Long gone are the good old days when placing a million dollar t.v. spot would virtually guarantee an increase in sales or a successful product launch. The “big” ad agencies used to place their client’s ads on t.v. channels, paying for “spots.” These days, the “smart” ad agencies are placing their client’s ads around internet content/entertainment, instead of on t.v. channels.

Entertainment used to come to us mostly in the form of shows and movies on television. These days, more and more of our entertainment comes from the internet. Take a look at how one teenage male consumes entertainment.

Instead of sitting in front of the t.v., he’s entertaining himself on the internet. Here’s a typical Saturday afternoon for a teenage boy who surfing the internet: First he visits Facebook and scrolls through the news feed to see what his friends are doing. He may upload a photo while there, or watch a video that someone else has posted.  If the video is funny, he may forward it to another friend to view. Next, he’ll visit an online car forum where other car enthusiasts post photos of their cars or videos of street racing. He may watch a video or two, scroll through some photos to see what’s new, and may also read a few car articles while he’s there. Next he’ll click on the local newspaper’s website and watch video highlights of the high school football games from the night before. With all of this entertainment, who has time to watch t.v.?

Because the internet allows us to access all types of entertainment, at the exact moment we demand it, our attention is spread out over an increasing number of non-t.v. “channels.” Is t.v. viewing in decline? Statistics in the U.S. show a 2% increase in television viewing in 2010, but this is obviously related to the high rate of unemployment in 2010.  Without this artificial prop of the viewing numbers, television viewing is most certainly in decline.

For this reason, great web content is more important than ever before.  Web content producers like, Next New Networks, could replace traditional television channels for the younger generations.  In short, the company creates web content for it’s clients that is both entertaining and viral.  The company produced the two most watched YouTube videos of 2010 and certainly understands that marketing your business successfully on the web is all about creating great content. Next New Networks was purchased by Google in March of this year for an undisclosed sum.

Demand Media, another company that is in the content media business, is using a completely different business model. Demand Media identifies popular topics that a large number of people are searching for on the web. These topics are typically in the context of “How-To.” Demand Media then pays freelancers to produce articles or video content related to these topics. The content is posted on a variety of sites, including YouTube and the company’s own sites including eHow. Advertisers then pay to have their ad placed in the video or on the same page as the article or video produced by Demand Media. It’s that simple.

Wired magazine explains Demand Media’s business model in an article from way back in November of 2009 called, The Answer Factory: Demand Media and the Fast, Disposable, and Profitable as Hell Media Model.

In the new digital economy, creating great and affordable content is key for growing sales revenues or launching a new product. Companies can no longer depend on a high dollar ad agency anymore to put their product or service on the map. In order to be successful in the new economy, companies must place their ads around good content and not on traditional t.v. channels.  Along the same lines, companies must hire ad agencies who are able to create compelling content and promote it successfully on the web.

“Most media companies are trying hard to boost the value of their online content until it matches the amount of money it costs to produce. But Demand Media thinks they have it exactly backward. Instead of trying to raise the market value of online content to match the cost of producing it, the secret is to cut costs until they match the market value.“

-Wired Magazine, November 2009

Posted by Corey Curwick on May 1, 2011