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One of my favorite hip hop artists, LL Cool J, describes TV advertising today the way that I see it at a moment in time, better than anyone:

“Don’t call it a comeback. I’ve been here for years.”

I have considered framing my argument in a variety of ways. I could trash digital and discuss fraud, fake news, a lack of trust, etc. Or, I could simply use the size and inertia of TV and the stellar Q3 2018 Political revenue (which not only threw TV a bone but changed the power dynamic of our country). I could speak about upper funnel versus lower funnel, the power of reach for a brand marketer only attainable in TV, etc.

All of these would make for a potentially interesting blog post but would ultimately not be the whole story.

Let me use this opportunity to quote another hip hop legend, the Wu Tang Clan, by adding another acronym to our already ridiculous lexicon:

“C.R.E.A.M. Cash Rules Everything Around Me.”

The Importance of Balance Sheets

I believe the most telling thing about a company is its balance sheet. It is like reading a man’s profile on Match (as opposed to Tinder or Bumble, which are more appropriate metaphors for private companies). Not that I have any experience online dating (uh-hum), but when you look at how much cash, fixed assets vs. good will, you see patterns.

You can know if someone is lying about their age and know if they really are as wealthy and successful as they project; and you can tell a lot about how they manage their daily lives.

Unlike dating and the pool of eligible bachelors, anyone that has read any of the wealth creation legends like Wallace Wattles or Napoleon Hill knows that wealth and prosperity are not like pie. If you get a big piece, it doesn’t mean there is less for the next person or company taking a bite (a lot like equality). 

I think the above is important because we have wrongly assumed that the success of companies like Google, Facebook, and Netflix are at the expense of companies like AT&T, Comcast and Disney. Traditional media companies have portfolios of fixed assets with different economic profiles and life cycles.

The DNA and economic profile of a company whose fixed assets deliver the last mile to homes vs. one that provides limitless online storage space are very different. The planning cycle for fixed infrastructure and theme parks is very different than servers and software. Perhaps this is why Google’s fiber experiment has not gone as great as hoped.

Managing Cash and Shareholder Expectations

In order to run a business where the investment horizon is in decades in lieu of months, a company must manage cash and shareholder expectations with a long-tail view. The skills required to do this also provide companies with the toolkits to weather economic ups and downs and competitive threats. When looking at a return on investment, TV years are very different from digital years from a shareholder perspective.

The big gorilla in the room and perverse irony of the current polarization (us vs. them) dynamic in advertising and media today is that most digital media and advertising technology companies and their shareholders rely on “big, slow, old, dumb” TV companies that have healthy balance sheets to buy them. It’s ironic, don’t ya think?

Facebook, Google, and Amazon are outliers. The other 10% of revenue is made up by companies that are relying on being bought by a big media company (traditional or digital) because many have been unable to turn early stage venture-backed economics into sustainable, profitable companies.

In Conclusion

So, whether it is because the digital media industry is failing to do their jobs well by lacking integrity, being untrustworthy, drawing attention to TV by spending so much time trying to disrupt it, or are simply waiting to be acquired, all roads go back to why traditional media companies will continue to adapt, weather the storm and work to thrive, not just survive. It is a long-tail game for these companies and their shareholders. 

And to quote an ancient lyricist, Sun Tzu, “For steep ground, if you occupy it first, occupy the high on the sunny side and wait for the enemy.”