Neil Thackray’s Business Media Blog

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The dinosaurs have gone. What the absence of revenue means for media companies.

I didn’t sleep well last night.  I had a nightmare.  I think it was about the future of media and media organisations in the digital world.  It was sparked by something I said at a recent conference.  I have been turning up on Internet related conference panels since the mid nineties, and what is odd is that, although some of the vocabulary has changed, the theme is always the same.  How do we, media companies, make money from the online opportunity.  More than fifteen years since I was first asked that question, I am still being asked it today.  It was as this thought was being processed in my brain that I had my nightmare.

I am the leader of primitive tribe.  Every day we go hunting for dinosaurs (I know this makes no sense, but it was a dream!).  We follow their spoor and when we find a dinosaur, we throw spears at it and then bring the carcass back to camp to feed ourselves and our families.  One morning we go hunting and find no spoor.  We look all over the forest for signs of the dinosaurs, but we can find none. We return to camp, puzzled and bewildered. After some discussion we make a new plan.  Instead of spears we take bows and arrows on our hunt.  The next morning we return from the forest empty handed still having found no sign of the dinosaurs.  A more radical reinvention of our approach is required.  Instead of all going out together, we travel and hunt in small groups.  We add more equipment to our armoury: knifes, catapults, lit torches, batons. We teach ourselves all the new skills we need to use these new tools.   Still no success and no sign of the dinsosaurs.  Before long members of the tribe fall ill with hunger.  Some die.  We sacrifice some others in the hope this cleansing of our population will somehow help us in our hunting.

A few moments before I awake trembling I have a moment of realisation.  We are wasting our time.  We can’t find the dinosaurs, because they no longer exist in our territory.  They have moved on to another country, a place we don’t know or understand.  A place that is not on any of our maps.  For tribes like us, there is no point in hunting for dinosaurs. They have gone to another place and they are not coming back.

In the light of the day, I thought about what the tribe should do.  Keep on going out every morning with increasingly desperate strategies or should we break up our camp, move on, learn how to feed ourselves in new ways?  Or is it possible that for tribes like ours, the only future is slow starvation.

The traditional media industry has been chasing the digital dollar for more than a decade.  In STM there have been some notable successes, but in mainstream content publishing there has been rather less.  Is it possible, that despite continuous strategic reinventions, there will never be any money for traditional content plays online?  Unless you change almost everything about what you do it is likely you will face the same fate as my tribe in the dinosaur jungle.

Here are five things the media tribe can do to stand a chance to feed itself.

1) Make a planning assumption that even if you succeed in online monetisation the revenues will be smaller than there were on the offline world.  Set your cost base planning accordingly.  Do it now –  in one big step. Sacrificing one member of the tribe at a time will destroy your morale and sap your management energy.

2) Put users at the centre of your planning, not your media brand.  Your brand may be an aid to what you do, but it is not the reason that readers find you useful.

3) The old weapons you used to generate revenue are impotent.  Throw them away. The old revenue models, like my dinosaurs are no longer available to you.

4) There has never been more media than there is today, all competing for finite users and money.  Make sure you can describe succinctly, preferably in one sentence, what it is that makes your offering truly distinctive.  Unless your name is Google, if your sentence talks about your brand, cross it out and do it again.

5) If deep down in your heart you think there is much truth in my nightmare and that is an analogy for a horrible truth – that for traditonal media companies, the money has gone for ever – change careers now – before it is too late.

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November 15, 2010 Posted by | business media strategy | 2 Comments

Get ready for www.themediabriefing.com

If you have been wondering why there have not been many posts here in the last couple of weeks, it is because I have been busy with the team at Briefing Media getting ready for the launch of our first business to business site for the media industry.  Early next week we plan to flip the switch when for the first time you will be able to explore our blend of intelligent semantic technology and original writing from industry experts.

We are releasing in Beta so do let us know if you spot a glitch or have a suggestion.  We already have a raft of enhancements in the pipeline and have begun the planning for the release of more sites for other business verticals.

There are plenty of ways you can get involved.  If you have an insight into the media industry why not become one our Experts and share your knowledge with the media industry.  If you’re shy, then you can sign up now to be one of the first to see the site when it goes live next week.  When we are live you will be able to register for specialist newsletters and pre order copies of our first special report.  The topic of that report couldn’t be more pressing.  If you are thinking about the impact of pay walls you will want to get a copy.  We explore the different models for implementing paywalls and give you all the knowledge you need to build, refine or review your approach to the pay wall challenge.

If you want to explore working with us and getting your business in front of our audience then just call and we’ll talk about how we can work together.

In the meantime you might want to take a look at a short video presentation about what we are doing here

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September 24, 2010 Posted by | b2b media, business media strategy, Paid content | 1 Comment

A Future for Business Media

There has never been a more exciting time to be involved in business to business media.  Over the last couple of years this blog has tried to capture some of the issues and challenges that we face.  But writing and commentating is easy.  Now its time to put the money where the mouth is!

In the next few weeks we will be launching a new business media company trading as Briefing Media Ltd.  We think it offers an exciting and new approach to serving business to business markets.

The co founders of Briefing Media are me and Rory Brown.  Between us we have extensive of managing business to business media companies and we have co-operated over the last few months to build a new approach and a new kind of business media company.

The essence of business media is simple.  Decision makers want information to help them make better business decisions and suppliers want effective ways to market to them.

Briefing Media takes that simple goal and uses the latest technology and good old fashioned market knowledge to create a suite of comprehensive information solutions for business to business markets.

This is the 21st century, so our principle means of distribution is by the Internet.  The specialist information we present is a cultivated blend of aggregated, curated and original content.  We are using an innovative semantic search  algorithm to organise and navigate the content with each vertical site being supervised by an expert analyst who constantly updates and improves the taxonomy and the content.

How does it work?  We start by identifying the best specialist sources of information, whether they be written by journalists, experts, bloggers or even industry suppliers. Our technology reads all the sources and looks for interesting relationships between concepts to determine what documents or information to point a reader to.  That decision uses a semantic search tool that blends three different algorithms to establish the probability of an article or document being relevant.  This semantic triangulation means that the results of a search will lead the user not to that which is most popular -but rather to that which is most relevant.

We believe that although original content commissioned by Briefing Media will be very valuable, there is much else published by others which is useful too.  We are happy to point our users to third party content sources as well as our own.

We think a successful business media company is not only about reading words.  In each vertical we operate in we will add services including, training, conferencing , networking, consultancy and research.  We will publish our own white papers, act as a shop window for white papers and research published by third parties, help decision makers identify and be informed about the key topics in their industry.

You probably want to have a look at our first site – but you will have to be patient for a month or so.  We expect to release our first vertical towards the end of September and have already identified six more to develop over the coming months.  If you want to know more or think you might like to work with us do get in touch

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August 23, 2010 Posted by | business media strategy | , , | 11 Comments

Does Content Matter Any More?

A discussion on the linked in group Specialist Media Network argues that the future of business media is not content but audience.  Hard not to agree.  In the old model, where we earned our corn from the publishing of magazines, we used content created by professional journalism to attract an audience which we could then monetise with advertising.  Although we were very interested in journalism it was not the purpose of what we did, it was simply the means we used to generate revenue.

The debate about the future is often muddled.  Journalism does matter but it turns out that in the new business media world it doesn’t matter as much as it used to.  Journalists in national papers, regional papers and the trade press reasonably complain that as costs are squeezed the quality of journalism falls and this weakens the papers on which they work.  They cannot understand how their bosses can’t see the connection between the two. 

The truth is that everyone recognises that papers and magazines are fundamentally altered by the squeeze on content costs.  Most would agree that printed products are not as good as they used to be.  The problem for journalists is that the media owners no longer think the impact matters all that much.  It might matter in a philosophical concern about the state ofthe fourth estate, but it is not very relevant to the business we are in.

There are many ways to skin a cat, and in the digital world there are many ways to build an audience and to engage with them.  Journalism is not only,no longer the only way to do it, it is in danger of becoming not even a very important way to do it.

However content can be a useful way to attract an audience.  Just look at the traffic success of the free to air newspaper websites.  But on its own, as evidenced by the low level of page views per visit on most sites, it won’t create real user engagement that can be monetised on a scale sufficient to fund the costs of content production.

The commercial solution is becoming clear.  Business media companies are beginning to understand that providing network tools, research, training, work flow tools, data, events, lead generation and more will create a sustainable model. 

The answer to the philosophical question about the future of journalism is much less clear. Journalists are going to have to work out how their skills can make a meaningful contribution to the development of audience engagement.   To begin there needs to be an acknoeledgement that it is not only professional journalists who can create great content.  For many journalists such a concept is anathema. Citizen journalists, bloggers, expert witnesses all have a role to play. Some a re good, many are not. The professional journalist has a role to play in sifting, organising, validating, editing, assessing, commenting, following up, verifying, linking, challenging all this content.

When a journalist writes for the web, what is his or her job?  In print it was simply to persuade readers to read what was written.  On the web every journalists mission must be to persuade their audience to read something else. A journalists job is not finished when the last full stop is placed at the end of the final sentence in the final paragraph; it has only just begun.  By taking this approach it is possible that the owners of media companies will realise that if content is no longer king, it certainly deserves a place at court.

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July 13, 2010 Posted by | B2B Journalism, business media strategy | | 2 Comments

How the vuvuzela is ruining business media

My excuse for watching the World Cup has been to wonder what it might teach us about the current state of the business media industry. I have been surprised by how much insight into our business watching Rooney, Heskey, Terry and the rest of them, has provided.  Who would have thought that Wayne Rooney could help us rebuild the business media industry?

Let’s start though with the wretched vuvuzela.  The players complain they can’t hear each other or the refereees whistle.  Nobody can hear what the crowd is singing or the tactical shouting from the dug out.  The wider audience at home might be thinking it would be more pleasurable to listen to the grunting at Wimbledon than the incessant buzzing of the vuvuzela.  What has been the result of all this cacophony?  For England a demonstration of what we have always done.  Hoof the ball up the field, thinking perhaps it is still made from rain sodden pigs bladder encased in half the hide of a Blackpool donkey rather than a precision object to be passed between each other.  We know it doesn’t work.  The coach knows it doesn’t work.  The players even know it doesn’t work.  Somehow the noise around them drives all sense from their brains and they become too frightened to try something new.  They can’t hear, for the noise of the vuvuzela orchestra, the increasingly desperate pleas from the coach, the fans and the experts, to change their approach on the pitch.  Instead they turn on each other. They blame the boss, the ball, the pitch and in Rooneys case the fans.  We, the armchair pundits know what to do, but it appears that no one is listening.  They can’t hear or think for the sound of the blessed vuvuzela.

In business media hardly a week goes by without news of a redundancy round, a reduction in publishing frequency, a magazine closure or the fire sale of a title.  This hasn’t happened suddenly.  It has been happening at an acclerating pace for a number of years.  Like the footballers who keep hoofing the ball, we keep doing the same thing.  It used to work didn’t it?  If we keep at it maybe it will work again we think.  All around us our readers (the fans) and most of the experts are telling us to change the approach, but save for occasional moments of inspiration (I rather like, for example, the work RBI has done with ExpertHR which has built a bigger and more sustainable business than Personnel Today ever was) nothing much seems to change.

So what is causing this deafness?  What is the business media equivalent of the vuvuzela? How could we get it banned? The African horn is made of plastic and blows a single note when air is puffed into it.  The business media horn is made of false hope that the methods of the past will still be useful in the future.  It is made of vanity and pride that our magazines are still great, it is the fans (readers) fault for not reading them any more.  It is made of the naievity of thinking that third rate web publishing will somehow save us.

How can the noise be silenced? You can’t move from hoofing it up the field to an elegant passing game iteratively.  The whole approach of everybody in the team and in the management of the team has to change. Everyone has to believe that the new way is the right way.  No dressing room tantrums.  No water cooler bitching.  No hiding from the detailed responsibility for getting it done by the CEO.  It starts with leadership and the ability to explain what we are doing to colleagues and customers (players and fans) in simple straight forward and logical language (I may have stumbled on the problem with the England management set up!).  It needs everyone to let go of the past.  When it gets hard, as we try and do new things in new ways, when things go wrong we cannot revert to our old ways, we must stick with it.

So lets let go of  the old pubishing model, lets find new ways to win in business media.  Let’s expect things to go wrong from time to time.  Lets pursue the new future together, with commmon aims and approach.  But to do this we need clear heads and we must all go “Shhhh!” to the bloody vuvuzelas.

June 23, 2010 Posted by | business media strategy | Leave a comment

The Danger of Complacency

Grant Thornton and the Economist Intelligence Unit have produced an interesting paper called “Retrench or Refresh”. It explores the challenges that all business faces in the new economic circumstances of post recession planning. Although it is general, I was struck by how relevant the principals it espouses are for the business media and the wider media industry.

“Business model change has been overly cost centered and left many companies unready for the future”.
The first recourse when revenues fall is to cut costs often at the expense of changing their value proposition. All media companies recognise that changes to their business model are required to escape from the malaise and yet the cost cuts have been so deep that many are at risk of losing out to more innovative companies. The report expects that cost structure strategies will continue to be the main focus of business model change in the next eighteen months. This is nothing less than a fundamental challenge to business leadership.

The problem with a downturn, especially one as deep as this, and when combined with a technology change, is that business focusses increasingly on the short term – at the very time when good long term strategic thinking is required.

This is because “Executives are pesimistic about a rapid return to market growth”. Some media companies are in danger of deluding themselves about the strength of the recovery. In my view, the better results recently declared simply show how terrible last year was. Compared to the meltdown of the first half of last year, the trading climate this year feels almost benign. But lets not forget that the year on year comparisons disguise the depth of the fall. If in our private moments we are still pessimistic that business will not return to normal then GT’s next point is very sharp,

“Complacency is preventing more widespread business model innovation”. According to the report, 89% of companies believe their company’s business model is set up to let them succeed over the next eighteen months. The danger of a dowwnturn isthat it makes us think short term at the very moment when we need clear long term strategic thinking.

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June 1, 2010 Posted by | business media strategy | , , , , | Leave a comment

Business to Business £1.3billion Smaller

The PPA conference played host this week to PWC who paintd a grim but familiar picture about the future of B2B media. The presentation argued that £1.3billion of revenue has been wiped from the revenues of business media companies since 2007 and much of this is structural not cyclical. They see little prospect for near term recovery and say that the only hope is in new digital services.

None of this is a surprise, at least not to those of you who have been reading this blog or Rory Brown or Paul Conley and others. What is left unsaid is the implications of this. The digital model requires a very different construct from the traditional model, not least the absolute necessity to build an enterprise which has much lower content creation and overhead costs. Although most companies have cut costs, I think it could be argued that none have yet really tackled the stuctural issues of business engineering.

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May 5, 2010 Posted by | b2b media, business media strategy, Uncategorized | , , | 1 Comment

A Mantra for Giving Up on Pay Walls

Solving the b2b conundrum is partly about how you think as well as being about what you do. It struck me today that we too easily use vocabulary that fixes us in a mode of being defensive. All the talk about paywalls is perhaps the best example. Our failure to innovate in online advertising solutions, the crippling impact of the decline in print advertising has led us to think defensively about our brands rather than thinking about how to better serve our readers or users. What is a wall? A barrier. It is a solid and impregnable way to stop users and readers reaching your content. That seems perverse. Of course I not saying we should not find ways of charging users for services we provide but if we build a wall, and we think like wall builders (think of Hadrian) we will end up in a battle with our users which they will win.

The answer is to think differently. Lets stop talking about walls and talk about access. Lets not pretend that we can charge for that which we gave away for free and think about how we can devise new content and services that will complement our free offering. Lets stop putting the old model and the defence of the old model at the centre of what we do and instead put our users at the centre. Lets think about how we can expose our users to more; for that way we may be able to charge. To offer users less than we used to by building a wall, and then expecting them to pay to climb over the top to get to what they used to have by right runs against the norm of human nature

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February 2, 2010 Posted by | business media strategy, Paid content | Leave a comment

Six Predictions for 2010

Happy New Year to you all. What kind of a year should business media be planning for and what will 2010 bring? There is no doubt that 2009 was the worst year any of us have experienced. The collapse in print advertising and the growing realisation that the online ad model was not going to get us out of jail has deepened the worry lines in every business media executives brow.

I fear there will be no easy solutions in 2010. Any of you who still have a planning assumption that things will get better are going to be sorely disappointed. For what its worth here are six random predictions for the year ahead.

1) Print advertising revenues will continue to decline but at a slower rate than last year. Some management teams will call this as signs of the green shoots of recovery. It won’t be. The downturn in print advertising will turn out to be L shaped.

2) The current craze for putting content behind a pay wall will deliver some returns but they will turn out ot be much smaller than the continuing decline in print advertising.

3) More magazines are going to close. They don’t need to, but unless publishers take an entirely new approach to the problem there will be little chance of survival for even some of the biggest magazine brands.

4) The rush to exploitation of network marketing will continue and there will be an explosion in marketing services companies offering advice to b 2 b marketeers.

5) Fear, panic and shareholder pressure will lead to wholesale changes in the senior management teams of some business media companies.

6) A new disruptive business media company with no legacy will make a noticeable impact on the market.

Happy New Year

January 4, 2010 Posted by | business media strategy, Uncategorized | 4 Comments

Letter from Canada

The iisues faced by our industry and by the PPA ar not unique. All over the world the same issues prevail. I was delighted to be contacted by the Canadian magazine trade body following my post about the appontment of a new CEO for the PPA. I asked the CEO of Magazines Canad to give us a perspective. As you will read, the issues are familiar but I was particularly struck by the call for more international co-operation and by the decription of the trade association CEO role.

From Magazines Canada
Neil Thackray’s piece on expectations for association performance is a very good template for discussion at any national association. I read it and then found myself self-testing here in Canada.

Magazines Ireland might quibble with this but we Canadians think there is no tougher domestic marketplace than Canada for home grown-magazines, whether consumer, cultural or business media publications. This has always been the case. Living next door to the world’s media juggernaut is like having Niagara Falls pouring into every living and working space across the entire 49th parallel. We call it foreign “spill”—not “circulation”—for good reason.

And then someone invented the internet!

In this context, Canadian business media publishers and indeed all magazine publishers continue to aggressively embrace new opportunities to reach and compete for Canadian audiences overwhelmed by foreign content offerings. These publishers are toughened by decades of competing in a global marketplace right at home.

Change? Economic meltdown? Bring it on!

Well no, not if it can be avoided, but Canada does have a small yet feisty, smart and efficient universe of magazine creators. They are responding to this massive change with the innovative energy of early pioneers. I suspect that is exactly what stage we are all at in this world.

After a decade of continuous growth, there are about 2,300 Canadian-owned, Canadian-content titles, of which 800 are business media. For business media, digital touch points continue to emerge in concert with print magazines and events. And everyone here is also looking for revenue on any platform. Although in 2009 we have seen print titles close, a great many people laid-off, consolidations and several high profile brands moving to online only, the number of available Canadian print magazines of all types remains fairly stable.

The industry is facing these challenges head on and expects Magazines Canada—its national trade association—to drive change, not ride along. And it is driving. But first a little profile, so break out the canoes.

Because of their geopolitical reality, Canadians have a long history of balancing tensions to achieve collective success. It is in us to see our part of the universe as expandable and inclusive so we can be, as one of publishers likes to say, “as Canadian as possible under the circumstances.” This could be the association’s mission statement—in both of our official languages.

Originally founded in 1973 as a distributor of small magazines who were rebuffed by big distributors focused on imports, Magazines Canada now houses collaborative advocacy, marketing and training initiatives for a “big tent” (or perhaps “big teepee”) of consumer, business media and cultural magazine content creators. Membership continues to grow in all categories even though the by-laws do not allow us to solicit prospects.

Today, association advocacy activity has evolved well beyond the necessary and often blood-curdling tasks of fighting off breathtaking postal rate increases and keeping governments attuned to cultural content investments.

More collective projects have been launched recently and more are planned. Some examples: in 2008, the tool kit for the times was launched and is regularly updated. Last August 2009, Ad Direct was launched. Last September 2009, Canada’s Digital Newsstand went live. Last October 2009, the Magazines Canada Business Media Summits premiered. In 2007, a revamped national conference was created. Managed by Magazines Canada, the MagNet conference has five associations driving event content. Remarkably, given the economic climate, MagNet attendance increased by 60% to 1,200 last June 2009.

These are a few examples of a collaborative association governance approach that ensures that the work of over 20 consultative committees engaging 200 plus industry volunteers is seen, heard and acted upon. Even in these times, member pride in the association is strong. After all, it’s their association and their agenda. And to Neil Thackray’s point, they have expectations AND they work collectively to achieve those.

Magazines Canada has learned a great deal by studying the online services of its international counterparts. FIPP connects the world’s national associations quite well in my view. But more connecting would be helpful in these times.

Finally, a tip to any prospective magazine association CEO, since it seems a current topic: With all of the smart, dedicated members and focused professional staff driving Magazines Canada’s collective outcomes, what exactly does the association CEO here do? Answer: Absolutely nothing except to facilitate the conversations and let the industry decide what’s next. But the job here is filled, well, for now.

Seasons greetings and all the best in 2010.

Mark Jamison joined Magazines Canada as its CEO in 1999. A career association executive, he has held the senior role in several association environments including a chamber of commerce, a symphony orchestra and a foodservice trade organization.

About Magazines Canada

Magazines Canada is the national trade association representing the leading Canadian-owned, Canadian content consumer, cultural, specialty, professional and business media magazines in the country. Hundreds of French and English member titles span a wide range of topics including business, professional, news, politics, sports, arts and culture, leisure, lifestyle, women and youth. The association concentrates on government affairs, services to the advertising trade, circulation marketing and professional development. Visit magazinescanada.ca.

December 18, 2009 Posted by | business media strategy | 2 Comments

The future is the network

From The Sipa Online Publishing and Marketing Summit. I had meant to blog live, but the sound of my keyboard was distrubing the delegates! Anyway the first post from the event tries to summarise the excellent David Cushmans powerful insight into why media companies are struggling.

The opening keynote is from David Cushman of the ninety10group.com which specialises in social technologies. Grounded in consumer publishing as a senior exec at Bauer he should be well placed to see the world of the new with a good understanding of the world of the old. His premise is that long tail demand may have been a disaster for traditional broad based media companies, but it creates exciting opportunities for specialists.

This is a structural change. There may be a bounce back but lets not forget this is the biggest structural change in media since the invention of the press. In the early days of the press, control of the means of production was the key to the power of information.

The future if digital is what people do together and how they self organise themelves. What used to be in the control of the publishers but is now in the control of us all.

Framentation means you can,target all the niches. but although the impact of the long tail is a disaster for traditional mass media models it is a huge opportunity for specialists. In a world where no one wants to pay for content and no one clicks on ads we have to think about media as a “social object” and this can reveal where the roi might come from. Cushman goes on to argue that everyone is apublisher now as the media world moves from the one to the many. With over 300m blogs and 50m twitter users peer to peer interaction is the most important behaviour change you can imagine.

He claims that 70% of pruchase recommendations are peer recommended which undermines the power of mass media to be influential in the purchase process. The user is the destination, not the media company. There is no point in waiting for users to come to us.

Buuilding lots of hits for the sake of it is a pointless strategy. Cushman argues that the majority is now made of people who don’t want the thing that the largest single group want – the power of the long tail. In a world where there is only “broadcast” or mass media, the audience for the broadcast is the largest group. In a social media world, the largest group is the world of one to one communciations. The implications of this are important. In the broadcast world the value was where the hits were. In the narrow cast world all the tiny niches are collectively bigger and more important and valuable than the largest of the lowest common denominator single group. Therefore, if you want to be a business of scale you must pursue the niches.

There are three key disruptions for media companies. Whow creates content? Any and everyone. Who gets to distribute the content? Any and everyone. Who controls the user experience? The user.

Cushman users a theatre analogy to make his point. In the old media world we were on the stage, broadcasting our message and the audience was looking quietly up at us and hanging on our every word. A big audience gave us scale and influence. If an adveriser wanted to speak tot he audience they would have to join us on the stage. The audience would not talk to each other. In the networked world the message from the stage doesn’t reach the audience. They are not even looking at the stage they are looking at each other and building there own networks of interest in niches and communities of purpose. They share messages anongst their groups – ther groups that they decide to belong to.

Media companies have to understand that we don’t own or contril these groups. Communication is not done to them but by them.

So what should media companies do?
Make it easy for users to connect and interact.
Encourage users to act – people who care act so find the social objects that they care about.
The actions of users attract more people by amplyfying and sustaining the converstion,.
Whatever your pay model is (eg click to buy) it has to be portable so users can take it with them into their own networks.

So finding the right social object is key. Get this right and users will care enought about it to tell their friends about it.

Cushman says we are just at the beginning of the disruption. By implication he is saying that the old broadcast model can never work in the long tail social netwrokoed world. Users aren’t look at the stage. No wonder ad click thrus are low! He concludes by reminding us that if the world outside is changing faster than the world inside, something is going to tear – and it won’t be the world outside! Almost everything you try as a mass media broadcast solution – or possibly naything you try at all will be disrupted by the network. The future isn’t digital – it is the network.

In questions, Cushman was asked what about thought about the rush to put content behind paywalls. His reply? Its insanity. Its a strategy designed to make as much money as you can from teh old model while you can. It si not a building block for the future

You can see the presentation here

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November 23, 2009 Posted by | business media strategy | , , , | Leave a comment

Wringing our Hands about paid content and advertising

I didn’t manage to get to the AOP Conference last week, but no surprise that it appears the discussion there was mostly much wringing of hands about how to make the paid content model work.  The Guardian reported;

“Digital consultant Bill Murray warned publishers that if they put a barrier in front of their users, it is likely that they will disappear. Instead he suggested, they need to rethink the concept of content. The most important factor in the success of iTunes success wasn’t the content, he argued, but the service”.

This seems to me to be the crux of the issue and is accidentally a key insight in to the reasons that publishers find the paid model challenging.  The natural instinct for a publisher is to put the content at the centre of the thinking.  Magazine publishers start their working day by thinking about how to make a better magazine and then work out wards from there.  When they ask what their readers want, the answer can only be something that can be squeezed into a magazine delivery format.

“Not me!” I hear the progressive publishers cry.  The honest truth is, it is almost all of us.  The paid content model requires a fundamental rewiring of how our media brains work.  Instead of putting the content at the centre of our strategy we need to put the user at the centre.

If I ran a chain of coffee shops I might consider that if I make the best coffee I can my business will thrive.  I invest in better beans, more reaosting technology, training my staff how to make the best coffee, serving the coffees in the finest china mugs money can buy.  I will fail every time until I realise I am not in the coffee business at all.  Not sure? Well think about this;

A famous case study of the demise of the Parker Pen company exposes the same mistake.  When Bic began eating into the share of the Parker Pen business by selling cheap biros the managment at Parker determined to compete.  They reworked their manufacturing process to produce cheaper pens.  They judged that to match the price of the new upstart they needed to cut their own price.  The result was disasterous and share conitnued to fall.  After a while the rate of decline accelerated to a faster rate than the growth of Bic.  What had gone wrong?  The inisght to fixing the problem was to recognise that Parker was not really in the pen business at all.  When a customer selected a Parker Pen it was most usually as a gift.  The substitues were not the Bic, but a rather a cigarette lighter or a letter opener.  A reduction in the quality of the Parker Pen had sidelined them in the gift market and continued to leave them at a competitive disadvantage to Bic on price.

What is there to learn from this for business media? The content we used to offer (mostly news) is now avaialable for free.  We have competed by offering our own news for free but have discovered that our users, instead of rewarding us with loyalty and praise, now simply take us for granted and use us as one of many sources of news on the Internet.

Other articles in this blog have said this before, and I make no apology for repeating it again.  Our business is not content.  Our business is helping users to make better decisions and helping vendors to sell more.  When David Gilbertson says that we over estimate the importance of business journalism he makes a fair point and if you read this blog and others you will find lots of clues about what to do about it.  But now for a heresy.  What would happen if we put the question differently?

Instead of

“Giving content away in an advertising supported model does not create enough user engagement (page views/session) or repeat visiting to justify a high CPM.  As a result we conclude that the ad model doesn’t work and we say, how can we create a paid content model?”

Lets try, “What would we need to do to persuade users to engage with our content in such a way that advertisers woudl agrees to pay a CPM sufficent to pay for the content creation costs and give us a profit?”

Let’s think about the scale of that task.  In the old model a typical B2B magazine with a 20000 circulation might have expected to sell ads at around £1500 a page.  That equates to a cost/000 of about £75.  Our current free content model is a long way short of that.  Our typical B2B companion website might get 100,000 page views a month. With a 70% bounce rate only 30% of that traffic is likely to be effctive for advertisers to reach.  Let us imagine that we can service three ad impressions on each page.  So if we sellout our usable inventory our total ad impressions will be 90000.  If you are selling your inventory at £30/000 cpm you are probably doing well.  So if we sell out, our monthly revenue will be not more than £2700 – less than two pages of advertsing in the old model.  My hypothesis could be wrong by a factor of ten and we still don’t have a great business!

We need to find a way to take this model and achieve at least £50000 revenue/month. Driving the number of user visits up is unlikely to work.  The universe of relevant people is limited by the scale of the niche.  In any event the task is daunting.

Consider this:

Where maximum monthly revenue = M

Monthly page impressions= T

Bounce rate (expressed as a decimal) =B

Number of Ad impressions/page =A

Average achieved CPM =C

Then M= T*(1-B)*A*C

Max Rev = 100*(1-0.7))*3*30= £2700

So. all other things being equal, by how much would any one variable have to move to achieve our £50k goal? The terrifying answer is we would need either 1.9m page impressions/month or 55 ad impressions on each page or a CPM of £555!

This seems to me to be so far removed from anything that could be remotely achievable that the drive to paid content is impossible to resist

Does this mean that we should give up on the ad model. If we could improve CPM by 50%, increase available traffic by 50% and halve the bounce rate would that help?  The answer is not much.  Our maximum revenue would still be just £13000 a month.

As with content strategy, using offline thinking in the online world is always going to disappoint.  If you think about it, the magazine ad model, where we could charge £70/ooo to perhapsps fifty advertiisers in the same issue is the equivalent of having 50 ad positions on every web page.  No wonder the offline ad model doesn’t work in the online world.

Is it possible to consrtuct an advertsing model for the b2b web that pays the bills? While I think about that keep cracking on with those hybrid strategies.

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October 11, 2009 Posted by | Advertising Sales, business media strategy, Paid content, Uncategorized | , | 2 Comments