News

Recession: the angel of mercy for past-their-prime strategies

Ahhh...there's nothing like a good, old-fashioned economic downturn to kick some sense back into the business. Now don't get me wrong. I'm not saying we should have one every year, but a recession really does force companies that have been complacent for too long to take a good, hard look at every business strategy in their playbook. And cleaning house from time to time gets rid of outdated models that aren't delivering the goods anymore, making room for new strategies to step up and do a better job.
April 1, 2002

Ahhh…there’s nothing like a good, old-fashioned economic downturn to kick some sense back into the business. Now don’t get me wrong. I’m not saying we should have one every year, but a recession really does force companies that have been complacent for too long to take a good, hard look at every business strategy in their playbook. And cleaning house from time to time gets rid of outdated models that aren’t delivering the goods anymore, making room for new strategies to step up and do a better job.

Take Disney Channel, for example. Since its inception 19 years ago, the net has grown into a top-20 cable outlet that currently shoots into 80 million households in the U.S. The channel is easily Disney’s most successful kid-targeting TV platform. And yet its considerable advertising revenue potential had gone completely untapped until last month, when Disney Channel welcomed McDonald’s with wide-open arms as its first corporate sponsor.

You might ask why the net has suddenly chosen to abandon its staunch commitment to providing a non-commercial haven for kid viewers. The answer’s real simple: Disney Channel’s mighty parent company has taken a serious financial beating this past year and is under enormous pressure from shareholders to make up the lost ground any way it can.

But the more important question is why has it taken the net so long to come to its senses? Sure its pledge to operate ad-free was an admirable and altruistic gesture in the beginning, but the committment has since become a cumbersome anachronism in light of the fact that every single one of Disney Channel’s competitors is taking money hand over fist from corporate America. Even PBS, which is mandated by the government to selflessly serve the viewing public without profiting, raked in US$55 million in sponsorship dollars last year. And it’s not as if The Walt Disney Company has any qualms about targeting kids with commercial messages. After all, it doesn’t hesitate to use other kid-skewing media outlets to market the bejeezus out of its various ancillary offerings. I seem to see a new Disneyworld ad every time I turn on the tube. So I say it’s about time for this particular change.

Nickelodeon’s plan to launch a boys action block this fall is another recession-driven development that seems long overdue. Destination viewing for boys is, again, a strategy that has been employed by almost every other kids cable net on the airwaves. When it works (Cartoon Network’s Toonami block is a prime example), this trick can hike boy ratings through the roof, thus luring new ad dollars from boy-focused sectors like action toys and video games. Nick already gets a high tally of boy viewers, so the natural next step is to drive those eyeballs to a dedicated slot that’s chock-full of premium-priced commerical space just waiting for the highest bidder. With its established ad clientele now coming to the table with much-diminished marketing budgets in light of recessionary cutbacks, Nick has to look elsewhere for those lost dollars, and I think the boy-block plunge is a pretty safe bet.

The bottom line is a tricky one: No one can afford to cling blindly to archaic models that don’t maximize returns in today’s market reality, but stabs in the dark can be equally destructive. Careful re-evaluation and the courage to put the kibosh on stuff that doesn’t work anymore are paramount to survival now, folks. Have fun rooting ‘em out!

About The Author

Menu

Brand Menu