How will media sales organizations compete against Amazon?

While there is increasing evidence that the number of people reading books is on the upswing, the fact is that fewer and fewer people are buying books from book stores. Whether people are buying their books electronically or purchasing the physical books online, the big winner in book sales continues to be Amazon.

So, it would be very easy, even rational, to conclude that book stores are suffering because Amazon offers customers a cheaper and easier alternative. It’s almost as if Amazon had put Borders out of business. Amazon is definitely part of the equation, but I think there is more to the story.

What exactly have the book stores done to add value to the book?

If a customer can purchase the exact same book, whether she drives all the way down to the book store or buys it with one click from Amazon, which is she going to choose? Which would you choose?

As a matter of fact, I can even make the argument that when you calculate all the time and expense involved in purchasing a book from a book store, the book store alternative actually reduces the value of the book for the customer.

As I prepared to write this post, I looked into my own book-buying habits over the last couple of years. I confirmed that I buy a lot of books and that I make many of those purchases from Amazon. But I was surprised to discover that the overwhelming majority of my book purchases are made through a book store that isn’t even in my city!

The Mysterious Bookshop in New York City specializes in murder mysteries and crime novels. Over the years, they have established very strong relationships with authors, which has allowed them to build and maintain an inventory of signed first editions. While I can buy any book I want from Amazon for less money, I am happy to pay the Mysterious Bookshop full price because the books are signed by the author.

To make it even easier for repeat customers like me, they offer a variety of readers’ clubs, two of which I have joined. Every month, without me having to lift a finger, the Mysterious Bookshop ships me a couple of signed first editions recommended by their staff. By the time I get home, they are sitting on my kitchen table.

The Mysterious Bookshop has figured out a variety of ways to add value to the books I buy from them every month. So much value, in fact, that I knowingly pay a higher total cost for books that I could have bought from Amazon faster and cheaper.

Now, let’s see if we can connect that to the media business.

There is a lot of media inventory out there for sale. Everybody can sell a banner ad, everybody can sell a commercial, everybody can sell an email program, and everybody can sell a mobile program. Combine that with the growth of programmatic buying, and what we see developing in the media business is very much the equivalent of customers purchasing media inventory through Amazon.

Indeed, the Rubicon Project’s purchase of Chango is a clear presage that, as programmatic matures, the business will experience several waves of consolidation. How long before some of the biggest remaining players are acquired by Amazon?

And would customers who buy media welcome it? Put yourself in the shoes of the people who buy media. The choice of whether to buy media through a computer versus dealing with human beings will quickly become a no-brainer. Would you prefer to send out an RFP to 50 people, get phone calls and emails from all of them who haven’t really read the brief that you sent them, review all the submissions, and then negotiate a different price with each of them?

Or, would you prefer to sit at a computer, put in the exact audience that you want to address, put in the exact inventory you want to buy to reach that audience, and push a button?

Media companies will add value to their tools with their marketing ideas.

As programmatic grows, prices will drop. Media companies that want to maintain control over the growth of their revenue will need a consistent, repeatable method to add value to the inventory that clients could have bought faster and cheaper from the likes of Amazon. The challenge will be to create so much value that their clients will knowingly pay a premium price for the program.

Fortunately, there is a growing number of media companies that are coming to the realization that the one remaining currency with which to create value for their clients is the marketing idea. Gawker Media’s studio@gawker, CBS’s Altitude Group, and The Onion’s Onion Labs, are just a few examples of how media companies are investing in their own idea machines to create marketing ideas – persuasive campaigns – that use the media companies’ menu of tools to accomplish their clients’ marketing objectives.

While the appearance of these idea machines is a very exciting development, I believe that the long-term success of any media company will lie entirely on the shoulders of the sales organization.

If the sales organization behaves like their job is to make their audience and their inventory available to their clients, that sales effort is much better managed by a computer.

Only media sales organizations that can evolve from being media based to being marketing based will be able to take advantage of whatever idea machines their companies invest in. After all, those idea machines are there to respond to the projects that the sales organization brings them. It will not be enough for media sales organizations to know how to satisfy demand for their tools. They will need to know how to create demand for their marketing ideas, which is a different game altogether.

The sales organizations that can engage in marketing conversations with their clients and bring them true marketing ideas that engage and activate their audiences will control their prices and, therefore, the growth of their revenue.

More Resources