Category — Business Cases

After seeing this call from Wikimedia to get volunteers and experts for a strategic plan, the question would be, could some media companies do the same with their audience? The New York Times has an initiatie (in which I participate) called Insights Labs, but I do not know many other initiatives.  Incorporating talent and letting people to be part of us can also be made through volunteers.  Media companies could have a big volunteer network with the right policies and incentives. Under the principle of “give a little, get a lot” our audience could be an added-value self-service.

Spotify says they can get to over 10% of subscribers, and the last survey states that 5% would pay for news. Of course, music and news are not the same product at all, and spotify is doing the right thing: converting music into a service.

We talked yesterday about Fast-Flip, that great last century innovation re-discovered by Google.  (A good example of how Google understand that innovation is also about recognizing good ideas). Today we may talk about something very similar.  Silicon Valley insider expect facebook to have the following mix of revenues (forget about volumes and concentrate in percentages):

Media revenue is much more based in brand ads (or, what we call “display”, although it is possible to sell performance paid ads through a self-service). They argue that this is due to the promotion of virtual goods through the platform, the advertising of TV shows online, and, mainly the great usability of buying ad space there. In fact the main reason probably is that mainstream advertising, or, in other words, massive indiscriminated “branding” advertising did not reach Facebook yet.

No matter the reason, what is necessary to reconsider is:

First: why they may get 36% of revenues from self-service while an average media site is, probably at a level  of more or less 10%.Why do not media sell mor ad-space performance-based to SMEs. This is about getting more people to bid.

An then, secondly, taking into account that, yes, there are experiences of selling display through self-service, whether it is the time for media brands to have their own performance paid advertising selling platform. In fact, again, we are talking about adopting the best practise, like we did yesterday.

At this moment, media are mainly implementing either Google or Microsoft for selling our ad-space. Interestingly, Facebook is not doing it. Facebook is using neither Microsoft nor Google to sell advertising. Does this fact have something to see with the successful self-service performance in the Facebook Revenue Mix?

“Get me as close to the fighting action at the point-of-sale and moments of truth—on that ground will I deploy most of my resources.” Robert Brazell

By having a look to new ventures, to vouchacha, while there are already some other initiatives out there, it reminded me to the vision of Rob Brazell on how to get media out of the fire.

ccimages by bashed, and Rsms

I had no hope in sustaining contents thanks to donations, and I wish I was totally wrong. Having a look to two references in donation supported models, I see that MIT OCW says to be operating at a cost of 3.6MM $ while wikimedia has an annual expenditure of nearly 6 MM $. When wikimedia reached their target, all funds collected were put into a reserve fund (if media had done this we won’t probably be where we are).  What calls my attention the most is their conservative approach to expenditures following a logic: if you do not have it, do not spend it. A second interesting point is in their budget. No content production costs (of course) and no traffic acquisition costs while technology is, by far, their main cost.

Sustaining a part, a section, a portion of contents of a traditional media by donations would need to be transparent and to give recognizement to donors. It may be possible but it would need a change in many decision makers. Converting a part of our business in a foundation could be possible and these two examples are showing how it could be done.

Image by websuccessdiva

It has very much been commented that YouTube was making loss for Google. Credit Suisse said it would lose 470 MM $ for 2009. From the beginning, this news has been difficult to believe, but I did not have arguments to doubt it.  According to Telco 2.0, there is a set of indirect benefits for Google, but, still, where is the return on investment? From my view, even they made an interesting analysis; those arguments are still not explaining why Google makes such a huge loss (if it were true). There are some arguments in which I do not personally have the same view they develop. I will talk about them first, and then, I will expose what I think is a problem for the healthy development of digital products and services: our bias to analyze as businesses products that we love.

Argument 1. More eyeballs longer time will mean more advertising budgets.

This is a recurrent argument, more exposure equals more advertising and more $$. How much exactly? Is it enough to pay back costs? When will they have a positive return? Why more viewers will necessarily mean more advertising dollars?

Argument 2. Information about users may help to optimize advertising.

How much is it increasing advertising revenues?  CPMs are so cheap nowadays that even the development of behavioral targeting is now not so clearly profitable.

Argument 3. Google profits went up, so they can afford YouTube.

This is more an opinion than an argument, but, ok, it is easier to understand that you make the bet when you have the power of doing it. But really, can you hold an investment that is making you to lose money just because you can afford it? Maybe, that would not be an investment but a cost.

Argument 4. Google is deploying network capabilities based in a superior scale economy.

Ok, this could be a strong argument to support why Google should keep YouTube.

Argument 5. It would eventually cut the middle men for audio and video contents in a supposedly future environment without piracy.

Again, we believe that first mover advantage will make a longer term difference. This is something not really demonstrated, and that did not happen even with MySpace (surpassed by facebook), nor probably with facebook (surpassed by twitter ¿?). In other words, it is not so clear that being first mover, even in a community network driven economy is such a barrier to entry nowadays.

Many analysis on digital products and services are still made from heart, goodwill and hope by all of us who are amazed and love all these products. We want them to succeed, so we try to find behind a great product, a great business. Great product does not necessarily mean great business. Trying to hide $ figures after faith arguments and supposed potentials is something we should be limiting when analyzing digital content businesses. Otherwise, we may continue to mislead investments. Our mindset should swift when we look at digital products as a business.

Marketing people at FORD as well as many other marketing departments all over the world, directly want to invest in building an audience at least for a concrete campaign. This is a potential growing trend, content not sponsored by brands, but created and promoted by brands directly. In fact, FORD is developing a kind of road movie through a reality show.

The Ford Fiesta has come to play on the American roads.  In the ultimate foreign exchange program, our 100 agents will spend 6 months behind the wheel of their own Fiesta, lifestreaming their experiences, and completing monthly missions to show you what the Fiesta is all about.

Ford will give a free car for 6 months to 100 drivers in exchange of the uploading their driving experiences. Those 100 drivers will compete for getting their stories spread through any social platform.

Fiesta Movement is an attempt of FORD for creating user generated content, getting viral marketing impact, and, why not, checking their own ability to getting positive return on audience. Brands and products want “to be the content”, to be part of the content creation and promotion, and so, advertisers are competing for audience just like any other media.  This campaign may include buying traffic through advertising in other media to increase viral effects.

It is difficult to measure impact in terms of direct ROA for this campaign, but it could be possible to compare the awareness of this campaign compared with others.

Key learnings of this experience remind us some basic principles to maximize returns:

- Reduce content creation costs: They know it may be cheaper to develop a decentralized content generation strategy, not just in content creators/sources but also in platforms.

- Keep a local focus: they select people in different locations across US to be as close as possible to their audience.

- Building engaging contents, with quick and continuous updates, uncertain in their results that may keep audience coming back to them.

- By getting impact in “traditional media” they are also jumping into media without a direct budget for this (I did also “create” contents in my previous working experience, where we intensively used PR).

- Be aware, advertising is not an endless gold mine, “content” businesses need alternative revenue streams to keep independent and sustainable.

In the other hand, while for media companies, as content distribution through social platforms become to some extent a commodity, brands are a growing competitor, for media professionals, it is an opportunity because the business of building profitable audiences will continue to be relevant.

In a fresh report from Newspaper Association of America there are a couple of original revenue generation initiatives for newspaper that seems to make sense at least for the shor term:

- St. Petersburg Times is handling 16 to 20 consumers’ shows a year with a great profit margin (45 to 65%). They are trying to lead the market in counsmer events. This is an extra activity of their promotions team. For each show, they have made a dedicated website.

It is a complementary market that can make more complete our service to both, advertisers an audience. Having events is increasingly important as offline newspapers disappear, because through this event is where our audience and advertisers will continue in physical touch with our brand. Community events with audience are a great way to continue building up a newspaper brand.

- Morristown is developing a hyperlocal strategy by launching weekly paper targeting hyperlocal communities. Advertisers want to be seen as par as the community.  They call it the “print version of facebook”. The model is simple: (only good news) of user generated content (40% of the content) and pictures, with hyperlocal ads. People want to see themselves in the paper and their neighbours, the same curiosity that drives social networks may push this kind of content that is entertainment. They may also cover hyperlocal sports events from schools with user generated content.

Similar to the case before, Morristown demonstrates how a printed paper can leverage on an online community to build up brand, entertainment contents, and a further user generated content flow.

Concept of bringing online contents to print is being used in other initiatives and it makes sense as a short term tactic.

These kind of initiatives may not transform a business model, but are a proof of dynamism and reflect a proactive approach to making more things in offline newspapers.

Full report is here.

According to CNET Sony intends to sell contents through kiosks. It is an initiative for Philippines, Thailand and Vietnam. In fact, this is a service they offer through Internet in many other countries.

Mixed models (digital delivery good sold in a physical location) could be a good starting point several years ago to let people connect a cable and bring contents back home, but it seems late for trying it. Interestingly, they are trying to make in countries that are behind pioneers in Internet literacy (to some extent, only).

Maybe, this is an experiment in how technology availability could influence consumers’ behaviour (and demonstrate the theory that piracy won because of its first mover advantage) and that is why this can be interesting. But, with their expensive pricing, it seems unlikely they will do it.

Let’s see!

We know Google are great, and so, why to reinvent what they do? A search engine gets information for free because it’s offering a service: search. The same way they get information, you may get their service to offer again final information in a different way.

This seems to be a response to google supported by Time Warner and Jeff Bezos: kosmix. It’s a kind of Metha-aggregator that just gets the information from sources and converts it into its own information. And, what is the relevance of this?

We thought we were becoming service providers with outstanding product while taking the contents of the others, but then, someone else comes and gets your service and try to make it a commodity to finally also offering the contents of the others. Search engines converted content into commodities and new search engines are trying to convert older searching into a commodity? It seems to be a very feasible and reasonable answer. And… if search engines did not have problems getting other contents to build on their business, now they got no argument to claim someone else is using their service in order to offer another one… and they try to clean up results: no SEO influences, not such information floods in order to getting lost.

Building in existing aggregators and search engines to improve our search experience is a very reasonable next step that makes sense. At the same time, these new solutions will be improved by others getting into a (hopefully) never ending process of search improvement, but… what is more relevant: inverting again the situation and getting back search as a commodity solution, and (maybe) content will be again a king.

Kosmix is trying just to do that, and it will be a first mover into a trend: building on existing services to offer improved services.

As content structuring business get harder into improving search and fighting each other, content suppliers (media business) will have less capacity to influence their own positioning in such places. That will make, probably, that established brands and those who are at the root of the news, will get more relevance.

A fierce competition in media structuring is definitely good news for media users, and so, for media business. Welcome kosmix, and welcome to all those coming business that will use existing content structuring services to improve them.