The Future for B2B May Not Be In Content

A study by Outsell (only available to subscribers) surfaces one of the underlying systemic issues affecting business media companies.  They asked business to business marketeers in the USA what they were doing with the money they were no longer spending on trade press advertising.  In summary the money went;

• 29% will be spent on the company’s own web site
• 21% will be spent on paid search and search engine advertising
• 17% will be spent on events
• 15% will be spent on other online community or special interest sites

Back in the days of Web 1.0 we used to talk a lot about the opportunities that arose from disintermediation.  Now it appears that it is the business media companies  themselves that are being disintermediated by their own customers. 

One of the biggest costs of trading as a magazine publisher is distribution.  Building a circualtion and then providing access to it for advertisers was the essence of the profit model.  In the digital world, distribution is pretty cheap and marketeers are discovering that they can build traffic on their sites directly without relying on business media publishers.

The implications of this are clear.  If we take the Outsell numbers at face value, even if we succeed with our online content models we might only expect to win back 15% of the money we are losing from print.  That won’t support the costs of a comprehensive content model.  If we are to win our full share of the digital cake we are going to have to think differently about the business we are in. 

Last week I spoke on a panel at the E Publishing Innovation Conference and I reminded the delegates of Michael Wolffs book from the early days of the Internet, Burn Rate.  In this highly entertaining book Wolff describes his adventures in raising money for start up companie in the febrile world of Silicon Valley.  At the end of the book, he declares a worry.  What, he postulates, if it turns out that the Internet revolution is not about media at all?

It turns out that he may have been right.  Although content and media may be part of the solution for business media companies it should not be at the centre of strategy development.  What we need to do is examine closely what our customers (the companies we used to call advertisers) are doing with their spend and help them to do it better.  As I have argued before, nobody wants to buy advertising next to content, what marketeers really want is tools that help them sell more stuff.  That certainly means we are in the lead  generation business.  We might also need  to be in the business of providing widgets and applications  and marketing services that improve the effciency of marketeers own websites.  Of course content is part of what we do, but if we think it is the purpose of what we do, our revenues from “advertisers” are going to be modest.

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User Engagement The Economist Way. It’s Good for Your Elf.

I had itended to keep blogging live from the Publishing Innovation conference, but my battery died!  There were a couple of other presentations on the first day which are worthy of note.  Ben Edwards from The Economist gave a really interesting insight into the thinking about how to make money online.  He started by declaring the scale of the ambition – for The Economist to be ten times as big as it is now in ten years time.   Thats what my old boss John Battelle used to call a BHAG – a big hairy arsed goal (or audacious if you a little queezy).

For the Economist the answer is not exclusively in the advertising model.  Edwards argued that part of the challenge of the paid content model is how you think about it.  Indeed he said,

“Stop thinking about charging for content online and start thinking about online paying experiences.” 

This is a subtle but significant distinction.  He explains what he means by demonstrating the usual user experience.  The user makes a search, finds a result, looks at the result and then probably goes away again.  This, he argues, “the search, click, result model” is not very engaging.  He goes as far as to say, that publishers are useless at building enagaging expereinces in the on line world.

Edwards uses a fascinating example from the world of online gaming, The World of Warcraft game.  Players can do four important things, they can manage their identity; they have a means to progress in a heirarchy; they can interact and network with one another; they can acquire “atrefacts” which validate their self worth.

This approach, Edwards argues is symbiotic with Maslows heriarchy of needs in that these four steps give the players a way enjoying self actualisation.  His evidence for the power of this approach to engagement is in the stats.  He shows a graph which compares typical time spent on a site which publishes news (a few minutes or o) with time spent per week by enthusiasts of elves and witches (world of Warcraft) at 26 hours.

So Edwards says, to build engagement in media, we should use the same approach.  Of course we must give away lots of content (the freemium model) in order to persaude perhaps 1-3% of users to pay for something.  Edwards points out that in the online world, distribution is cheap, so have a wide funnel and put lots of content and users into it to get a small  percentage to pay.

I really like this approach and The Economist is making a start in bringing it to life.  Edwards shows a screen crab of an online debates page with a chair, lead speakers for both sides of the argument and a vote.  This is an example of herairchy (the lead speaker), networking and communications, identity management etc.

The power of Edwards excellent presentation only slightly spoiled by the admission during questions that the Economist hasn’t built most of this apporach yet.  Still, I like it.  Like it a lot.

Exalead and Vertical Search

Robert Brown of Exalead is arguing that publishers come from an online world and struggle with the online world.  The future is online and this must drive the business but this is difficult for most publishers.  Search he argues is the key to unlocking the value of content.  The old business models do not transfer well to the online world.  Selling ads is not enough. Premium content is incremental revenue.

Exalead believes that vertical search solutions can uncover the value of data.  But we need to move beyond basic search.  The key drivers are devloping smart growth, accelerating innovation, gaining traction and protecting shareholder value.

The key is make oonline a profit centre not a cost centre, We need to be faster at utilisation of new technologies.  Content is all  over the organisation but it is non standard format and fragmented.  We have to abandon offliine legacy mindsets where we believe online is like print. We need to search in way which combines unstructured and structured data.  Imagine a web site which combines blogs, reviews, maps.  Which is the most reviewed restaurant, which is the most favoured.  Weight can be attached to the provenance of articles to maintain editorial control.  What about a next generation proframme guide for TV?  Why can’t this be searched in the same way as we do on Google?  Run the BBC homepage and then run it through Google to create related and faceted terms he suggests.  This “wikification” enables you to build up a taxonomy or dictionary of terms and their relationships.

He argues that his solution to semantic analysis of structured and unstructured date is now relatively cheap to deploy in hardware terms.  Content is not king – if it was then the content owners would be wining right now and they are not.

Notes from The E Publishing Innovation Forum

So we are listening to David Craig the Strategy Director of Thomson Reuters.  He says there is a volume war in information. Are we going to play in the volume war or the insight war?  Their users feel bomabarded with information and data noise.  The challenge for TR is how to help their users discriminate between the useful and the useless.

TR process 10billiion daily stock market prices and 400000 data updates a  day in total – a total that has grown by a factor of four in two years- an example of the scale fo the information challenge.  Moores law creates more information than it creates processing power to deal with it.

Just because there is more information doesn’t in itself mean that there are more revenue opportunities.   So for TR the journey is about how to get to intelligent information, what David calls, “the next horizon”.   A three stage process from access to information to workflow tools to improve user priductivity (where does content stop and software and tech start he wonders, and finally to “intelligence”.  This is about linking TR information to data in the outside world.  How to expose contest and knwledge to show insight and decision making perpectives.  TR strategy is all about the journey to this third destination – the provision of insight to aid decision making.

Einstein said “information is not knowledge”.  Info needs to have six attributes, context, availability trust, timeliness,actioanable, self describing all linked together to provide actionable insightful information.

Craig says there is a perfect storm of change.  An economic shock, new tech – especially mobile, new competitors and substitutes and changes in the regulatory environment all operating together.   

The four main changes for info companies are the economic shock + the global shift+ the professional cloud (ie networks)  + the velocity and volatility of information. 

For the global economy in the future there will more regulation, less financial leverage, greater global coordinattion and increased protectionism, a greater need for risk management and transpareency and the growing influence of Asia.

Craig comares the rapid speed of the adoption of th eipod compared tto the landline phone.  What’s the next thing.  It’s coming fast.  The lifetime of  the top 500 S &P companies has dropped from 80 years in 1930 to just 15 years today.  Google is just 7 years old is already pretty mature.  Velocity is increasing.  And so is volatility. This makes it harder to spot where the trends are and where we might end up.

What is clear is that speed and content accuracy is vital.

Professional networks – are they an inconvenient truth.  USers choose what information they need and who they interact with.  TR wants to help their users reach their network.  Example of research scientists.  Researchers need collaboration, publishing research and funding.  As a result TR has devloped a collaboration netwrok called Researcher ID. Researchers put their “ID on their website which taks the users to a unique ID ladning page which aggregates data about the researhcers published work, his citations etc. This validate for the user the pedigree of the researcher and helps them find collaboration partners.  The tool shows the researchers network by geography and expertise.  So this is TR creating added value networks – specialised  in a way that the Linked Ins of the world would struggle to deliver.

 I missed most of the presentation from Julian Shambles of The Telegraph.  He seems to be saying that online is different, that rewriting headliines for SEO is worthwhile, that social newtrk sites and digg is important, that their content and writers don’t have to change, but the presentation of those stories does.  Getting high up in google news results drives traffic.  Nothing new here.

 

 

 

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Tackling the B2B Ad Sales Problem

I have spent the last couple of weeks reviewing some investment opportunities some early stage businesses.  In thinking about whether to proceed I began to wonder about the next developments that will be needed to leverage the business media model into a workable and scaleable  advertising based solution.

Most publishers complain that they have more inventory than they can sell.  This, it is argued demonstrates how hard it is sell digital advertising to b2b companies.  The volume of unsold inventory leads to price weakness and an overdependence on ad networks and backfill.  When clients are persuaded to buy advertising too often the ROI is poor and click through rates are alarmingly tiny.

I think the analysis is flawed.  It seems perverse to complain that there is too much inventory in the same way as it would be perverse to complain that we had too much circulation.  The truth of the matter is that we do not have too much inventory, but rather we have too much of the wrong kind. We have discussed before that a key challenge for web sites is to build user engagement.  A visitor to a site who arrives from natural search is unlikely to hang around for more than a page or three, and this is too little engagement to develop a high propensity to engage with advertising.  (First challenge – increase user enagement)

The second problem is that the nature of our ad inventory is of little use for brand advertising.  Brand advertsing requires a build of opportunities to see, reach and frequency.  Standard skys, leaderboards and banners are not good at delivering that.  To compound the problem we struggle to serve the right ad at the right time to the right user in the right context.  So the next two challenges are to create inventory sets that enable our customers to develop brand as well as clicks and then to find tools which enable us to put the right ad in front of the right user at the optimal time.

The fourth challenge is arguably the easiest.  We have to teach our sales people how to sell the digital opportunity.  Most sales people in b2b come from a pedigree of selling “space”.  Digital sales is much closer to the agency model, with every proposal bespoked against a clients objectives.  Sales people are often frightened to admit they don’t know what they are talking about but this is easily fixed. (I am working with BEC Development in offering a primer course for anybody who wants to develop their digital sales skills-To get on a programme just go the Bec Development website and the fine folk there will help you).

There is one final piece of development you should get your teams to think about.  The mobile device of choice for business people is the Blackberry.  Mobile browsers are not great, but b2b websites are none the less missing out on an opporutnity.  View your website through a mobile browser and you will discover that it is slow to load, the ad experience is awful and the rendering of the content is almost unreadable.  There is much to do to build user engagement, but you should add to your list of tasks mobile apps and optimisation of what you do for mobile browsers.

 

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A Green Field Opportunity for Business Media

Paul Conley has a wise take on the current health of business media.  He was also one of the first to argue that the old model is in trouble.  Although he remains concerned that the debt laden media companies are unlikely to survive in their current form, he is begining to feel more optimisitc about the future.

What is clear to me is that there are no signs yet of a recovery in print advertsing.  For most of the traditional media companies the ugly truth is that any growth in online revenues is dwarfed by the deterioration of offline revenues.  Recruitment advertising markets will remain weak until GDP grwoth reaches 2% – and that is at least 18 months away.  Display advertising is never going to return to pre recession levels.  Online advertising remains a small business for most publishers.  The challenge remains to develop new model strategies for growth. 

The start point for this is to restate the purpose of the business.  We have to stop thinking like magazine publishers or conference organisers or trade show managers or even web site publishers.  Business media is about three things;

- Helping business decision makers to take better decisions

- Helping vendors to sell products and services to business decision makers

- Facilitating liquidity in recruitment.

That’s it.  There isn’t anything else.  If you started with a green field and wanted to build a business that delivered against these aims the reuslting enterprise would look very different from the traditional model.  We would develop a range of products that enable some or all of six deliverables;

1) Right information at right time for users

2) Advertising and marketing solutions

3) Research and discovery

4) Networking

5) Product demonstration and marketing

6) Learning and professional development

Although magazines and community websites and trade shows could be part of the mix, they would not be what drove us.  I plan to come back to these six themes and discuss what product options could be open to the new age business media company.