Ad Sales Blog

Are you in the content delivery business?

  Many print publishing companies are failing  in their transition to digital by giving the wrong answer to the question, "What business are you in?"

  In Theodore Levitt's classic marketing essay, "Marketing Myopia" he describes how the once mighty railroads went bankrupt by failing to understand they were in the transportation business, not the railroad business. Many publishers are making the same mistake, thinking they are in the content delivery business when they are actually now in the customer engagement business.

Like the railroads, many publishers are failing to see how much new technology can transform an industry.

The Internet makes content a commodity. Think that great celebrity interview in your June issue is so unique? Type her name into Goggle followed by the word "interview" and see ten other interviews your readers can instantly access. But your ability to use content to engage and service readers has never been more valuable. The internet may commoditize content, but is also creates a need for knowledgeable guidance though the vast, conflicting, un-moderated content chaos that is the Internet.        

Also, digital media does not just "transmit" content like print media does, digital media transforms it. When content is delivered through digital social media channels the content added by readers can be more important than content generated by editors. How many readers link to an article can have a profound effect on search engines ranking which can make or break the life of a piece of content. Publishers who think their "transition to digital" is about swapping analog transport for digital ignores the importance of interactive reader participation. This came out loud and clear in the recent study, "The Case for Advertising in Interactive Digital Magazines" as it documented the core reason marketers advertise in digital magazines is to deliver an interactive brand experience to readers. When value comes from interactivity it is not hard to see why straight digital replicas of print magazines have less value to advertisers.

 It is important to anticipate that digital content will be aggregated, redistributed, rated, commented on, ranked by Goggle, re-purposed, trashed, praised, and ignored as part of the process. All this is very healthily, adds value to the content you create, and is the key to your ability to monetize it. Why? Because it shows that the mere content that you pump out is driving the creation of an online community. If you can show a lot of interactivity between your community members, the value increases. Again, online, most content is a commodity, but when you use it to build a community, you create something of unique value that you can charge for.   

For publishers, the transition from analog to digital can be painful, unfair, and frustrating. At the heart of a successful transition to digital is a reinvention of the business model. Magazine publishers are often initially surprised by  the tiny revenue their digital media generates as they swap $10K print pages for $1K newsletter banners. But those newsletters, operating within a community as data gatherers, can return big profits when leveraged properly. Subscriptions for magazines and newsletters are harder to charge for when they go digital, but free subscriptions operating as content development centers, can be leveraged to create other reader experiences that can be monetized. 

The key to figuring all this out starts with answering the simple question, "What business are you in?" Online, most content is a commodity. If you still think you are in the content business...please, think again.   

 

The future of print magazines: fewer, but just fine.

Print magazines will be around for many years, but they will be lot fewer in number. Why do I say this? Because as part of the study, “The Case for Advertising in Interactive Digital Magazines,” I measured the percentage of print magazine and website users who were “very actively involved” in their media. When I tabulated this against the age of the respondents, I found that younger respondents were less often heavy print magazine users. I found the opposite for heavy users of websites.

Why measure seriously involved media users? Because most often they determine the future of any media. If the most active users of Facebook started leaving where would Facebook be? Looking more like MySpace.

Print magazines readers skew older. The number of respondents who subscribe to more than

 

six print magazines increases steadily with every 10 years added to a respondent’s age. Almost half (47.6%) of the sample over the age of 70 subscribe to more than six print magazines. But with each 10-year decline in respondent age group, the number of serious magazine readers drops consistently.

For respondents under the age of 20, only about one in five (21.5%) subscribe to more than six print publications. Assuming readers maintain their reading habits as they age, there will be less demand for print magazines in the future.

But print magazines will not disappear. One in five (21.5%) under the age of 20 still subscribe to more than 6 magazines. While that is less than half the number for those over 70 who do so, it is still a very significant base. Print magazines are not dead, nor will they die. The difficult transition we are in now is a question of oversupply, not ineffectiveness. When magazines get though this transition there will be fewer of them but they will be robust once again.   

Information on “The Case for Advertising in Interactive Digital Magazines” can be found HERE. The chart above combines findings #16 and 17 from the study. The study was sponsored by VIVmag and Nxtbook Media.  

Profit on the web is about audience not traffic

At the recent Digital Magazine Symposium, Gordon Borell astonished the audience by blowing up the notion that building that largest base of online readers is the key to ad revenue. 

   After surveying the financial results from thousands of local media Web operations for the past eight years Borrell concludes there is no direct correlation between large amounts of traffic and large amounts of money.

For example, Borrell tracked a wedding Web site in one of the top media ten media markets making nearly as much money in Internet advertising (in millions of dollars) as the #1 ranked TV station website in that market. The TV site gets about 600,000 unique visitors per month, the wedding site gets about 60,000, or 1/10th of that traffic. How can this happen?

Borrell says that online, the best advertising is content. There was a time before the Internet (my kids are shocked at this statement) when the top way consumers learned about products was through advertising. But the Internet has become a far more efficient educator. Many of the most profitable websites make money because their content functions like advertising did years ago, as a customer educator for product sales. According to Borrell, visitors of these sites are “leaning forward” to read the content while probably ignoring the banner ads. 

Some print publishers are still trying to win the print circulation/CPM battles online. But that battle is over. They lost. Online, search, which now accounts for over half of all online advertising dollars spent, has won. A media buyer can always buy more clicks per dollar buying search. 

While the online CPM battle is lost, the war for publisher profit can be won. Borrell shows us how with an example: “Compare radio, a $15 billion media segment, with the yellow pages, a $9.8 billion segment. About twice as many people listen to radio compared with those who use the printed yellow pages. So those ad dollars seem just a little out of whack, right?  Now consider this:  For radio, average weekly time spent listening is about 20 hours.  For the yellow pages, it’s about a minute.  An industry that reaches less than half the audience of radio and gets about 60 seconds of quality time with them every week – compared with radio’s 20 hours a week – can still attract about 65% of the ad dollars as radio?  That’s because the yellow pages, like the Internet, are a lean-forward medium where people see the advertising because the advertising is the content."

At the Digital Magazine Symposium, when Borrell laid this out, everyone in the audience was taking furious notes.

To further support Borrell's points, the chart below illustrates the dollar value of a unique visitor at some of the best known websites. To estimate these numbers, Silicon Alley Insider took the full year revenue for 2009 for each of the companies below and divided them by the number of their average monthly worldwide unique visitors.

As per Borrell, the more "wallet ready" the unique visitor is, the more dollars generated. Search gets the most per visitor, then display, and then social. 

Google's uniques (search) are the most valuable: $18 of revenue per monthly unique per year. Facebook's uniques, meanwhile (social networking) are worth a paltry $3.50. Twitter's uniques are worth almost nothing.

Understanding this, publishers, even small ones, can compete. For example, check out HD Camera Guide which attracts  a relatively small but valuable "wallet ready" audience.

The revolution in magazines that will be here by June

By June of this year we will be having a very different discussion about interactive magazines. By then, the behind the scenes work going on in several areas will come together enabling the printed magazine to evolve into its inevitable digital form. Soon content publishers, content distribution companies, and hardware technology companies, working on different pieces of the puzzle, will have their pieces on the table. Once connected, a new way to look at magazine content and how it is delivered will emerge and the skeptics of digital magazines will need to reconsider their views.

The activity is everywhere; 

• Apple is quietly working behind the scene's to lineup publishers for rumored digital magazine distribution through iTunes alongside the release of an Apple tablet reader.
•  Hearst just announced an e-reader to support their magazine content at the Consumer Electronics show.
• Condé Nast, Hearst, Meredith, News Corporation, and Time Inc. announced a "Hulu for magazines" to distribute their digital magazines.
• At the Consumer Electronics Show, which just ended, e-readers were so prominent some reporters to called it the year of the e-reader.

The pieces are coming together. Let's connect the dots:  

First: what the experience will look like

Two publishers have animated the concept on videos showing what interactive magazines will look like on the next generation of digital readers. The readers are responsive to the users touch, and highly interactive as they intuitively create a dynamic reader experience. The first video shows the anticipated edition of Sports Illustrated with a play by play of what that publication will look like in digital form:

The second is a concept video is from Bonnier Corp, the publisher of Popular Science, and offerers a detailed look at how content for interactive magazines will be created and delivered:

  

Science fiction? Nope. The digital Sports Illustrated edition will be out in June, and as for Popular Science, they have been publishing interactive editions of the PopSci Genius Guide since last year. In addition there are already dozens of interactive magazines published around the world.  What will be different six months from now is that the next generation of digital readers will be making their way into the hands of readers. Which brings us to the next piece of the puzzle... 

Second: the digital readers are coming:

Here is a video report from the recent Consumer Electronics Show where a wide variety of notebook computers with specialized e-reader features, as well as dedicated e-readers were shown. In this video Associate Press reporter Haven Daley predicts that 6 million notebook computer and e-readers will be sold in the US this year.

Third, digital distribution technology is moving ahead.

Several digital magazine service companies are not waiting for the digital readers, they have launched applications to deliver a magazine reading experience to smart phones that are available now. Look at these three videos:  

Zinio's CEO Rich Maggiotto explains how his organization's iPhone app delivers both a high end graphical experience and readability to a small screen:

Nxtbook Media's Marketing Director Marcus Grimm shows how his organization's smart phone app creates ad revenue opportunities for publishers:

Finally, a demonstration of Texterity's iPhone version of Elite Traveler magazine:

Magazine content, e-reader hardware, and distribution technology are all coming together. When the three are finally in place be prepared to rethink everything you know about magazines. 

If you had seen the "media correction" of 2009 coming what would it have looked like?

If you were in media sales for print media,television, or radio 2009 was a miserable year. What would it have looked like if you could have predicted it? It might have looked like the following blog post. Based on events that had just happened in the financial industry my June 22, 2007 blog post, describes the "inevitable correction" that ad based media will be going through. It looks like the end of 2009 to me! 

Here's the post:   

A recent "follow the money" analysis of the advertising industry by Dow Jones' "MarketWatch" should serve as a shrill wake up call to anyone in the ad sales business who thinks that online products will not be the biggest part of their portfolio in the future. I also see this article as a great sales tool to show any advertiser who feels the same.

The article looks at the recent spate of acquisitions among online ad giants with eye popping billion (with a "B") dollar signs; Google buys DoubleClick for $3.1 billion, Microsoft buys aQuantive--for $6 billion, etc. MarketWatch concludes, they make perfect sense because of the "inevitable correction" coming to the ad industry as a whole.

MarketWatch lays out the case:
"Last year, U.S. consumers spent nearly a third of their total media-consumption time engaged with online or interactive media, a dramatic increase from just two or three years ago. At the same time, Fortune 500 companies allocated only 6 percent of their marketing budgets to online media in 2006, up from 5 percent in 2005...they're spending ever more money where, increasingly, consumers aren't."

The prediction:
"The inevitable correction is upon us. That's why online adverting in the U.S. market is growing seven times faster than other advertising media: Online was up 35% year over year, while the overall ad market grew only 4 percent. Whether dollar allocation percentages ever match consumer usage numbers is academic; it's clear that the gap between consumer behavior and corporate marketing budgets must close."

If it's anxiety producing to hear financial types apply the word "correction" to the industry where you currently earn a living, take heart. Now that you know what is "inevitable" you can take advantage.

Read the full article on MarketWatch

UK follows Denmark as second country where Internet ad revenue overtakes TV

In the US where television advertising still commands the largest share of ad dollars what has happened in the UK is unthinkable; Internet advertising revenue has surpassed TV ad revenue for the first time. From a recent report in the The Guardian newspaper: 

 The UK has become the first major economy where advertisers spend more on internet advertising than on television advertising, with a record £1.75bn online spend in the first six months of the year.

UK advertisers spent £1.75bn on internet advertising in the six months to the end of June, a 4.6% year-on-year increase, according to a report by the Internet Advertising Bureau and PricewaterhouseCoopers. To put this in perspective, in 1998, when the IAB first measured internet advertising, just £19.4m was spent online.

The internet now accounts for 23.5% of all advertising money spent in the UK, while TV ad spend accounts for 21.9% of marketing budgets.

The IAB's figures show that of the total of £1.75bn spent on internet advertising, £1.05bn, or 60%, was spent on search advertising on websites including Google, up 6.8% year on year.

The UK is not the first country where internet ad spend has overtaken TV spend, Denmark reached the milestone about six months ago. But it is the first major economy to do so.

How soon do you think this will happen in the US? 

Read the entire article in the Guardian 

Wall Street shake up to help media sales?

When the news from Wall Street is gloomy it is easy to forget that we are in the communication business, not the content publishing business. When major companies have messages they need to communicate our financial fortunes can rise independent of what is going on in the general economy.

Just before the meltdown on Wall Street the financial advertising sector was the largest in the US. In the aftermath of all the restructuring, a lot of companies will have new stories to communicate. According to Heidi Dawley in a recent post on Media Life: 

"...against the worry and gloom there's a bright side to the credit crisis for the media economy.

Provided the crisis doesn't deepen--certainly a vital worry--ad spending ought to rebound as the financial services industry responds to the restructuring of the industry and shifting of assets from failing institutions like AIG and Lehman Brothers to healthy institutions.

While smaller banks and insurance companies may still fail, and the credit mess still has a long way to play out in its impact on the entire U.S. economy, the sense, at least for now, is that the worst of the collapses are behind us, that no new AIGs lurk in the shadows.

Going forward, there are solid reasons to expect a rise in ad spending in the financial service sector."

For one, major retail players, the banks and insurance companies, need to put out the message to consumers that they are healthy and conducting business as usual.

For another, competitors of those troubled giants like AIG and Merrill Lynch have every reason to pump up ad spending to steal away customers, playing on fears that sticking with those giants will put them at financial risk. "

Makes you think!

Read the whole Media Life post

B-to-B digital ad revenue to top print by 2009

Burlingame, Calif.—B-to-b digital advertising revenue will outpace print ad revenue by 2009, according to a new report from market research company Outsell.

According to the report print accounted for 44.7% of the $20 billion b-to-b media revenue in 2006, compared with 28.3% for digital products and 27.0% for events. But by 2009 the roles will reverse.

B to B print revenue will account for 34.3%, 38.6% share for digital products and events 27.1%.

Read the news item on the B to B website:

http://www.btobonline.com/apps/pbcs.dll/article?AID=/20071022/FREE/71022037/1078

2008: the year of selling with ideas!

A study just released by Next Level SMG gives insight into why marketers will spend on advertising next year. Among marketers, the top reason to budget for advertising in 2008 is "differentiation."

From the study:

"The need for differentiation and an updated brand image / personality are the lead drivers for marketers’ who see developing a new advertising campaign as their lead initiative for 2008. Changing media consumption trends are also creating a need for messaging that has greater clarity and impact. As one respondent noted, “in an increasingly attention-scarce economy, [you] need to work harder to ensure that branding messages are sharp-edged and clear.”

Eighty-two marketing executives participated in this survey, and respondents include marketing executives from companies including Kraft, Pepsi, Dannon, Colgate, Cadbury Schweppes, Playtex, Clorox, Nokia and Starwood.

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Use this on a sales call.

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A marketer motivated to differentiate product will be highly motivated to differentiate their media buy as well. Pitch ideas that offer unique exposure to your audience. Custom publishing projects or single sponsor newsletters or web sections can deliver unique exposure with no competitors present.

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If you are calling on a marketing executive present these options as way to differentiate brand/product in competitive markets.

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If you are calling on a media buyer, print out the study at the link below and show it. Then say, "In 2008 marketers see differentiation as their top priority...is differentiation important for your client?" Assuming a positive response present your ideas a way to differentiate the clients product/brand.

      

Download the whole study

http://www.nextlevelsmg.com/files/news/NLSMG_FinalSurveyReport.pdf

Internet to Overtake Radio in ‘08 & Mags in ‘10

The ineveitable prediction has been made. According to a ZenithOptimedia forecast,

"We predict internet advertising to pass three milestones over the next three years," ZenithOptimedia's forecast said. "We expect it to overtake radio advertising in 2008; to attain a double-digit share of global advertising in 2009; and to overtake magazine advertising in 2010, with 11.5% of total ad spend."

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On a call.

Use this on a call.

A perfect study to show your web laggards. Show them the chart and ask, "Come on guys, do you really think this Web stuff is just going to blow over?

Read the full article on the AdAge website

PDF with the stats on the Ad Age site