According to Pew’s annual State Of The News Media report, revenues from print media have declined almost 10%. At the same time revenues from digital media have grown, however they have not grown enough to cover the losses from print.
This discrepancy between the growth of digital revenues and the fall of print revenues suggests that two things are happening.
First, digital is a more efficient method of advertising that print, so it makes sense that digital would be growing while print shrinks. However, the second thing is that while digital evolves into a more efficient advertising tool, the legacy print revenue models that surround digital advertising remain outdated and inefficient.
As the inefficient revenue models from print fail to capture the value from digital, the shift in spend from print to digital exposes a massive market inefficiency.
The great thing about market inefficiencies is that they represent opportunities. The goal of digital advertising should be to measure and monetise information and the transmission of that information between peoples.
In order for that measurement and monetization to occur we need to know three things. 1) who shares 2) what they share 3) with whom are they sharing. Once we know these three things we can build a marketplace which values the different types of actors and activity and empowers advertisers to purchase influence and attention from exactly the right people at the right time and for the right reasons.
This marketplace of influence will exploit the inefficiency in the digital advertising buying process and, counter-intuitively, cause prices to increase since the results should improve with more precise information.
As prices increase and results improve advertiser spend should also increase thus closing the gap between digital and print and perhaps even causing the curve to go the other way.
If we look at other markets where inefficiency has decreased such as finance and retail we saw corresponding growth in both those markets as consumers we more easily able to transact. The important thing to remember is that the growth came not from incumbents but rather from the innovators.
Marketers always want to spend more money when their money can be profitable turned into growth. The goal of publishers should be to seek out the innovators who can effectively exploit market inefficiencies for the benefit of all.