Category Archives: Media/Journalism

What Irish media companies can learn and steal from Bloomberg Media…

There probably aren’t too many positives to being in the publishing industry in Ireland these days. Margins are being squeezed, competition is fierce and the move to digital hasn’t made up for diminishing returns in circulation and print ad revenue.

The Facebook/Google duopoly is hoovering up ad revenue and forcing companies to make Faustian pacts to share their content, while trust and credibility in media has taken a hit the world over in the past year.

Something needs to change. For the majority of Irish publishers, the choice is between a slow (but increasingly faster) march to death or changing things around and trialling new ways to make money using existing resources.

There is one big positive about trying to come up with a winning strategy in the media industry. Unlike in most global businesses with media the vagaries of language and national relevancy mean publishers can observe and copy the models of media companies in other country markets, without falling into a ‘me too’ trap.

One of the best pieces of advice that I ever received was that

“there’s always going to be someone out there who has faced your exact same problems and come through, so find them and ask them how they did it”.

In media it’s no different. And this week, I came across a short presentation that I’d recommend media execs. around the country should print out and read through with a fine tooth comb.

Speaking at a digital publishing summit organised by Digiday, Bloomberg Media CEO Justin Smith delivered this. For me, it’s the clearest summation of the modern media business model that I’ve seen. Across 11 areas, Smith offers a pithy, one line strategy for publishers to aim towards. He examines how to fend off platforms, how to maintain and grow revenue levels and what ancillary businesses make the most sense for media companies to enter into.

Here are a four key points that really hit home for me when I think about Irish publishers.

1) Obsess over differentiation

Most breaking news is commoditised. Indeed most journalism is commoditised. The only value is in differentiation and being a high value outlet for your readers. What marks you out as being a product that people will want to pay for? In a dog eat dog world, what’s your competitive advantage? Is it brand? Tone? Journalists? Sources?

Differentiation and uniqueness means you can charge more for advertising, and also potentially charge for a subscription. But if your content is based on taking stories from elsewhere, re-writing ‘news’ and chasing clickbait headlines, the game is already up unfortunately. Just like in the old days, unique voices, strong editorial slants and investment in journalism that stands out from the crowd is the only way to succeed. The race to scale is over and there isn’t enough digital advertising money to go around, so your only option is to be very valuable. 

Here’s the key question to ask: Would anyone miss your company if it died tomorrow? If the answer is Yes, you’re in business.

3) Fight to keep a direct relationship with your audience

Publishers used to be in control of their own distribution channels. Readers could either buy the paper or come to their site. But as the importance of social distribution has grown, the direct relationship between publisher and consumer has lessened. Only 23% of Irish consumers recognise the news brands responsible for a piece of content on social media. We’ve become blinded. The brand gets stripped away, the publisher struggles to gain recognition and much of the credit is wrongly inherited by the platform.

Thus, as Smith says, it’s vitally important that publishers struggle to stay connected to the people who buy and consume their product. Subscriptions are the holy grail, but there are other options – live events, apps, accounts, email etc. Brands have quickly figured out that building your house on the rented land of social is dangerous, since one algorithm change can take your ‘community’ away. It’s about owning the relationship rather than outsourcing it.

Another media critic that I rate, Rafat Ali is very strong on this topic too.

“Building direct relationships is the only way to build a long lasting media company, email works very well.”

5) Reinvent brand advertising and wean yourself off programatic

Programatic is inefficient and ready to explode, while adblocking is rife because of annoying, intrusive digital display. Thus, giving away free content in return for digital ad monetisation hasn’t been the cash cow that many publishers hoped. According to a report this week, last year, The Guardian conducted a test where it bought its own ad inventory on open ad exchanges so it could get a sense of how much of the money put into the ad tech ecosystem made it back to the publisher. In the worst case scenario, The Guardian found that for every £1 spent on its inventory, just 30p actually made it back to The Guardian.

Relying on programatic is unsustainable, so its up to publishers to regain control and begin to revalue some of their assets in the eyes of brands. Already, most of the large global publishers have custom content houses, and their advertising deck offers everything from branded events to sponsored content to video licensing. Smart brands want different, attention grabbing ways to advertise. It’s up to smart media companies to concoct and sell these opportunities, without mixing up editorial and advertising too much.

Monocle magazine is a brilliant case study in how to offer beautiful, effective advertising options to brands in print and online, without needing to sell your soul to do so.

10) Do things that platforms can’t do

The media industry has to get it into its head that it’s no longer Goliath. In the shadow of Google & FB, its David. And the only way to take on the duopoly is to do things they can’t or don’t want to do. As Smith says, the onus is on publishers to use their strengths like storytelling and expand into areas that others can’t reach. If it’s a matter of ‘who can offer the most optimised advertising’, there’s only going to be one winner, but media brands can offer tailored, bespoke ad packages that offer real value for brands looking to reach a high worth audience.

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There’s some great advice in here for publishers. Not all of it is applicable, but it tallies very much with stuff I’ve been saying for a few years. There are no quick wins to the situation that Irish publishers find themselves in, but with a smart strategic approach and a focus on long term sustainability beyond short term clickbait metrics will ultimately pay for itself.

The full deck is available here and is well worth a look:

 

The Second Captains paywall – A smart, calculated experiment in new media models…

Full disclosure before we kick off – as you can see below, I’m a huge Second Captains fan. I’ve got the mugs and yearbooks. I know all the quotes, I’ve seen the TV show and I’ve followed the lads since they were fledglings on Newstalk.

And I’m also an avid media watcher, meaning this week’s announcement that Second Captains is moving from its cushy nest in Irish Times towers towards the wilds of a paywalled, community funded model from next Monday made me irrationally excited.

Maracana with the lads

A photo posted by Shane O Leary (@shaneoleary1) on

The Captains have decide to offer fans a ‘metered paywall’ model, in the guise of a New York Times or Irish Times, and will begin charging users €5 a month for a new ‘World Service’ edition.

The show will be kept ad free, and two free shows on Monday will remain, but in place of Thursday’s double bill, they will instead put out one daily podcast between Tuesday and Friday.

Mark, Ciaran, Ken, Simon and Eoin have shown plenty of balls in their media career. They’ve backed themselves to move from Newstalk, set up their own podcast against the backdrop of some scepticism, pitched and their own TV show, and won a new audience through their summer stand-in slot on RTE Radio 1.

In all of this, their fans have followed them.

But this is a different kettle of fish. Asking people to pay 5 quid a month is where the rubber hits the road.

Niche or enormous, there’s no middle

I’ve spoken before on this blog about how media is fragmenting and new models are emerging. Essentially, to succeed in modern media, there are two choices.

On the one hand, you can strive for enormous scale and hope that pays off. Try to make money by monetising your readers through display, print or paywall subscriptions, try to speak to everyone and cast the net as wide as possible. This requires experimentation and a reliance on distribution platforms, since most of us consume our media through social feeds now (and also leads to clickbait). Buzzfeed is probably the best example, but most daily papers play this game too.

On the other hand, you can be really, really valuable to a small cohort of people and hope that they love your work enough to provide enough income. Often, this requires a heavier paywall and ancillary revenue streams like events, merchandise etc. You can see this in effect across media, in places like The Economist, The Farmers Journal, The Information, Skift and in podcasts like ‘The Anfield Wrap’ and Marc Maron. In a similar vein, individuals like Tim Ferriss have created their own mini media empires too. It requires that you understand your fans, are very close to them and relies on you continually creating lots of value for them.

There’s very little middle ground between these two options, and media companies without serious scale or serious relevance are getting squeezed badly.

With the Second Captains paywall, the lads have chosen the latter route.

‘1000 True Fans’

They might not have heard of it,  but the way Second Captains as a brand has grown takes a lot from the ‘1000 True Fans’ approach, first coined by Kevin Kelly. According to Kelly, because of the lowering distribution costs on the internet, it’s now much easier to reach the people who really love what you do. The 1000 figure is just an arbitrary number, but the essence to his point is that if you can find a certain number of people who will buy anything that you put out, who really get huge amounts of value from what you do, and then service them directly without intermediaries,  you’re in business. It’s a theory that’s still very relevant in 2017, as the lads will attempt to prove.

If you lived in any of the 2 million small towns on Earth you might be the only one in your town to crave death metal music, or get turned on by whispering, or want a left-handed fishing reel. Before the web you’d never be able to satisfy that desire. You’d be alone in your fascination. But now satisfaction is only one click away. Whatever your interests as a creator are, your 1,000 true fans are one click from you.

The way Second Captains has grown its following has been both methodical and masterful. This move to paywall hasn’t come all of a sudden. They haven’t just started asking people for money, their growth has been staged, they’ve built slowly and smartly creating products and events, branching out into other media and even building their own brands through journalism.

With the new model, they’ll likely be ramping up these extra revenue streams, but critically fans are already used to paying. According to producer Mark Horgan, speaking in the Indo this week, “The way our audience has developed is interesting. Many are the same people who listen every week and they want more. They’ve been dedicated since the beginning. It’s also rolling the dice in some ways, but it’s perfect for this type of journalism. At our last event, in December, we sold out in hours. Part of the deal with the new membership subscription is that members will get first call on tickets.”

The benefit of radio and podcasting is that it also really lends itself to creating strong relationships with fans, since your in their ear for 4-5 hours every week. It seems the lads are now ready to monetise all the work they’ve put in to these relationships.

$$$?

So what are the economics like? From the outside, this seems like a gamble. Why move from under the brand of a large media group (The Irish Times) that can offer you distribution and fame?

But Killian Woods put out this interesting set of tweets during the week, and, even with back of fag packet sums, the money part seems to make sense.

When you really analyse it, the risk here is small and calculated. The lads have a hugely valuable brand. That won’t be going away. They own their own channels too, which is crucial.

And even if this goes wrong, the worst case scenario is they go back to usual podcasts and sell advertising. I’m also pretty sure that another media company would come calling very quickly. But it won’t go wrong. They’ve done the sums, they know how much their fans love them and they’ve seen other models in media make money this way. This is never going to be an explosive growth business, but I’d be pretty bullish that it’s a smart decision.

Irish people are willing to pay small recurring amounts in subscriptions for a high value service, particularly in sport, and particularly if it’s a company with a strong value offering that you can’t get anywhere else.

Best of luck Second Captains, and congrats on a ballsy call that should show the way for the rest of Irish media.

They never go home those boys.

 

 

 

Deep Dive – Inside Facebook and Snapchat’s battle to become ‘the new TV’…

This is my considered take on the story set to define multiple industries in 2017 – two enormous social platforms battling for the biggest prize in advertising, the $200 billion spent on TV each year.

If you like it, please share it, and if you have a comment to add to the discussion, please let me know

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Act 1 – The big blue monster smells blood…

Small changes in the language used by a brand can be very revealing if you look carefully and join dots.

And Facebook knows the importance of semantics better than anyone.

At launch, Facebook’s business platform emphasised the power of precision targeting, personalisation and cost effectiveness. Minimising ‘wastage’ was their USP, a counterpoint to the traditional mediums of print, radio and, of course, T.V.

Facebook Advertising 1.0 was about direct marketing and performed very well in direct response.

But across 2015 and 2016, the language began to change. Slowly at first, but then all of a sudden, Facebook started to emphasise its ability to generate broad, mass awareness. Advertisers were told that when buying ads, ‘optimising for reach’ gave the best bang for your buck. Language like ‘personalised marketing’ was replaced with a focus put on ‘scale’.

Why?

Because Facebook is money hungry and it spotted a huge opportunity.

Like a cocky young lion stalking an unsure middle aged zebra, it saw a chance to take an even bigger bite out of global ad spend as the TV/digital scales starts to balance up.

Brand versus direct

Direct marketing is focused at the bottom of the marketing funnel, and that’s great. But the problem with hyper-targeting is that in seeking out the perfect potential customer, advertisers risk ignoring the wider pool of possible customers.

Facebook realised that in focusing on precision, it was disregarding the need for brands to speak to a wide audience, to have cultural impact and to target vast swathes of people, just like T.V. allowed them to do.

So it made the strategic decision to change tact.

Brand advertising – making end users aware of your product in the first place, or just building affinity for your brand as an investment in some future payoff – is still as necessary as ever. Despite the targeting opportunities of digital, reaching lots of people with salient, noticeable advertising is still the best way for brands to win share.

Just ask Byron Sharp.

Sharp’s ‘How Brands Grow’ is one of the seminal marketing texts, and scientifically makes the case for brands needing to continuously reach all buyers of the category with salient assets.

One of the biggest ‘negative’ Facebook stories last year was P&G’s admission that they were scaling back on targeted advertising, and would refocus on much broader brand campaigns (but still invest the same amount in Facebook). Many saw this as a bad story for Facebook. But the more cynical among us saw it as a carefully orchestrated P.R. move that made advertisers sit up and see Facebook as a brand building, rather than a direct response option on their media plan.

Much of the brand advertising money on TV will eventually split and go somewhere. It’s not going to go to Google, who are kings of direct, so why not to Facebook, the other giant in the digital ad duopoly?

It’s certainly big enough – close to one-fifth of the world’s population checks Facebook daily, there are already more than 4 million active monthly advertisers using the platform and video makes up an increasingly important part of its business.

“The more they can make themselves like TV, it will certainly better position them for those ad dollars.” Kieley Taylor, GroupM

Brand advertising is more lucrative, often more beautiful and less intrusive than a lot of direct marketing. With Facebook’s core focus on user attention, not annoying people but still increasing ad load, trying to offer a platform for media spend that’s like T.V. but better makes sense.

Strategic moves

And they haven’t just talked the talk.

Almost every major strategic move that Facebook has announced over the last 12 months has a connection to grabbing a slice of the brand T.V. pie.

The launch of live video was the first indication. Facebook spent more than $50 million paying publishers and celebrities to create live content, and changed its algorithm to heavily prioritise it in the feed. It also spent heavily on an advertising campaign for Live, intriguingly paying for heavy T.V. ad break rotation to promote it.

But ‘Live’ hasn’t been the only addition in the effort to become more like, and ultimately usurp TV.

In 2016, Nichola Mendelsohn, the company’s VP for EMEA, said that she expected Facebook to be all-video within five years, echoing similar comments by company Zuckerberg.

Then, after creating a dedicated video tab for brands, Facebook made its latest big announcement early this year – mid-roll video advertising.

Just like TV advertising, these are video adverts that will interrupt users mid video.

The company has partnered with Nielsen, the entity most associated with TV ratings measurement and last week announced that it was also  ‘trying to give marketers a more accurate grasp of how ads on the social network compare to other media like television’ by creating  a new modelling tool that compares its ads to T.V.

And there’s more.

In the past week, Facebook has announced that it’s preparing an app for set-top TV boxes, a sort of Hulu/Netflix lite if we’re to believe the news. It will now rank longer videos with high completion rates more favourably in the newsfeed. And, like Netflix and Amazon, original programming is in the offing too. Facebook will look to licence TV-quality shows to be available on the app, and will look to current Facebook video publishers too. According to Kurt Wagner or Recode:

“As part of a larger effort led by Facebook exec Ricky Van Veen, Facebook is pushing publishers to create longer, premium video content. The hope is to get more high-quality video onto the platform and into your News Feed — the kind of stuff, presumably, you might find on Netflix.”

Oh, and Facebook has just this week signed an MTV executive to create original content.

To anyone smart enough to join the dots, the trend line seems obvious.

From a few small copy and language changes on their advertising platform in 2015, Facebook has grown to now offer mid-roll ads on long form content that’s shown on TV and measured in the same way traditional TV is measured. 

Facebook really wants its slice of that big tasty TV pie.

Act 2 – A new challenger arrives…

It’s not just Facebook that’s trying to make a dent in TV advertising.

Snapchat is positively gunning for it. Just like Facebook, Snapchat is stealing vast amounts of attention with its video heavy social app. In its IPO filing last week, boasted of 10 billion videos a day.

But unlike Facebook, which initially focused on targeting and personalisation, Snapchat is a platform that’s purpose built to take brand spend away from traditional ‘brand’ channels. It’s much closer to ‘TV designed for your phone’ than its big blue brother has ever been.

Mobile TV?

Snap is in a perfect position to create a “mobile TV” experience with a menu of programs designed for an attention-short, vertical-video-watching audience. Its UX is already set up in a ‘channels’ format, just like TV, and it doesn’t hurt that the app over indexes heavily in the 18-34 bracket, where TV viewership has been been falling at around 4 percent a year since 2012.

Another trump card is the nature of video consumption on the platform. With Facebook, video is consumed in a stream, surrounded by other pieces of content. On Snapchat, the vertical video on on offer is far more immersive, and delivers much higher attention for brands. Snapchat ads are also fun to watch. Taco Bell and Gatorade have both generated enormous levels of engagement with branded filters, in return for enormous spend.

Taco Bell’s Cinco De Mayo custom filter generated over 224 million impressions.

Snapchat’s content strategy is focused on partnering with networks to develop entertainment programming and it has strong existing partnerships with brands like CNN, Buzzfeed, ESPN and others. In August, the company announced it had partnered with NBC to develop Snapchat-specific episodes of some of its hit shows, including “The Voice”, “Saturday Night Live”, and “The Tonight Show With Jimmy Fallon.” It has also worked with BBC on Snapchat tailored versions of the incredible hit ‘Planet Earth‘ and is planning unscripted drama series called ‘Snapchat Shows‘.

The company has also made some intriguing hires. In a move that clearly flagged future intentions, former Viacom sales head Jeff Lucas, a well renowned exec in the TV world with strong connections to US adland was hired as Snapchat’s vice president and head of global sales.

Ad spend has flowed in to boot.

According to Martin Sorrell, WPP spent $90 million with Snapchat in 2016 — having only projected to spend around $20 – $30 million. This year, Snap wants $100 million to $200 million in 2017 commitments from WPP, Omnicom and other ad companies. According to reports, at CES last month the company pitched a room full of Publicis executives and clients, making the case for why it should soak up TV spend.

That’s fightin’ talk, and for good reason. Snap’s IPO puts it at a valuation north of $20 billion. If it’s to realise that, it will need to win its battle to take a slice of the TV pie.

That’s a riskier bet than Facebook, but given its enormous success so far, you certainly wouldn’t write that off.

Act 3 – Who’s the winner and do they take it all?

So who’ll be the winners, losers and the ultimate champion? Will Facebook and Snapchat dance on traditional TV’s grave?

It’s impossible to say at this stage. By the end of 2017, things could be clearer, but its a VUCA (volatile, uncertain complex and ambiguous) industry with lots of egos and lots of moving parts.

Firstly, consistent studies have show that traditional linear TV is still by far the most effective platform for brand building, and in Ireland for example, over 60% of our video consumption is still linear and live. What Snap, Facebook and others don’t seem to have any feel for is the power of TV compared to their own ad offerings. Most great TV advertising is talked about, it’s enjoyed in your living room with your family, and just being on TV gives brands a kudos, a social cache that paying for FB adverts doesn’t. That’s a key strategic challenge for social media platforms, but it might be overcome just by virtue of slowly decreasing TV viewership.

It’s also not just Facebook and Snapchat’s battle to become the new TV, there are plenty interesting players involved.

Other platforms will have a strong say. YouTube for example, despite losing some momentum and offer less powerful brand advertising options, is still the major video player, and has been wooing networks.

On the other side, there’s danger from Netflix and Amazon, who have the huge budget to create their own content, but don’t need to rely on money from advertising. Netflix have a strong recurring revenue from subscription, while Amazon could credibly turn around and give away all its video content for free as a way to generate subscriptions for Prime.

And then there are also plenty of legacy issues with both Snapchat and Facebook that could create speed bumps. Snapchat’s advertising platform is pretty much non-existent, meaning it relies on multiple large deals rather than giving advertisers the chance to self manage. Its lack of targeting will not play well in an age when measurement is everything either. There’s also the double edged of being a youth biased platform – who’s to say the success with under 34s will be grown into older brackets? And then there’s the pressure to monetise pre and post IPO.

Facebook has its own issues. Despite paying for original content and being the place where most people in the developed world get their news, it refuses to admit it’s a media company. Four separate measurement errors in the last year alone has shaken advertiser confidence in the platform too, and articles like this really don’t help Facebook’s case.

So who’s going to win?

Certainly as digital advertising reaches maturity and we come out of the ‘trough of disillusionment’ (Gartner Hype Cycle terminology) caused by the display/programatic/adblocking mess, this will be the defining story of the next five years.

My uneducated guess is that the fragmentation of traditional TV will take much, much longer than we expect, and, at least in the medium term, it won’t be a winner takes all game.

Now that you know a little more about the main protagonists, let battle commence.

Because the final act is about to be written…

 

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Further Reading:

P&G scale back on precision targeting – WSJ
The Facebook Epoch – Stratechery
The Great Unbundling – Stratechery
The T.V. ad isn’t going anywhere, it’s going everywhere – Wired
Facebook’s big TV push – Digiday
Facebook is testing mid-roll video – AdAge
Facebook TV is happening – TV Rev
Old fashioned Snapchat – Stratechery
Get ready for Snapchat to feel a lot more like TV – Business Insider
Why Snapchat is the new TV – WSK