Monday, January 19, 2009

This is No Business Cycle; It's a Game-Changer

This mess we’re in is not a cycle; it’s a “game-changer,” according to Jeff Immelt, chairman and CEO of General Electric, parent of NBC Universal.

The global economy and the domestic economy are being reset by a crush of extraordinary forces including runaway debt, tight credit and the digital revolution. Nothing will ever be the same again.

Financial services, automotives , real estate and even retail are being transformed by economic and technological forces that will make them completely different industries . The government is commerce's new partner, “so get used to it,” said Immelt, speaking candidly on MSNBC’s Morning Joe.

“We can’t just hunker down. We have to come out of this as a brand new company, “ Immelt said, referring to his ongoing revamping of GE into a more streamlined and green global conglomerate.

Unfortunately, many media companies are acting as if the auto and financial services industry ad spending will resume at historic levels when the recession abates. Given the radically altered nature of investment banks and the demise of Detroit’s Big 3 automakers, there clearly will be fewer, more tightly focused companies providing different products and services. Overall business marketing efforts will continue to go digital in ways that offer more value and efficiency.

As I have repeatedly pointed out in my On Media column, such change will manifest as permanent declines and shifts in advertiser spending. Ad-dependent media companies need to reformat during this painful lull to embrace emerging revenue streams and growth businesses rather than stubbornly cling to failed old models. It’s time to rethink our thinking.

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