Tech Companies Should Give Media an Intervention

(MoneyWatch)  Helping someone out of a desperate strait is considered an act of human kindness. But when the other party won't climb out of a death trap and has the key to your safe, a rescue is protecting your self-interest. That's exactly the position that Web-based companies face with old line media producers. They ultimately need the content for the Internet ecosystem, but media executives seem determined to take their companies down, with the latest evidence being another dubious attempt to prove the "superiority" of traditional advertising channels.

A recent advertising study backed by traditional media companies suggests that advertising in magazines and on television is better than what you can find online. Among the conclusions are the following:

• Within a half hour, magazines effectively delivered more than twice the number of ad impressions as TV and more than 6 times those delivered online.
• Though TV doesn't deliver as many ads per half hour as do magazines, net recall of TV ads was almost twice that of magazine ads; magazines in turn had ad recall almost three times that of Internet banner ads.
• 85% of Internet ads served appeared on-screen and could be identified by brand.
• Among web users, 63% of banner ads were not seen. Respondents' eyes passed over 37% of the Internet ads and stopped on slightly less than a third.
• For Internet ads, almost all net recall could be attributed to ads that were seen.
• Internet video ads appeared much less frequently than banner ads, and their exposure skewed heavily towards young men. When they did appear they were twice as likely to be seen as banner ads.

Reason for a snap decision by advertisers to embrace the past? No, more like a rationalization of why the media companies should not proceed where they need to go. The conclusions are slanted because they refuse look at the results in the context of reality:

1. So what if online video ads skew to young males? That is one of the most desired demographics by advertisers.
2. Ad recall is fine, but not the same as ad effectiveness. The advertising industry is replete with stories of memorable campaigns that accomplished little for the underwriting companies.
3. Recall also fails to address the intent of an ad. The advertiser wants to know if people either bought a product or become more inclined to the brand, and recall is not necessarily either of them.
4. Who cares if television and magazine ads are more readily remembered if people are increasingly heading to the web for media and entertainment? Advertising only works if the right people are actually exposed to it.
5. Even if television and magazines are more effective, at what cost does that come? A factor of 100 premium? A factor of 1,000? More? In tough economic times, services must be cost-effective.

Even more disturbing is that the companies underwriting the study -- Conde Nast and CBS (disclosure reminder, BNET is owned by CBS Interactive) -?€" will both say they are interested in new media. But companies never allow studies they fund to see the light of day if the results don't come out the way they want. And so, even when media companies say they want to get onto the Web in a big way, they're trying to prove at the same time that advertisers shouldn't be interested.

No industry stands significantly unchanged by time, and media is no exception. [UPDATE: For example, for the first time in recent memory, "the magazine death rate has surpassed the magazine birth rate".]

Unfortunately, status quo is exactly what the large companies in that industry appear to want, based on their actions. Last month I argued that it was a good time for technology companies to buy media firms. Now I'll add that if the tech companies don't do so quickly, they will find themselves in trouble.

The problem they face is one that I mentioned in the context of Microsoft: the world is splitting into content creators and content consumers. But you can't have one side of this equation without the other. Leaders like Google and Amazon don't create anywhere near the volume of content that they need, and they'd have to change considerably to do so. But if major content sources seem intent on driving at full speed into a brick wall, the technology firms will find that they are strapped into the passenger seat.

Cars and wall image via Flickr user Timm Seuss, CC 2.0.