Brett King

“What Jay Leno, Conan O’Brien and the banks have in common”

In Groundswell, Media, Retail Banking, Social Networking, Strategy, Technology Innovation on January 17, 2010 at 01:19

It has become clear over the space of the last week that NBC, Jay Leno and Conan O’Brien really did not anticipate what has transpired with viewers over the last few months. Jay’s show at the 10:00pm time slot on NBC was an experiment to see if Jay’s popular show could survive in the Prime Time slot, but it was also about NBC looking to cut costs as Jay’s show was inevitably less expensive that a series that could be slotted into that time.

Some have commented that the failure of Jay’s show is that late night shows are becoming formula and that since Jay Leno and David Letterman reinvented the format in the 80’s that nothing much has changed. Others argue that the late night format is just better suited to ‘late night’ and that the prime time experiment has failed. But the truth is that this is a symptom of a far larger problem facing NBC and the networks.

In the last 5 or 6 years, traditional media has been progressively facing the challenges of a changing landscape. In 2003 and 2004 the emergence of TiVo produced the so-called “TiVo effect” where consumers first had the opportunity to skip advertisements through the use of technology. In recent times surveys have showed that the majority of viewers would pay for ad-free TV over having to watch Ads.

The emergence of YouTube and sites like Hulu has produced a change in viewing behavior too, where users select content on demand and tend to surf through content fairly rapidly a few minutes at a time, compared with sitting watching a longer show. Then we have the whole download element where users are using Bittorent and other tools to download movie and TV shows – some estimates put the percentage of web traffic related to Bittorrent downloads sometimes exceed 50% of total web traffic.

Consumer behavior in respect to media has been undergoing a dramatic change. Traditional media companies like NBC, and content providers like Jay Leno and Conan O’Brien are not really sure about how to make the transition to what will come – we can’t say for sure what will come in the future, except that it will be different. Newspapers are facing even more acute pressure.

In 2008 the Internet surpassed all media except television as the primary source for national and international news (Source: EIAA Mediascape); this has taken its toll. In March 2009, the Seattle Post-Intelligencier or the “PI” as it was known, a 146-year old newspaper, closed down, citing rising costs, falling revenues and declining circulation. Since just January 2008, at last count, 53 regional newspapers in Britain have folded. Of the top 25 newspapers in the U.S. in 1990 (the year newspaper employment peaked), 20 of those newspapers have seen declines (on average reporting circulation down by more than 30per cent), and two have been closed down or declared bankrupt. New York Times reported a 30 per cent fall in advertising revenue, resulting in a $35.6 million loss for the 2009 third quarter alone. Newspaper mogul Rupert Murdoch and his contemporaries are grappling with this very change right now.

This is purely indicative of the changing behavior of consumers in respect to sourcing content, news, and entertainment. While movie cinemas continue to post record revenues, traditional media such as TV, Radio and Newspapers are under significant pressures from these changes in consumer behavior. While networks and advertisers are hoping beyond hope that ‘things will return to normal’ the fact is that these traditional media sources are in terminal decline – especially free-to-air TV and newspapers.

One of the reasons bank’s have fallen into trouble with consumers is that they too, like traditional media, have not anticipated the massive changes in consumer behavior. Banks continue to believe in the branch as the primary channel and traditional methods of engaging customers such as direct mail, telemarketing and direct sales. While they see disruptive change coming, they don’t really know what to do to tackle those changes, so they choose to ignore it and hope that traditional methods see them through.

Unfortunately, the disruption to media and to banking is yet to play out fully. In the end we’ll likely be left without newspapers, free-to-air TV (cable and subscription services may service), and radio. Traditional marketing mechanisms for the bank will be reduced purely to occasional branding campaigns, whereas broader marketing efforts will be focused much more on target consumers at the point-of-impact.

Needless to say, before this decade is over, Jay Leno, Conan O’Brien and the big banks will probably have a lot more to worry about than dwindling numbers – they need to find a method of more effectively adapting to the way consumers wish to receive their content, rather than attempting to re-arrange the message on existing media.

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