There is no correlation between audience share and ad revenue. This is a truth Anke Schäferkordt, CEO of RTL Television Germany, admitted she had to face this year, when, albeit RTL will have had the largest audience share in this decade, its ad revenues won’t have increased accordingly. And all they do is start whining, because they don’t have no clue what’s next.
And this is obvious for this whole generation of senior managers in media as of today. They might understand that the correlation between the two is gone, but they don’t know what the reasonable thing to do is. The reasonable thing to do, and, I might add, the only thing to do to stay on top in business, is to start taking risks. When your old business model is faltering and you’re the best at it, you better start getting worse quickly. This concept is hard to understand and embrace for someone who’s been taught the old model for 25 years when it still worked.
But guess what, the world has changed! Not in a disruptive fashion, but (pun intended) bit by bit every day. And now being good at making an appealing TV programme is not good enough anymore. Moving your old programme to new platforms won’t help. Had they done this 2 years back it would have been buzzworthy, today it’s an act of cutting their losses. What’s more, trying to bully your network distribtution partners into not permitting their subscribers fast-forwarding their ad breaks on VoD is no solution either. What you have to do is take risks and start inventing entirely new programmes.
Instead of forcefully trying to get the share of the pie you consider to be fair, make the pie bigger your way and have all the surplus! That’s what your job as a leader is, showing the world where to go next. That’s something to weigh in when your shareholders gather. And if you fail? Well, it won’t do any harm because being the best at the old model didn’t benefit you either (you have proof now!). Sure, you get all the fame for being the market leader, but that’s nothing the CEO’s employers, i.e. the shareholders, care about, because it’s not reflected in their pockets.
The old model used to give you more deniability when you took less risk – henceforth taking risk will be the only thing giving you any deniability. It’s the best that could ever happen, if you think about it.