Interactivity: The Digital Blueprint for Success

by: Diane Mermigas

Acting on trends reshaping media will be more important than contemplating them in 2010. Propelled by an improving economy and mainstream digital adoption, the new year is time for companies to take a deep dive into interactivity.

The parameters for digital success are clear: Consumer connections must be all about heightened functionality and real-time relevance, as well as practical and social mobile applications.

The recession that seriously clipped corporate revenues and profits also instilled no-frills technology reliance. The new modus operandi is to pay only for what one needs and is value-added -- even when it comes to entertainment. This has serious implications for print and video content producers struggling to alter consumer expectations about the definition of "free."

Fortunately, there are apps. They already are embedded deep into our social media, mobile and digital activities, short cuts to precise news, data, guidance and entertainment. They also are mechanisms for payment and ongoing relations with target customers.

As the new bridges to everywhere, apps will become more sophisticated and mainstream as they connect consumers to more qualitative contextual information and services. The marketplace is rich with indications of where consumers are going. The widespread shopper use of mobile social and commerce related apps this holiday season is striking evidence that these trends are now woven into the fabric of our lives.

Consumers want what businesses want: more refined, actionable, specific information that has the context of customized interpretation and recommendations. Those mechanics have become as important as the devices and digital content .

Consumers expect immediate access to more refined interactivity. So it's no mistake that mobile phones outnumber PCs four to one, and that nearly one-third of Americans have permanently eliminated landline phones. Apple (NASDAQ:AAPL) and RIMM understand and cater to consumers' mobile digital behavior and needs in ways that few other media-related businesses do. Heightened competition from Google's (NASDAQ:GOOG) new Android ecosystem will make the next wave of mobile enterprise even faster and better.

The lowly flat, big screen television that is the new living room shrine to high definition still has a chance to join the interactive age rather than waiting for cable operator and TiVo set-top boxes to transport them. In fact, it is make-or- break time for all things TV. Much of the fundamental content has value, given new digital form and function. Too much of the legacy infrastructure and process of broadcast TV stations and networks does not.

Revitalizing content ties to consumers by devising mobile interactive functionality is one way to stay in the game. Publishing faces the same challenge. The electronic readers and tablets gaining favor with consumers will become mass conduits for temporarily displaced quality text and video, the baseline value of which will be reset. These digital readers will extend and enhance--not replace--newspapers, magazines and books.

Amazon (NASDAQ:AMZN) already is carving out its niche as the "Netflix" of publishing. Netflix's (NASDAQ:NFLX) user-friendly access from anywhere approach to movies and other video poses a serious threat to cable because it understands and respects consumer penchant for relevant social mobility. And it has a profitable built-in pay function to boot.

If others choose to boldly follow consumers' lead, some transformational change could quickly unfold.

Advertisers could cut to the chase by opting for secured transactional target marketing. Their involuntary spending respite during the recession prompted many marketers to reevaluate their business practices and strategies. With just a fraction of pre-recession conventional advertising spend on the rebound; it is the perfect time to take the digital plunge instead of waiting for a return of the old norms.

Pepsi (NYSE:PEP) is redirecting its ad dollars next year online to community outreach -- and virtual projects -- to strengthen consumer ties in ways that are relevant to people instead of corporations. It will be an interesting and important test case for giving interactive marketing a life away from static print and TV advertising.

Pepsi's approach also underscores the importance of local content as the new personal connection. It explains why Google is chasing after Yelp, and The Huffington Post and NBC Universal (NYSE:GE) are pursing hyper-local services such as Outside.In. It is why Google is integrating social network posts at Twitter and Facebook into real-time search. These are the new hybrid sensors to everything that matters to people - at home and work. They are mining the physical communities on which many local newspapers and broadcast TV stations lost their once-firm grip.

Yet formidable obstacles remain to creating systems of accountability, quantifiable measurement, secured universal payment, privacy and permission-based sharing. An arousing deal market will render more strategic tuck-in acquisitions to enhance media players' capacity in mega mergers, like Comcast's (NASDAQ:CMCSA) proposed controlling ownership of NBC Universal. But there is no substitute for, and nothing more important than, media-related businesses completely embracing digital interactivity. The key to future growth is that simple, and that complicated.

Disclosure: None

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