Importance of Advertising to the Mass Media - Report Example

Importance of advertising to the mass media Introduction Over the years, a constant phenomenon of the mass media has beenthe advertising, which occupies the lion share of mass media content and/or messages (Sun, Blaylock & Allshouse 1993; Shah 2012). The prevalence of ads in TV, magazines, newspapers and other outlets does signal the existence of an intricate interrelationship between the mass media and advertising. In fact, it has been argued before that advertising is undeniably the single most important component of the mass media (Zagano 1996). Magazines, radios and TVs, or any mass medium for that matter, have every incentive to build the largest number of readers, listeners and viewership correspondingly because their average incomes from advertising and sponsoring are directly proportional to the size of their audiences (Nowak, Cameron & Krugman 1993). Departing from this perspective, this paper seeks to interrogate exactly how important advertising is to mass media; precisely, this paper will discuss the role of advertising in the mass media while elaborating on the different economic models of mass media in the UK in terms of their source of funding. Moreover, this paper will evaluate the benefits of each model while assessing the appropriateness of the balance between advertising and non-advertising material and their corresponding effects; this paper will also explore media content, development, distribution and presentation, as well as the likely future of mass media industries. Background information The rapid flow of information and ideas across societies is undeniably one of the greatest predicators of the advancement in information and communication technologies in today’s globalization age (Fog 2013). The rise of the mass media has greatly benefited the modern societies because it has become the main channel of communication, as world’s populations rely on the media as the primary source of information regarding what is happening in their surroundings. Information communicated through the mass media plays a central role in helping individuals to make informed decisions regarding critical issues of their concern in society (Andrew 2013; Lynda, McKinney, Tedesco & Gaddie 1999). In that respect, the mass media is a powerful tool that can be utilised in shaping public opinion formation (Prat & Stromberg 2011). The messages passed through the mass media have an immeasurable impact on the entire society, both negative and positive (Browne 1999, p.103). Generally, mass media communication appears in a vast range of formats including the written and broadcast (radio and T.V); given that there are different forms of media outlets, each one of them has to compete for the attention of the same audiences (Reid & Karen 2000; Albarran 2013). While magazines and newspapers are competing for the same section of readers, TV and radio stations are battling to attract the largest numbers of viewers and listeners respectively; the increased mass media competition in the free and unregulated global market economy has inevitably increased the stakes for industry players (Fog 1999). Most of the media outlets have resorted to many desperate strategies such as titillation, scandal mongering, and spread of fear to remain relevant in the highly dynamic and highly competitive media industry (Sutter 2002). Mass media classification The mass media refers to the vast range of media communication technologies that address themselves to wide audiences (Holt & Perren 2011). Prior to the 21st century, mass media was clearly differentiated into eight main mass media industries including television, newspapers, books, recordings, radio, magazines, as well as movies, and the internet. However, since the early 21st century, the increased diversification of mass media has further complicated the equation, thereby making it increasingly harder to outline what exactly the different forms of what should be regarded as mass media (Osifides 1999). For instance, observers have often been divided on whether new technological devices such as cell phones, video and computer games should be regarded as mass media. On one end, cell phones have traditionally been single use devices but on the other hand, internet-enabled phones that can connect to the internet and the World Wide Web, which are mass mediums, have also emerged (Wilken & Sinclair 2009). Since 2000s, the “seven mass media” classification emerged and became popular in mass media discourses. The internet and mobile phones, which are collectively referred to as the digital media emerged in 1990s and 2000s respectively (Maddox & Gong 2005); radio and TV comprise what is generally known as the broadcast media. Each of the different ass media is content specific and has its unique creative artists as well as business models; mass media has a wide audience reach at once, as opposed to other forms of communication such as the telephone, which is practically a two way communication. Historical perspective The history of the emergence and development of the mass media is very short, lasting only about 500 years; nevertheless, the numerous forms of mass media that have emerged over the years have had tremendous impacts not just on the socio-political, but also on the economic, technological and cultural trends in global societies (Graham, Kamins & Oetomo 1993). The earliest developments coupled with their corresponding technological advances and social change was responsible for both the demand and the rapid innovation that led to the emergence of the modern day mass media. Books are the oldest media, with existing records showing that the first book ever to be written found in Egypt around 1400 B.C.. However, given that, it was only after the invention of the printing press in 1456 that it was possible to reproduce books for mass consumption; newspapers are generally regarded as the oldest mass medium. New-sheets made their first appearances as early as 100 B.C in Rome, but the first-ever regular newspaper appeared in the 1600s. Development of the magazines was fairly slow compared to the newspapers, with the first-ever English magazine appearing in 1704. In comparison to the print media, the electronic media (primarily radio and TV) developed more rapidly. From the onset, radio emerged as a mass medium in the early 1920s, as a result of the increase in popularity of mass entertainment and rapid technological advances that were taking place at that time. Following the possibility of mass entertainment through radio, there was a great rush to introduce pictures, a phenomenon that led to the invention of the TV in the 40s; cable TV and satellite communication followed pretty first, and more recently, the internet was born. Throughout the history of mass media, it is clear that each new media emerged both to supplement and to compete with the existing mediums (Fox & Geissler 1994). In that respect, the emergence of new medium often threatened to, and often did, undermine the survival of existing ones, whenever they reached mass audiences. For instance, the rise and subsequent popularity of TV back in the 40’s and 50’s displaced the radio industry as the main source of information (Shaver & Lacy 1999). More recently, the emergence of new media platforms such as the internet and World Wide Web, which enjoy unrivalled popularity due to their characteristic high interactivity, has spelled nothing but doom for the traditional media such as newspapers and magazines (Tan, Kwek & Li 2013; Randle 2001,). Industry players have no choice but to battle out for market shares because their very own survival depends on it; eventually, the long term survival of the different media outlets depends on their ability to remain profitable irrespective of the growing competition in the industry (Sherri 1997). Mass Media Advertising in context There has been no single definition of the term advertising up until now, but it generally refers to the paid, impersonal and one-way approach to marketing of persuasive information from a source through the numerous mass communication channels, which often seeks to promote certain goods, services or even ideas (Rotfeld 2006). Advertising is a central function of the diverse range of mass media including newspapers, magazines, radio and TV broadcasts, and films, as well as billboards, among others. Advertising messages originate from their specific sponsors who finance their production and then pay for their placement in mass media (Reid & Karen 2003). Advertisements appear in both the traditional media such as newspapers and TV as well as in the new media outlets such as websites and social media. The four main inventions that shaped development of the media namely the printing press, radio, television, and the internet, have also impacted the advertising industry significantly (Hirschman & Thompson 1997). The invention of the printing press made it possible to disseminate words on paper, thereby giving rise to the possibility of selling material, and the rise of advertising agencies. With the invention of the radio, it was now possible to hear advertisements, apart from seeing them in newspapers and magazines; radio became the most popular commercial medium in the 1920s. Thereby seriously competing and nearly edging out the print medium as the primary source of information. Sales of products on radio in form of infectious advertising jingles soured immensely with the continued increase in the popularity of the medium. However, the popularity of TV in the 40s and 50s greatly revolutionized media advertising. The popularity of TV as a mass commercial medium in the 40s and 50s was due to the decrease in prices of TV sets round that time, which made them readily affordable by most households; the possibility of broadcasting commercials with vision, sound and motion was a game changer, which nearly edged out print and radio advertising. The invention of the TV had a great impact on the entire advertising industry and the manner in which products were sold. Advertising agencies begun creating mini movies, about 30-60 seconds, and segmenting their audiences to ensure effective communication of their advertising messages to the right segments of the populations. Role of advertising in mass media Advertising inevitably plays a central role in the mere existence and continued survival of commercial media organizations, including radio, TV, and the print media. Evidently, none of the mass media outlets would be in existence today were it not for the revenues generated through advertising (Chinenye, Ephraim & Chinwe 2012). In that respect, it goes without saying, that without access to advertising revenues, even the oldest and most popular worldwide newspaper or broadcast organization would have to close its doors and move out of the market. In the worldwide media industry business, the two most significant variables that are highly predictive of economic survival and prosperity are viability and profitability. The wide audience reach of mass media outlets makes them a viable marketing tool for many advertisers. Advertisers use the audience reach of media outlets to assess the outlets’ potential to promote their products and services to wider audiences (Karen, Reid & Morrison 1997);. In that respect, the wider the audience reach of a media outlet, the higher its capability to attract sponsorship thus increased ad revenues. The population segments addressed by each media outlet is also a great predictor of their potential to generate high returns for advertisers; for instance, the richer the audience segment, the more advertisers will be willing to pay to access them (Chinenye, Ephraim & Chinwe 2012). In that regard, diversification of the audience coverage becomes a high priority for worldwide media outlets, to ensure that all the segments of the population are reached. From this perspective, advertising is not only the primary source of revenue for worldwide media outlets, but also a guarantee of their continued survival and profitability amid tough competition in their specific media industries. Apart from helping them to stay in business, advertising revenues also enable media outlets to expand their audience reach much faster than they would without the motivation to do so. Given that the more the audience reach, the greater the chances of attracting sponsorship, media outlets have very high incentive to expand their coverage. Advertising revenue has numerous other benefits for mass media outlets; notably, advertising revenues help mass media organizations to drive down the cost of their products and services significantly (Chinenye, Ephraim & Chinwe 2012). In that respect, advertising revenue also enables media outlets to reach wider audiences; for instance, subsidies from advert revenues help worldwide newspapers to lower cover prices thereby increasing affordability of their products. Moreover, advertising revenue enables worldwide media, particularly those that are privately-owned, to maintain their independence and freedom (Beard & Nye 2011). Without the reliance on public funding, privately owned media are not bound to any restrictions to their freedom and independence and can express themselves freely. Traditional media business models Business models reveal the competitive strategy of firms; faced with the rapidly shifting global business environments, media firms are increasingly differentiating their strategies and adopting advanced business models, which call for more specialized capabilities (Ingram 2014). In order to beat competition by creating and delivering high value propositions to their clients, media companies are striving to acquire knowledge and expertise beyond their specific areas of expertise. Identifying viable business models in the face of the ever-increasing audience-fragmentation, which is brought about by the increasing range of media content and sources of information on the internet, is one of the daunting challenges facing media companies today. Numerous media business models have been implemented in the US and in the UK, namely the subscription based model, the ad-sponsored model, the mixed model, and the dual model (Westerlund, Rajala & Leminen 2011); all these models are varied significantly and each of them have their unique advantages. The subscription model entails selling a product without any ads for a positive price as in the case of HBO while the ad-sponsored model has to do with bundling a product with advertisements and giving it out for free as in the case of Metro. The Mixed model entails selling a product with advertisements at a positive price as in the case of the New York Times; on the other hand, the dual model is closely related with the mixed model but differs slightly on the point that it entails offering two products at the same time, one of high-quality and the other one of low-quality. In the fashion of the mixed model, firms adopting the dual model offer their high-quality product alongside a few ads at a positive price and the low-quality product is often ad sponsored. The subscription-based and ad-sponsored models are regarded as the purest forms of media business models, primarily because they have a single source of income, price and advertising respectively; however, the mixed and dual models are considered to be hybrid models since they combine features from both the ad-sponsored and subscription-based models. Usually, new entrants into the media business often find the pure ad-sponsored business model more suitable for them because of their reduced quality service to enter the market; however, following the improvement in quality of services offered, mature firms often exploit the other business models. Centrality of advertising Ad-sponsored business models are dominant in today’s economy, as many firms are increasingly choosing the option of financing themselves through ad revenues while offering their clients free products and services (Masanell & Zhu 2009). Ad-sponsored entrants pose a serious threat to the survival of incumbents, whose business models rely on subscriptions or fees charged to customers for services and products rendered. For instance, the new music service provider Imeem allows users to access free ad-supported music files, thereby posing serious competition to subscription-based industry front-runners such as Apple’s iTunes. Beyond the Internet-based industries, free ad-sponsored broadcast TV channels have also posed serious competition to the traditionally subscription-based cable channels such as HBO. Similarly, Metro, considered being the largest newspaper in the world by circulation is also free and ad-supported. The mixed-product-line-extension model or the dual model enables incumbents to respond effectively to the competition offered by ad-sponsored entrants, particularly in the Newspaper industry (Masanell & Zhu 2009). For instance, the Boston Globe was able to respond effectively to competition from ad-sponsored entrants such as Metro Boston in 2006, by taking a significant stake in the latter, thereby successfully switching from its traditional dual (mixed-single-product) model to a mixed-product-line-extension model. In less than a year, The Boston Globe had successfully managed to dislodge the 2007 free ad-sponsored entrant, BostonNow, out of competition, after switching to the mixed-product-line-extension model (Masanell & Zhu 2009). However, the mixed-product-line-extension model is not necessarily a one-size-fits-all solution for all incumbents in the diverse media industries; for instance, in the case of Apple’s iTunes, which continues to operate on its traditional subscription-based business model, introduction of ads would most likely have a detrimental effect on iTunes’ sales. Emerging issues The rush by media houses to address the increasing decline in revenues and audiences as a result of the ever-narrowing audiences, predicated by the increasing audience segmentation as a result of the widening range of mass media diversification, has led to the exploration of possible future business models. The slash and burn approach, which entails a focus on cost reduction, has been a common practice by most mass mediums, particularly the traditional ones; a number of broadcast networks and newspapers are considerably cutting down on their costs of production (Macnamara 2010). The problem of severe cost-cutting is the inevitable reduction of research and development, thus, the curtailment of innovation investment, which could potentially result to the death of the business in the long term. Rather than cut costs, media firms are better off exploring the potential of adopting multiple platforms and new technologies as ways of distributing their contents to wider audiences, thereby safeguarding their long term survival and continued profitability. There have been increased discussions on the possibility of charging for content delivered in mass media, in a new call for the implementation of the so-called “paywalls”; New York Times’ publisher Arthur Sulzberger Jr. rejuvenated the push for paywalls in January 2010 (Macnamara 2010). The publisher made the big announcement that the newspaper “would start charging for content above and beyond the cover price” from January 2011; New York Times “metered” model resembles the one already adopted by London’s Financial Times, where the content that exclusive online readers can view for free is limited to a few articles. Given that the New York Times is regarded as the stronghold of global media, adoption of the metered model was undoubtedly a significant move. The New York Times had earlier on attempted to charge for content previously in 2005, when it introduced its Times Select service, which charged about US$49.95 annually or US$7.95 monthly for accessing its online columnists and archives (Macnamara 2010). TimesSelect became popular gaining nearly 227,000 subscriptions by 2007 and was grossing US$10 million annually but was discontinued after 2007 when the newspaper pulled down its paywall thereby making its contents free to all viewers. The explanation offered by Vivian Schiller, the manager of the TimesSelect service then, was that the newspaper had projected a greater growth in the emerging area of online advertising than in subscriptions to the service. A much recent call for adoption of paywalls has been from News Corporation, which announced its plans to start charging for accessing the contents of its titles all over the world; News Corporation’s Wall Street Journal has been charging for its content since 1996 (Macnamara 2010). Together with The Financial Times of the UK and the Australian Financial Review, Wall Street Journal has successfully recovered revenues through charging for content over the years. Nevertheless, Chase Carey, News Corporation’s Chief Operating Officer has recently expressed reservations concerning Wall Street Journal’s online paywall strategy, citing weaknesses that allow users to access its contents free of charge through Google search. News Corporation has threatened to block Google from accessing its content, which is quite possible through filtering tools, but this again raises moral questions regarding the organizations excessive restrictively restrictive approach to safeguarding its profits, which thoroughly curtails freedom to access of information. Charging for content has not worked for all industry players as numerous case studies of failed attempts by media organization to adopt this model are rampant today, leading to the increased criticism of the idea of paywalls by numerous observers across the world. For instance, the US-based Los Angeles Times attempted to charge for the access of its arts section back in 2005 but dropped the move altogether after experiencing a marked drop in the number of web visitors to its pages. According to Jeff Jarvis, Guardian columnist, world A-list blogger and media analyst, paywalls are not necessarily the way to go because they inevitably compel readers to make “economic decisions” whenever they are seeking news (Macnamara 2010). The prevalence of free access news and commentary sites, such as blogs and news and content aggregators such as Google, media users are quite unlikely to consider paying for content; surveys in the UK have indicated that many media users are more likely to switch from news sources if they are compelled to pay for content. Public funding of media has been hailed as the solution to the ills of the ever-increasing commercialization of media in a vast proportion of the emerging discussions on media funding; approaches to public funding of mass media range from radical to conservative. Generally, most countries have resorted to financing at least one national media network through the public-funding model; for instance, the UK’s BBC is publicly-funded (Macnamara 2010). In recognition of the increasing financial problems facing many worldwide media, many national governments, including the US have recently expressed their initiatives to extend support to commercial media. Nevertheless, the push for public funding of media organizations has been mired with many challenges, key among them being the traditional media organizations’ resistance to subsidization; public funding has been resisted by traditional media organizations because of its perceived negative effect on their independence (Rotfeld, Jevons & Powell 2004). Moreover, the prevalence of other high priority areas such as education and health, which are critical to nations, make public funding of worldwide media organizations beyond the set funding levels unjustifiable. Conclusion Overall, it is clear that advertising is extremely important for the mass media, particularly because it is the primary source of revenue that enables mass media to remain sustainably profitable, and to innovate their offerings while expanding their audience reach. It is clear that advertising revenue has impacted mass media in many ways; generally, advertising revenue has impacted mass media economically, and organizationally, as well as culturally. Economically, advertising revenue has empowered mass media, thereby enabling them to remain profitable and sustainable amid the increasing competition in the highly competitive global business environment in the industry. Organizationally, advertising revenue has enabled media to develop structurally, by providing funding for research and development that leads to innovation; the increasingly shifting global mass media dynamics are posing serious challenges to the long term survival and profitability of mass media. In that respect, advertising revenue does enable mass media to adopt strong organizational models that guarantee not just their profitability, but also their long term survival in the worldwide mass media environment. Culturally, advertising revenue has enabled mass media to expand their coverage or audience reach respectively, thereby increasingly diversifying their audience’s population segments; expansion to cover diverse audience population segments has inevitably increased the cultural diversity of mass media. The future of mass media industry is set to be significantly different, owing to the fact that the industry is gradually shifting its orientation from the mere networking of individuals and information to a “content” game. In that respect, for mass media to remain competitive and sustainable in the future, they must strive to continuously innovate in order to create value for their clients, and to survive the increasing competition in the digital age. 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