When the new normal becomes normal
The right debate is happening now, only in the absolutely worst possible way: What will a return to “normal” look like?
Politics aside, the business leaders I speak to are not only moving beyond triage to look-forward mode, but they’re also contemplating what will emerge from this searing experience that has upended nearly everyone’s lives and the global economy. While there is a camp clinging to the notion that things will spring back to as they were, there is also the more revolutionary side that sees a wholesale reshaping of industries and the social compact. Most pragmatists fall somewhere in the middle. Here’s what I’m hearing are the likely lasting impacts to the media industry.
Advertising as the preferred business model of media is over.
The first trend to accelerate in media is the flight from advertising as the preferred business model. Publishers have found themselves in the position of begging advertisers to run their ads on coronavirus-related content, subject to stringent keyword blocking. Some advertisers, like Bank of America, back up their words about “purpose” with action, but most have not. Integral Ad Science, a leading brand safety provider, has even tried to nudge brands into reconsidering. It published research this week showing that people don’t think less of brands whose ads appear on coronavirus stories. Everyone seems to agree on this except, yes, advertisers.
Advertising will continue to play an important role in publishing, but that role has started to recede — and will recede further. This week, Mark Campbell, CMO at Tribune Publishing, laid out how the newspaper chain that’s home to The Baltimore Sun, Daily News and Orlando Sentinel, is seeing not just a boost in subscriptions but in digital subscription revenue. This will alter their strategy when this crisis eventually recedes. “It will reignite the age-old tension between volume [of audience] and revenue.” In other words, direct revenue will win over theoretical ad dollars tied to scale. And the news industry will be healthier for it.
Subscription models will evolve.
More publishers are finding success with driving subscriptions even as they make most of their coronavirus content freely available. How can that be? Mostly by messaging to readers that support is needed. This is a tricky balance. Passing around the collections basket is a dubious business model, and the current crisis has clearly brought out a feeling of solidarity throughout societies. But as The Guardian’s U.S. and Australia CEO Evelyn Webster told me this week, the approach can support large, ambitious news organizations. Of note: Americans respond better to messages asking for support. She chalks it up to a more charitable nature to Americans, although I still suspect it’s because we rely on private contributions to cover up a patchy welfare safety net.
Companies will rethink their office spaces.
Executives are looking ahead to when they return to their offices. At Hearst, executives have formed a working group to mull over how they will return to the Hearst Tower. Kate Lewis, chief content officer at Hearst Magazines, told me on an episode of The New Normal — be sure to catch this week’s show tomorrow at noonET — that there is no thought of abandoning the office, but things will change.
They must. This grand experiment in remote work is stretching past week six for most. For all the feelings of being cooped up, most people feel more productive, less prone to being pulled into random meetings or buttonholed about some matter of little consequence. Sure, this is a crisis with a high level of alertness, but not one executive I’ve spoken to feels being remote has had an appreciably negative impact on their overall work. This is not the end of offices, but this is likely the end of the notion that every single person needs to come to a single, often expensive, location during the same time. Companies will invest more in video conferencing setups and stagger working hours and even days for employees. For media companies, this will inevitably lead to downsizing the real estate needed. Few will shed many tears for the pain felt by commercial real estate in pricey cities like New York and London.
“People’s willingness to come back to work will be affected by the nature of the place,” a veteran exec told me. “The most important thing is to secure the perimeter. Make sure they’re no longer in danger. There will be an expectation of focus on hygiene. Their expectations of their employers is there will be new level of standards to keep them safe.”
Industry “tentpole” events will lose their luster.
Early in the crisis, a top revenue executive was ticking through the chaotic upheaval they faced in their business. Coronavirus content makes a third of what non-coronavirus content does but 70% of the content is coronavirus-related. Ad revenue could fall by a third. What the second quarter would look like is unknown, much less the third and fourth quarters. But there was one bright spot: “If there’s a good thing it’s that this industry will stop making such a big deal about CES, Cannes and the Upfronts,” said the exec.
The media world’s strange migration to large scale events often held in plum locations — OK, maybe not CES — was always an anachronism. I’ve written the same walk-up story to these events myself several times: It’s all about the meetings and the networking, it’s a people business, etc. The truth is this industry has long had an unhealthy obsession with boondoggles. Relationships can be built in other ways, deals will continue to get done. Nobody knows when in-person gatherings will return, but as University of Pennsylvania infectious disease expert Zeke Emanuel relayed to The New York Times, large gatherings “will be the last to return. Realistically we’re talking fall 2021 at earliest.” The industry will adapt, and by the time these gatherings do return they will not occupy the central role they did previously.
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