mikal rohde
TRANSCRIPT
Media revolution
Some thoughts for reflection
Elvebakken VGSMikal Rohde; October 29, 2009
We are in the beginning of a digitalized media revolution. The changes we see will effect all marketing processes. Change in media consumption happens more rapid than we are able to recover
The users takes control, and we have to live with it
3
”There will be no media consumption left in 10 years that is not delivered over an IP network. There will be no newspapers, no magazines that are delivered in print form.”
Steve Ballmer, CEO Microsoft in Washington Post summer 2008
”Printed news will become occasional luxury items”
Craig Newmark, founder of Craigslist
”The truth is that the newspaper business is still a huge industry and will be around in one form or another for the rest of my life”
Chris Anderson, editor in Wired and author of “The Long Tail”
“News is eating itself: needs new media business models for journalism”. “Search will see its overall share of online ad dollars swell from 45% this year to 48% in 2009 as other segments slow down.”
Paul Brandshaw, Birmingham City University
But Google delivers……
4
So what will the future bring?
We don’t know!!
What do we know…
• Few companies truly understands how to survive and prosper in the internet age
• The understanding will be key to be able to navigate in a world that is under constant radically change
• Effective and international free distribution encouraging new services from new players
• Tagging and tracking users and their interest and behavior will create customer segment down to one
• The user engagement will create new exiting services
• In the “old days” media decided what the ad cost was. Now the advertiser decide
• Our ownership models doesn’t work as well
Two major challenges in the media business today
7
Media businessFinancecollapse
Structuralchanges
What will be the position after the wave?
8
The Economist, August 2006
Schibsted - a worldwide exception within newspaper business
Schibsted
10
Not afraid to cannibalize ourselves
NOK million
8696 98 99 93
72 6856
4426 24 22
2943
6483 95
12
0
30
60
90
120
150
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 E2006
Aftenposten
FINN
Aftenposten and FINN charge approximately the same for an ad, about NOK 200-300
8085 87
107
90
117
Aftenposten vs. Finn - Cars
11
Online activities’ share of Schibsted’s operating profit (EBITA1))
-4
13
2
2420
15
43
62
131
93
6664
46
4330
23
45
1
-2
6 8
150
2929 15
28
53
-20
-10
0
10
20
30
40
50
60
70
80
90
100
110
120
130
140
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Percent
2002
1) Reported EBITA excl. associated companies
2003 2004 2005 2006 2007
Quarterly
Rolling 12 months average
2008
12
Split online vs offline revenues and EBITA
3536
76%75%75%
91%91%93% 90% 88% 87% 85% 84% 82% 80% 80% 80%77%
24%25%
25%
9%9%7% 10% 12% 13% 15%16% 18% 20% 20%
20%23%
3182
2,497 2,6432,432 2,2602,557 2,697 2,907
3,487 3,359 3,450 3,1793,622
3,448 3,574
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Print Online
109%
515
345 322361
443
224
139
40%38%55%41%53%
49%62%
66% 63% 67% 63%43%
59% 51%88%
60%62%45%59%
47%
51%38%
34%37% 33% 37%
57%
41%49%
388407
251 251197
245193
319 299
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Revenues
Adjusted EBITA
NOK million
2005 2006
2005 2006
Note: EBITA excluding operating loss from new initiatives and income from associated companies.
2007
2007
2008
2008
1393 1403 1391
14811522
1571
16551696
18471912
19852047
1384 13681321
1358 1343 1349 13761334 1356
12941228
1168
2281
149
266
364435
537
664
866
1062
1222
1380
0
500
1000
1500
2000
97/2 98/2 99/2 00/2 '01/2' '02/2' 03/2' 04/2' 05/2' 06/2' 07/2' 08/2'
Total
Paper
Online
Daily readers (000)
Source: Forbruker & Media.
Totally we reach more
people
Not less audience, but different
Source: Morgan Stanley, The Internet Advertising Report
Introduction of new technology in USA
19
30
19
20
19
40
19
50
19
70
19
80
19
90
19
25
19
35
19
45
19
55
19
60
19
65
19
75
19
85
19
95
120
100
80
60
40
20
0
Millionusers
Internet(World Wide Web)TV
Cable TV
Radio
Telephone
20
00
20
05
Speed of change increasing
7 trends in media consumption
1. From periodic to “just now”
2. Fragmentation
3. Mobility
4. Ego orienting (web 1.0 to 3.0)
5. Demand for speed in development, but not everything works
6. Modern consumers have “some of each attitudes”
7. Digital overflow creates mental limitation
10%
20%
30%
40%
50%
60%Buyer of newspaper
Under 30 years 30 – 39 years 40 – 49 years Older than 50 years
23%
18%
41%
18%
8%
10%
20%
62%
Part of population
We hope they live forever…
Less time reading printed newspaper
…. not only newspaper……
18
US population vs Newspaper readers
0
50 000 000
100 000 000
150 000 000
200 000 000
250 000 000
300 000 000
350 000 000
1940 1950 1960 1970 1980 1990 2000 2005
Daily circulation up 33%
Population up 118%Gap
Working women
Youth
Single households
Immigrates
New technology
Shift in behavior
Wilkinson INMA 08
19
Evening News, 1945-1970
6:00 7:00 8:00 9:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 23:00
News consumption
Wilkinson INMA 08
20
6:00 7:00 8:00 9:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 23:00
Morning news, 1970-2000
News consumption change
Wilkinson INMA 08
21
6:00 7:00 8:00 9:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 23:00
Diversified , 2000->
News consumption change
Wilkinson INMA 08
22Source: Mediaedge:CIA
Increased complexity
Wilkinson INMA 08
Media companies challenge Disruptive media
Traditional media
PushEditorial
PullSearch
New
Today
High revenue
High cost
Lower revenue
Lower cost
Do we have the right business models to support the new age?
Storm, climate change or hurricane?
Print product
New user habits
Radical innovation
Economical down scaling
Technological innovation
New players
The new Media World!
25
Top sites US (Alexa):• Google• Yahoo• YouTube• Facebook• Live• msn• Wikipedia• Blogger• MySpace
Analog vs. digital
Digital reflex camera
Digital camera
Analog camera
Kilde: NGN prosjektet 2008
Readers use the newspaper different today
• Traditional– General news
– Information
– Last news
– Kept updated
– Get known
– Common information
– Participate in day to day discussions
– Daily routine
• Today
• Conclusion
• Info in depth
• Telling a story
• Inspiration
• Relaxing
• Education
• Self esteem
• Knowledge for analysis
• Individual knowledge
News as product
• Dictated by production and distribution
• Owned and controlled
• Centralized
• Once a day
• One way
• One message fits all
• Perfection as a standard
Network model
• Collaborative
• Not all owned, joint platforms when feasible
• Enabling other to build content to your services
• Extracts minimal value to grow to maximum size
• Critical mass faster, cheaper
• Sharing ad system
• Tailor-make content and distribution systems to be able to sell content
• Build traffic from other sites
Content was kingNot anymore: Consumer/conversation is king
Source: Earl Wilkoinson, INMA
The battle of:
31
Digitalization makes everything possible
• Digitalization is changing the media arena
• General content is “free”
• Aggregation services will grow and new services will be built on your content
• Advertisers will demand effectiveness for ad spending via content relevancy – context, geo, behavior and demographics
• New business models will change roles of players • User habits change• Business rules change • New players enter the market• Not only a technical issue
– Prices, terminals, access and regulation
32
What will disruptive technology do?
• Substantial shift in business thinking –threat towards current business models
• New opportunities – also for the media sector if we understand what to do for the customers and advertisers
– New products
– New business models
– New advertising platforms - network
Basic elements in future media platforms
UserContent
Access
Everything will be digitalized Everything will be accessibleFreedom to choose is huge Different demands
Different needsDifferent settings
Type of Access Access qualityAccess price
Black box
This is where everything happensConnecting content and behaviorKnow all about users Targeted ads and content
NewsClassified
TVPhone
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Media business model today
Navigation
35
A challenge?
Ad market ahead
• Traditional media channels will be threaten – Offline to online
– Advertisers demand ROI
– Ads and listings will be sold on action basis
– User knowledge in depth will tailor-made ads
• Revenues will follow traffic, service and users – Transaction based payment
– The largest traffic and best service win
Fase 2
Media & Kommunikasjon
This is not a Google presentation, but…..
They have a natural position in the discussion.
Google didn’t build their business based on broken rules, they established new rules of the new age, that’s what
we have to understand….
39
Factors of Media Use
Factors of
Media Use
Technicalrevoulution
UserBehavior
Available Time
Accessibility Of
informationConvergence
Demo and Socio Trends
Adsolutions
IFRA Scenarios of Media Use
Find customer differentiators
41
Context
Content
User
Ads and
More content
Context Driven Business
Are you willing to pay for content?
42
You have to offer something different• Tailor made content• Exclusive content
• Exclusive distribution• Your content
One to many
Online offer today
One to one
New opportunities
Long tail
Large advertisers
Small advertisers
# 2’s challenge in Europe!
RPM
Time
RPM = revenue per 1000 search
Google network
Alternative network
!
What do we need to do?
• Take the Google medicine!
• Create an advertising network based on “the Google philosophy”– Build the network strong by;
• Seek local strong partners on traffic
• Build and control the ad system our selves
• Build more intelligent contextual systems for advertisers
What do we need?
Ad handling system
Ad format Ad format
Distribution - network
Sales
ContentContextGeoDemographicsBehaviorSearch
Examples
We analyze the text
And proved a Tailor maid ad
Helt ny iPhone 3G 16 Gb selges kr 4.000,-
Ulåst i ny forpakning
Litt brukt iPhone 3G 8 Gb selges for kr. 2.000,-
Åpen for alle nett
Helt ny iPhone 3G 16 Gb selges kr 4.000,-
Ulåst i ny forpakning
Litt brukt iPhone 3G 8 Gb selges for kr. 2.000,-
Åpen for alle nett
Helt ny iPhone 3G 16 Gb selges kr 4.000,-
Ulåst i ny forpakning
Litt brukt iPhone 3G 8 Gb selges for kr. 2.000,-
Åpen for alle nett
Helt ny iPhone 3G 16 Gb selges kr 4.000,-
Ulåst i ny forpakning
Litt brukt iPhone 3G 8 Gb selges for kr. 2.000,-
Åpen for alle nett
Helt ny iPhone 3G 16 Gb selges kr 4.000,-
Ulåst i ny forpakning
Litt brukt iPhone 3G 8 Gb selges for kr. 2.000,-
Åpen for alle nett
Content match between product for sale and the cover text in the newspaper
Mobile – why will that be the new arena for ads?
• New technology will provide much more traffic
• All handset providers will follow the Apple way to make handsets
• Cost of communication will be predictable
• We know where you are
• We know what you do and are interested in
• Everything will be available on the mobile
• We have all kinds of advertisers and messengers to connect to you
Price High Lower Flat rate
Speed Low Acceptable - High and getting
higher
Content Poor (www) Better (time, place &
personalization)
Good
Handset Poor Difficult to use still Good (iphone,
Ericsson X1, etc.)
TodayBirth of the mobile 2009
The time is now!Mobile 2.0
StandardsWeb ServicesWeb as a PlatformUser-centered
Mobile 1.0
ProprietaryWalled GardensFirst to marketBrand-centered
Mobile content usage
06.00 24.00
Breakfast
Commuting
Lunch
BreaksCommuting
On the sofa
In bed
Need for a differentiated ad system
”The most obvious large space of advertising is the mobile internet”
”The next big wave in advertising is the mobile internet ”
”By these products, the advertising gets more targeted because phones are personal ”
”Yes, mobile will be a larger business than the PC-Web. But it will take a few years”
US Mobile Advertising Revenue Silicon Alley Insider
Transaction based ads also on news sites
News aggregatorContent for all news stories, clustered
Other stories
Persons in the news today
Different navigations
New business currency
• User engagement
• New distribution via social medias
• Free distribution
56
Largest sites in Norway
100%
0%
EBITDA margin
Size vs second player
1x 3-5x 8-10x
Desired position
50-70%
30-50%
5-30%
Desired position
“Returns on scale” works for all online
verticals?
Learn how to earn money in the structure
59
Front pages can do a lot of things but not all
Relative importance of search Distance from front page
e
C
P
M
e
C
P
M
We have to index
the specific content
for monetization
and paid content
• Aftonbladet’s web TV had more than 1,13 million unique visitors per week
• “Fanthomas” to date had 8.000.000 viewers.
• VG live TV has an average of 250,000 UV per week, an increase with 18% since 2008
61
Web TV viewers – new record
Mobile
What is mobile?
• We have to define our position in mobile
• Value creation– Content
– Apps/browser
– Ad network
• How to build successful services
• Timing – Handset
– Data traffic
Owned vs. outsource
Ads
DistributionProduction
Editorial
Editorial Ads
Production Distribution
Revenue models
• Where is the value?
• Where are the opportunities?
• New open ad network
• New industry networks
• Hyper local networks
• New ad models (behavior, context)
• New measurement
Today’s traditional revenue model
Ads50 %
Subscription
50 %
Many new revenue models are needed
For å redigere footer > View > Header and Footer
66
Process for monetization via ad network
Methods
Format
SystemSale
Distribution
ContextBehavior
GeoDemo
BannerText links
Web, mobile, TV
Ad handling Auction model
Billing
Self sale Self service
Agencies
Own distributionNetwork
Flexible usage
Conclusion RationaleAlternative
Not attractive To small alone to challenge Google
Limited profitability individually Separate activity
Recommended solution Cost synergies – system and sale
Higher revenue per click due to more effective action and wider distribution
Large network that will attract more local distribution
Cooperation
Not attractive Give most revenue on short term
Not attractive to let the largest competitor to run our prime business
Co-operation with Google
Alternative models for ad network
Online media represent a substantial inventory
Owners
Control fees and revenue share
Distribution partners Increased revenue up to Google
level. Be an alternative to Google
AdvertisersAn alternative network for
performance and action based ads
10-15%
65-70%
Marked - # søk*)Market - # of searchs
Marked - # sidevisninger**)Market - # of page impressions
Why should we build our own network?
The big picture
Self Service
KAMDirect
KAM Agencies
Other
Agencies
Own *)Sale
*) Own sale = sales from independent brands
System
News
Directory
Bing
Yahoo
Classified
Other
SalesSystem
Distribution
Methods
Value creation for an ad network
71
Relevant web traffic
Match rate
Click rate
Price per click
Gross revenue
Main contribution
happy advertisers and distribution partners
Directory
Alternative traffic attractiveness
Search oriented Pull
Content oriented Push
Low effectiveness
High effectiveness
Classified
Vertical
portals
Vertical
news
News
Communities
Search
“No content will be sold, if we neglect to offer the buyer a easy and effective way to pay”
E -reader
Who will control this business?Would you like to own the value chain, or only be a content provider?
Content the users are willing to pay for?
• Exclusive and unique articles (if presented well to the user)– Historical archive, print, pictures and video
– Guides (travel, business)
– Time limited subscriptions (PDF newspaper for a day, football match)
– VOD and POD
– Pictures and other relevant content
• Subscription services – Fix and recurring subscriptions (PDF newspaper, football video, film channels)
– Payment for e-reader news services (tailor-made content)
– B2B services (new agent)
• On time payment for listing fee– Listing of items for classified services
• Goods sold– Books, magazines – on e-reader or as PDF to web
– Music, videos
• All kind of mobile content (alternative to CPA)
75
Summary
• Readers worth less (online less than print)• More competition (All types of channels are challenge your
business with more advanced services and user offers based on your content)
• Lower cost (New productions are more effective to produce and distribute. Ads are available with without any sales effort form several sales network)
• Share some of your platforms (You don’t need to own your own platform to create traffic and visitors. The marketplace is not exclusive any more)
• Content will be free (We dream about that users are willing to pay for content provided. The wide range of producers and contributors (professional and private) will still do the content free in general. Unique content or distribution presented as the user will have it will enable some willingness for payment )
Recipe
• Face the challenge
• Get out of the box
• Use the tools for the new age
• Think network economy
• Just do it
…….if you don’t do it, somebody else will do it for you
“The best way to predict the future is to create it”
Verdikjeden i medieproduksjon
Kreativt Publisering Format
Tekst Foto
VideoRegi
Research
DeskingProd system
PapirNett
E-bokMobil
TV
Brukergenerert innhold
Utviklingsløp
Basis Kunnskap (VGS 1)
Fagkunnskap (VGS 2)
Drift og fordypning
(VGS 3)
Forventninger
VGS 3
VGS 1
VGS 2
Mål og mening
Modell for opplegg
Basis Produksjon
Tekst
Foto/video
Desk
Grunnmur
VGS 1
VGS 2
VGS 3