JamieG Analysis

Continuing with key concepts in digital media, today I would like to focus on “fragmentation”.

To help analyse this I would like to focus on a particular aspect of media which, I hope, the general reader has a better hands on experience.  Advertising.

The general consumer would understand, up until the advent of online/internet advertising, we had traditional and clearly understood methods.  Generally this would be listed as. TV, Radio, Print (Magazines and newpapers) and signage (Outdoor billboards and indoor poster).

Each advertising medium had been researched over many years and had expected results and associated costs.

Media sales companies would sell big chunks or media to advertising companies. They would then on sell that media to all their clients.  It was well established with clear ground rules.

Then the advent of Digital based advertising. This included online advertising and “Dynamic Digital Signage” (Screens everywhere running ads.  For example, see the movie “Minority Report”)

Let’s look at “Dynamic Digital Signage”. For quite some time now, this market has been maturing. The most well known company in this space is “PRN” in the WallMat chains.  Around the world, many local companies developing local business modems have attempted to grow this market into a powerful advertising platform.  Over the last 10 years I have seen man y of these companies come and go.  Many expecting to create the network and watch the money start flying in.

Unfortunately this is not the case. Dynamic digital signage does not fall into the traditional model of advertising.  Advertising companies saw it as a media that would suck costs from its advertising pie.  Ad the fact that dynamic digital signage is harder to get right and needs much more focus to work as effectively as it can.  It can be extremely effective.

There is no doubt that dynamic digital signage will be a powerful tool for advertising in the future.  As users start using Digital playback systems that can basically remove all advertising from media.  The effectiveness of traditional media will decline.

Dynamic digital signage is seen as having great potential however, advertising companies are having a very hard time factoring all the different formats and ideas (Fragmentation).  Unlike traditional advertising, dynamic digital signage is, as the name suggests, dynamic.  Different models work better in different implementations.  Each has different costs and returns.  As such advertising companies now have not just a handful of mediums to understand but hundreds.

The paths to advertising your product have fragmented from a handful to hundreds of advertising possibilities. Each having specialist knowledge to make it as effective as it could be.

The traditional advertising company is not equipped to handle this environment well.  Very few companies are. In my opinion, we still have a long way to go. A combination of new and old ideas has to be applied.  We need to figure out ways to utilise a lot of different advertising paths but reducing the costs of following each path. At the same time these technologies have to share justification with other advantages that come with it. Advertising should be the cream on the cake and not the cake itself.

Online Advertising is considerably different.  Online is shared infrastructure. (Ie people access if via a computer they own and control) Online Web advertising is creative and dynamic in nature however, it is one network and there is clear advantage in adopting standards.  Online is also, by nature, trackable.

We have all seen the standard web page banners.  The internet has been self serving and proposed banner resolutions and sizes have been imposed by dominant online advertisers.  These standards have made it very easy for general web developers to create advertising content that is suitable for general use across the internet.

At the same time, the paths to getting this advertising to pages that people view has funnelled to a dominant few.  This is largely been possible by the self imposed standards.  Still, these dominant players are finding it very difficult to implement similar standards for video media on the web.

Every week you hear about another startup having developed great technology that they hope will be part of these standards, as until these standards have matured even a little, effective advertising on video content is unreliable in its cost effectiveness.

What I am trying to indicate here is that online, specifically video, and how we will get it is a fast moving target.  We have Apple, Microsoft, Adobe and many other start-ups developing proprietary methods for getting this video to the consumer.  Each wanting their technology to become dominant and reap the rewards.  I.e. the market is still fragmenting.

However, in the long term, these proprietary ideas are bound to be bypassed.  I am not saying some will not be reasonably successful.  What I am saying is that, the internet will eventually self regulate itself as it did for banner ads, and an open distribution and advertising method will be adopted.  A method that the internet users are comfortable with.  A method that does not annoy or inconvenience.

For future business models to survive, fragmentation must be factored into the dynamic nature of video distribution.  For example, the model should be dynamic in nature and not bound to a walled garden approach as we are currently being offered by current players.

Evelutionary business models will adjust to conform to these models.  The return per view may not be as great, however, the potential viewer base can be much higher, and the distribution costs near $0. The direct benefactor will be the producer himself.

My main passion for writing this blog is to help navigate this channel to archive, what is in my opinion, this unavoidable evolution.