The Media

1. The Media • The commercial media consist of enterprises that: • Create or acquire content. • Distribution of content (news, information, entertainment, or data) to an audience. • Content ----- Medium ----- Audience (Method of distribution) Packaging or Retail

2. Media Industry Structure * Distribution: Distribution: Content Segment Packaging Retail * Aggregation * Marketing and promotion * Wholesale distribution * Delivery to final customer * Creative data production Key Function * Artist/production house * Author/imprint * Journalist/title * Cable channel * Book publisher * Newspaper/ magazine publisher * TV/radio network * Cable systems * Book retailer * Newsstands/postal services * Newspaper delivery * Local TV/radio stations * Billboards Examples * The Curse of the Mogul, Knee, Greenwald, and Seave, Portfolio, 2009.

3. Mapping to Assess Competitive Advantage D e c r e a s i n g A d v a n t a g e Increasing Competitive Advantage * (# of competitors go down) Content Packaging Retail Continuous (on- going relationship) Physical (sales force) Local * Mixed Mixed Hybrid Discrete (one time, no scale) Electronic National/Global * Barriers to entry *The Curse of the Mogul, Knee, Greenwald, and Seave, Portfolio, 2009.

4. Media Business Models Advertising Only(Single Rev. Stream) Advertising/Subscription Hybrid(Dual Rev. Stream) SubscriptionOnly(Single Rev. Stream) Transaction(Single Rev. Stream) Cable Newspapers Magazines TV Radio Google Outdoor HBO Newsletters Mobile Movies DVDs Music Content ownership cost is highest Content access cost is low Content access cost is higher Content access is free Content creation, distribution, access, and advertising-delivery business Content creation, distribution, and advertising-delivery business Content creation, distribution, and access business Content creation, distribution, and retail business

5. Supply and Demand • Demand for advertising opportunities is up • Global ad spending increases every year 2-4% • Especially demand for video advertising online and in mobile (online growth +15%, mobile +25%) • Supply of advertising inventory has gone from scarcity to abundance • All TV, radio pricing used to be based on scarcity, now just big, live events are • Newspaper and magazine pricing used to be based on size and placement, now it’s a mess

6. The Internet Changed Everything • Advertising opportunities – inventory – is abundant, in fact it’s virtually infinite • Search (Google) garners about half of all online advertising revenue • Performance-based (CPC) pricing • Relevance of results • A million customers • TV CPMs have gone up slightly, but ratings have plummeted, thus revenue is down.

7. The Internet Changed Everything • Selling media • Ad Words • Negotiating more • DSPs (demand-side platforms) • Buying media • Networks, exchanges, and trading desks (SSPs, supply-side platforms) • Targeting platforms (Blue Kai)

8. Consumers/Customers • A consumer uses a product: TV, radio, websites = audience or readers • A customer buys a product: newsletters, music,, DVDs • Advertisers are customers for radio, TV, magazines, websites—they buy access to audience/readers/users • Subscription revenue is relatively minor except for cable companies • Who is P&G’s customer? • In some businesses the consumer and the customer are the same person • Detergent, razors

9. Purpose of a Corporation • To create and keep customers • Can’t make a profit unless you have customers • To serve stakeholders • Consumers/audience • Customers/advertisers • Society • Employees • Stockholders (owners, investors, lenders) • To survive • Need profits • Need to innovate and adapt (innovator’s dilemma—disruptive technologies)

10. Create a Customer • Must satisfy unmet consumer/audience needs and wants—benefits sought (might be unrecognized) • Stories • Search • Social media • Create a differential, sustainable, promotable competitive advantage that will get customers/audience and keep them • Best way – high barrier to entry (TV stations, cable) • Next best – great products • Create a business model that monitizes content/audience/traffic

11. Media Selling

12. What Is Selling? • Selling is about getting customers and keeping them • It involves a process of helping customers/buyers get what they want • It is not a manipulative process in which salespeople get customers/buyers to do things they don’t want to do • Selling is about building trusting relationships, and guided by three basic relationship rules

13. Basic Relationship Rules (For Sellers and Buyers) • Do unto others as they would have others do unto them. • Treat them the way they want to be treated. • People like and trust people exactly like themselves • Find similarities and areas of mutual interest. • People don’t care how much you know until they know how much you care

14. Purpose • What is the Purpose of ad-supported media? • “To bring our audience and advertisers together” - KOMC/KRZK, Branson, MO • “To help people sell more Fords,’ Lowry Mays, former of CEO Clear Channel Communications • To “create a customer” - Peter Drucker • Ad-supported media are in the advertising delivery business • Thus, agencies and the media are co-dependent

15. Objectives • What are salespeople’s objectives? • To get results for customers • Should be – not universal • Buyers need to teach salespeople this objective • To develop new business • To retain and increase current business • Increase customer loyalty with insight selling

16. Insight Selling • The Challenger Sale • Teaching • Tailoring • Taking control of the conversation

17. Strategies • What are salespeople’s sales strategies? • Sell solutions to marketing/advertising problems • Reinforce the value of advertising and of their medium • Create value for their product • Before negotiating or discussing price • Become the preferred supplier • Innovate • Big Ideas • Packages and sponsorships

18. Functions • Salespeople’s functions (key skills) • Create a differential competitive advantage in a buyer’s mind • Provide insights • Including how to buy the medium (Google) • Manage relationships • Solve problems • Big Ideas • Insights • Easy to buy

19. Related Functions • To represent the customer to sales management (inside selling) • Reinforce and help salespeople with this function • Give them justifying arguments • To provide customer service • To monitor the marketplace for sales management • Help salespeople, don’t lie to them

20. Biggest Problem In Sales Organizations • People do what they are paid to do • Wrong incentives lead to wrong, counter-productive behavior • E.g.. Wall Street and bankers and the sub-prime mortgage debacle led to the Great Recession

21. Buyers • Ask all salespeople how they are paid (their incentives) • If primarily on commission, they are out for themselves, not the company and they will lower rates to get an order, to maintain relationships, and keep their list intact. • If primarily on making budget, virtually the same as being on commission, but will drop rates more near the end of the month or quarter. They are in a dilemma, but their short-term interests come first.

22. Learn to trade favors, if you trust the salesperson • Learn negotiating skills • Talk price early • Open low, come up slowly • Have an effective concession pattern (get smaller) • You never get anything you don’t ask for • Competitors vs. cooperators • See Advanced Negotiating Seminar at http://www.charleswarner.us/AdvancedNegotiating.ppt

23. If a salesperson’s company/product is important to you, get to know the salesperson’s top management (highest level possible) and negotiate with him/her • Manage these relationships with important vendor management assiduously and objectively in your self-interest (your organization’s and your own). • Network , cable TV • Top six websites (70%)

24. Carefully design your career • Media becoming ever more important • Focus on planning • Exchanges and trading desks taking over buying • Specialize • TV • Online • Mobile