Saturday, April 18, 2009

New Venues Can't Escape Old Business Rules

It seems every day, there's a new story on Twitter or some other new communications tool and their likely impact on the future of marketing and public relations. Pundits and prognosticators writing about what will happen with Twitter should look no further than one of the last new media darlings.

In a report issued this week, Credit Suisse projects that YouTube will lose $470 million this year, while raking in only $240 million in revenue. Since Google ponied up $1.65 billion for YouTube more than two years ago, YouTube doesn't face the same financial pressures of a typical technology company, as long as Google's willing to underwrite YouTube's losses. Still, their progress does speak volumes about what happens when you put a platform ahead of a business model.

PR pros and other communications professionals looking for help in deciding where to place their marketing money and effort would be wise to remember that the notion that you can build an audience first and worry about your business model later generally hasn't worked out too well historically. Just because Twitter's a media darling today doesn't mean it won't be gone at some point in the future.

I was surprised to finally see a negative -- or realistic, depending on your take -- column on Twitter that ran this week on CNET's penned by Charles Cooper. Basically, Cooper said while the rest of the media world may continue to fawn over Twitter, he's going to take a vacation and wait for Twitter's co-founders to finally cement a business model before joining the crowd singing their praises.

Like Cooper, I'm generally advising all my clients to put their time and effort into social media platforms and tools that are based around a solid, quantifiable business model. Quite simply, if the platform you're banking on hasn't figured out how they're going to put money in the bank over the long term, it's not worth the majority of your time and effort at this point.

Twitter may indeed go on to become a true sensation that changes the way we communicate, but it's important to remember it may also become another WebTV; there's $425 million Microsoft would likely love to have back.

Monday, April 06, 2009

Defining (or Defying) Conventional Wisdom

During times of economic tumult, there's a natural tendency for everyone to look at historical precedence in an effort to get a handle on how the future may play out. The reason for this is simply because things often play out that way. While that may be true in this instance, we've got an opportunity to make some important changes this time that may have a long-lasting, positive impact.

One of the things that naturally occurs during a downturn is businesses struggle to get where they were before the downturn occurred. Most often, they embark on this journey using the same tactics and practices that have historically been used, without asking whether or not things can be done better.

Unfortunately, it's this lack of innovation that actually is a big reason that downturns themselves are cyclical; in other words, you can't predict much about them with certainty, except that they will occur again. Changing tactics or philosophy will likely not eliminate downturns, but it certainly could reduce their lifespan and/or severity.

It's my sincere hope that the public relations industry comes out of this downturn with true ideas on how to successfully innovate. The biggest thing we need to realize is innovation doesn't simply mean ways to make more money, but rather a long-term change that will result in one or more positive impacts.

I challenge my fellow practitioners to help me bring about innovation in public relations by having PR practitioners seen as valued counselors rather than merely hired hands that perform a tactical service. This perception is one of the reasons that PR pros often find they're not able to get clients to take their strategic advice. Instead, the client often ends up telling the agency what to do, and the agency works to deliver it -- regardless of whether it's a good idea, or even possible, in the first place.

This symptom results in public relations and the firms who practice it losing some of their value. In economic downturns, value becomes crucial because the first things to get cut are often services or products that are perceived to not deliver value. This certainly won't be an easy journey, but if we can join forces to bring it about, it will bring a seismic shift to the PR industry and all who practice it.