Mar 26, 2009

Media and advertizing challenge (2): IBM study reveals a "growing rift between advertisers, consumers and content owners"

Following my previous post on how it is going to be more and more challenging for media to keep their advertising revenue, IBM just published a study insisting on the "growing rift between advertisers and content owners, media distributors and agencies". (tx to Eric Scherer)

In, Mansha Daswani writes: "To succeed—especially in the current economic environment—media companies will need to develop a new set of capabilities to support the industry's evolving demands which include micro targeting, real-time ROI measurement and cross-platform integration." [...] "Advertisers are following consumers to new platforms; the study indicates that 63 percent of global CMOs expect to increase interactive/online marketing spend while 65 percent expect to decrease traditional advertising."

Full article
IBM report

Mar 18, 2009

Why is it going to be increasingly more difficult to subsidize news with advertising revenue?

The challenge that journalism has always been facing is to be financed. The cost of information has never been fully covered by the end customer. Revenue sources vary by media and by countries. Today, advertising is the main -- and very large -- source of revenue. But, governments, special interest groups, readers (for print), foundations..., also contribute to the financing of information.

Businesses need to advertise their products and services. Media offer a vehicle that can display the ads. Either they offer mass-market reach or niche reach (local or specialized). Advertisers buy eye-balls hoping that some of them will be customers. Media, using polls, study their customers and build their sales pitch around it. They offer a limited amount of space (time or number of pages) and sell this scarcity to the advertisers.

Digitalization is fundamentally changing the game.
  1. Media no longer have the monopoly of offering a platform to display ads. Any website can display ads. Why promote the release of a new DVD on a newspaper site and not on the Target site?
  2. Scarcity does not exist anymore. There are no limits to inventory space. The limit is on the advertising side. There are just not enough ads to finance everybody. When scarcity does not exist anymore, prices (CPM) go down.
  3. Data collection is the name of the game. Before, it was difficult to collect information about customers. It is why we were using a lot of tools based on polls. Today, polls are in competition with real data collection. Why use polls when you can track the habits of each customer one by one, compile and analyze them? Today's data are much more precise than yesterday's polling data. Pages are talking to pages. Data are being linked. Devices are starting to talk to each other. The Internet is becoming this huge machine, as Kevin Kelly is explaining at this Ted conference in December 2007, full of information about each one of us. Question : how much data are we willing to give away? The privacy limits are probably going to be decided by the legislators.
In the conferences I give, I love to say to media executives, "we are not any more in the news business, we are in the database business". Know your customers. Then anticipate and serve targeted information and news content, and targeted commercial messages.

When you are losing, step by step, your monopoly of serving ads... When the price to advertise is going down... What do you need to offer to stay the best advertising vehicle? You need to offer the best ROI. In other words, you need to move from an eye-ball logic to a transaction logic. And you'll get your dollars if you are able to prove that your vehicle helps to increase sales.

I know ! It is tough because all of a sudden you become somewhere responsible for the quality of the advertising and the quality of the product/service. It is a total paradigm shift. The total nightmare for the media and advertising business. But, Google, with CPC and CPA based ads, has already been changing the game. A few words online (ad-word campaign) can have better ROI than a very sophisticated and expensive ad on TV. Tough times.

Not only does the media need to display ads, but also they need to show to the right person. And on top of that, the right person for a business is a person that buys the product or service advertised. Bottom line is that businesses need customers. The winners will be -- are -- the ones providing the best engine to get those customers.

So, if news organizations still want to finance their operations with advertising dollars, they need to ask themselves : "Are we in the data collection business?" If the answer is no, your chance to survive, with an advertising model, in the medium-to-long term is close to zero. And if advertising revenue dries up, who is going to subsidize the information?

Example of what you can do: Geo Segmentation: Add ZIP To Your Email

Mar 4, 2009

Le Post (2): a successful and innovative news site that mixes pro and am content

You asked more questions about, the French news site, Le Post. Thanks. I tried to summarize them and asked Benoît. So, here is the update.

What do you think you're doing right that explains the success of Le Post ?
BR: First of all, flexibility is our religion. We are always experimenting with new stuff and failure is part of the deal. We are building the site brick by brick, with small projects that we test and can quickly stop if they are not working. Our site is organized around three concepts:
1- We are using the strengths of network and viralness. This way, we can be up to speed quickly on news or information that starts buzzing.
2- We take advantage of the fragmentation of information. We are not focused on the home page and we consider that each page is a potential HP. Also, we work the content with the SEO in mind.
3- We are taking care of our community. Readers are major contributors, so the content reflects their interests.

What is your secret (if any) to have amateurs contributing?
Once again, we take great care of our community. All our journalists are community managers. They manage, stimulate and provoke, non stop, the am. They are engaged in a permanent conversation with the community members [remember there are six journalists for 25,000 members].

What type of subjects are am contributing the most ?
In order: politics, crimes and accidents, web/buzz subjects, montages and collages with news content, and testimonies.