so they still have a ton of room to grow.

    Regarding Facebook and Twitter, I personally think they will eventually become thriving businesses. However, you’re right to point out that even these enormous successes, with massive audience and dominant market share are still somewhat question marks.

    It begs the question: If these guys aren’t a sure thing, what hope do the other social media sites have?

    Thanks for a great comment.

    – Greg

  5. April 26, 2010

    Very good analysis, Greg!

  6. April 26, 2010

    Thanks, Stan.

    Have a great week!

    – Greg

  7. April 29, 2010

    This was interesting. I had reviewed the Forrester report you referenced. When I read it I came away with impression that we (the collective industry) was heading for a dramatic change. Your article gave me another point of view.

    I especially agree (if I have read correctly) that the Digital Media arena is more interested it’s tools and toys than in the art of understanding customers and selling their products.

    However, I wonder if customers can resist the temptation to reach for new Digital Media options (albeit less refined than some of the traditional marketing disciplines) because of their low cost and because of the perception that DM is more cutting edge.



  8. April 29, 2010


    Thanks for your comment. I think you’re right that there is a lot of potential in digital media and direct marketing has proven useful for decades. The point isn’t to knock digital media, but to be realistic what the present and future actually look like.

    – Greg

  9. May 23, 2010

    As a “newbie” to this arena, what strikes me most is the pure, unadulterated BS that goes on. Many of the experts are “snake oil salesmen” in the Old Fashioned meaning of this.

    The old media had to develop accountability methods (circulation audits, Neilson Rating, heck even bulk mail is accountable)… seems nobody stands behind anything when it comes to electronic media. And, the peculiar thing is everything is trackable with computers.

    But the younger generations are raised on computers and most don’t even know how to read an old fashion newspaper or magazine. And, even I know you have to talk with your prospective clients in the media they receive information.

    Hope accountability and honesty comes.

  10. May 23, 2010


    Interesting perspective. Thanks for sharing.

    – Greg

  11. June 14, 2010

    Hello Greg:

    Thanks for the article. I thought it was provocative. So, I will add my 2 cents.

    I believe there is another scenario out there to consider. First, although things like Ti-Vo were unsuccessful in ridding TV of ads, there is little doubt that these increasingly popular content providers materially challenge the old school advertising revenue mode. In fact, iTune, Pandora, etc., suggest that consumers are not only migrating away from commercial based content providers, but are also willing to pay subscription fees to get commercial free content.

    Second, Apple, Inc., has changed everything again. Apple’s iAd program will be implemented in weeks. iAds are intended for handheld devices like iPhones and iPad. It’s commercial content is non-intrusive, provides consumers the power to view or reject commercial content, and — given Apple’s increased footprint as a media company — will provide a different commercial experience than the traditional ads. More significantly, it will likely change how advertisers think about the manner in which they will seek to deliver commercial content to consumers.

    Third, digital advertising will likely become the preferred medium for advertisers. Why? One can more precisely identify a target consumer groups by following cookies rather than by relying upon things like Neilsen Ratings. During earlier times (prior to the its merger with Razorfish) “Avenue A” grew from a little academic idea into an important industry voice by data mining cookies. It fact, Razorfish was able to match cookies with consumer profiles. While there were some limitations to this approach, (chiefly, it was intended for geo-static Internet use) it was, without doubt, exceedingly accurate at identifying consumer behavior. The Avenue A model now becomes particular relevance now that mobile handheld devices are not only built with web browsers, display content, and are becoming the preferred medium for capturing and reviewing content.

    Last, just as Google’s semantic search model has been used to place advertising properties outside of of content, there is nothing that precludes one from using the semantic model to place ads directly inside of content. (We can discuss this point in personal e-mails.)

    Greg, these new trends are already in place; they are an unavoidable reality that has already changed the old school advertising model.

  12. June 14, 2010


    I hear what your saying, but disagree primarily for two reasons:

    1. The issue is not whether people will pay, but how many and how much. Generally speaking, consumers are more valuable to advertisers then content is to consumers. When a medium is small, the early adopters will often pay but over time, the economics favor and ad supported model. (This is the general case, there are obviously some important exceptions)

    2. You define digital too broadly. The trends you mention are indeed important and real. Nevertheless, they remain problematic and apply to all media fairly equally, not just what is considered “digital” today.

    As an example for semantic advertising to work, and enormous amount of data would need to be RDF tagged. This will take a while (and is indeed a problem to be solved).

    As always, thank you for your comment.

    – Greg

  13. June 15, 2010

    Hello Greg:

    OK, I will concede on the first of your points. It is true that over time, market forces do favor ad based revenue models. This market force, however, has less to do with real consumer preferences, and more to do with stockholders’ pressures. Simply, companies like XM and TiVo are traded publicly. Their shareholders look towards more revenues and dividends.

    I do not agree that RDF tagging is as big an issue as it seems. Right now this methodology is still at its refined concept stage. Once we have some discrete standards in place, (and a few neat data libraries like those Apple uses to reduce coding and speed up response times) the Semantic protocol may become more common than a URL address. We should also note that the amount of data involved in this will probably equal to that of a very large telephone book. The overall amount of analyzed data would likely match those associated with credit card transactions. I am sure Google has overbuilt its IT structure to handle such.

    Keep up the good work.

  14. June 15, 2010

    Thanks. See you soon.

    – Greg

  15. June 25, 2010

    Digital Marketing is good at certain things and traditional media good at others. Some products benefit more from a digital profile that others. Having a social media strategy is essential for most brands.
    What is more interesting is the ability to convert passive listening to direct and active conversations with the customer base. The Branding Engine ( uses a patented address bar technology that promotes direct conversations with your customer base combining text analytics, processing of multi level mult source data to produce real time management tools that improve the effectiveness of both digital and traditional media activiites.
    The return on marketing investment through any organisation will become more critical and having the correct tools to demonstrate how you “hear” what your market is telling you will be Key performance Indicator if it is not already. getting the digital marketing element right will mean this can happen in real time with real time adjustments to campaign content and management

  16. June 25, 2010

    Interesting. Thanks for sharing.

    – Greg

  17. June 14, 2014

    But in India , after Katrina came Sunny (Katrina Kaif , Sunny Leone).

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