Archive for July, 2008
July 24, 2008
Putting aside practical issues such as fact checking and the legal necessities required to avoid contempt of court, the winds of change within the professional media circuit clearly flag that publishers and other outlets can no longer afford to sustain products which are produced exclusively by professional journalists, writers and film crews.
Instead, the mix is increasingly being diluted by social or community contributions. These ‘contributions’ are, more often than not, appearing as direct content pieces, but emerging is another type of contribution - that of personal data, including editorial preferences.
In effect, the media’s expertise in news gathering and analysis is now being de-constructed to follow several agendas at once, each serving key customer segments, rather than the one agenda which has previously been set by the outlet’s editorial team.
A very recent example of this trend is the association now developing between the New York Times and LinkedIn. Aggregated data on occupations, geographic spread and other details are being used by the paper to make its editorial coverage more relevant to readers, or in this case, members of LinkedIn.
There is nothing unusual in media outlets market researching their audience to determine profiles and story preferences, but linking part of its editorial coverage to a dynamic membership base like LinkedIn, where profile characteristics are changing every day, if not every hour, is a new proposition in audience engagement. And this time, the information is incredibly granular, as opposed to the handful of traditional psychographic segments so loved by market researchers.
A sudden surge in membership from a certain industry vertical, for example, (the above image highlights energy professionals) would flag a requirement to re-evaluate existing reporting around energy issues, and perhaps force the paper to re-focus its efforts in this area. Hypothetically, several such insights or changes could emerge during the day, placing considerable pressure on resource allocation to capitalise on new members and secure their loyalty by demonstrating an immediate insight into issues relevant to their profile through editorial coverage.
In dealing with an influx of new readers who are engaged in energy production, for example, the paper could produce a special feature on carbon trading systems around the world, canvassing a range of professional opinions (including some from LinkedIn members!).
In broader terms, this dynamic transfer of audience details (in aggregated form) provides the media outlet with two positive outcomes. Firstly, it secures a more engaged audience, improving retention and acquisition metrics. Secondly, advertisers now have fantastically improved methods of validating audiences, which in turn creates greater value for sponsors and brands.
But before any of this can happen, media of all persuasions must recognise that data strategies, particularly those around audience profiling, including the identification of behavioural characteristics and preferences, are needed to not only negate the risks and general loss of control associated with UGC, but to go some way towards repairing an arguably broken revenue model.
July 19, 2008
The increasing dominance of search as a media option is having a profound impact on its positioning as a marketing discipline.
Given that three out of every five Internet sessions involves the use of a search engine, and that consumer satisfaction with their initial search results is running at more than 90%, the days are numbered when search will be viewed only as discrete and perhaps quaint option for mainstream brand and retail advertising.
More accurately, search will play the roles of both a substitute and complement to other media, depending, of course, on the campaign and business objectives, and in particular, how people ’shop’ a particular category. For example, do they research online, then buy offline, or research online and buy online, or research offline and buy online. Still with me?
Further, this phenomenon known as the ‘digital disparity’, where digital marketing spend, as a proportion of total spend, is still below the proportion of time consumers devote to digital media as a proportion of their total media time, is rapidly closing thanks to the analytical methods employed by the search industry (i.e. engines as well as their clients) to determine ROI on a range of variables, including brand equity.
Let’s face it, publishers who rely on general online display advertising dropped the ball on this years ago and have never re-gained ground.
In short, not satisfied to simply take the largest slice of the market’s digital spend, search is making some very serious investments in new methods and analytical tools to prove one point: that search is the most cost-effective advertising medium their is, and by a significant quantum.
From the ‘hygiene’ practice of correlation and trend reports, through to cross-media and diminishing returns analysis, day-parting ratios and efficiency matrices, search is preparing to make a very forceful case that an advertiser can optimise a campaign, and not just a website or landing page.Even more importantly, the argument will not be limited to the currency of CPA, CPC and the like, but will also engage the almost unchartered territory of brand advertising as well. In other words, the value of optimising a website or purchasing a keyword should not be confined to immediate actions, but possibly to events which occur well after the actual search has been made.
When click-through rates for online display advertising began to drop through the floor, this “highly accountable” medium drafted the branding argument to support ongoing ad funding. Most advertisers viewed the tactic rather cynically, and as a result, have not boosted their online display budgets accordingly (as a proportion of total budgets). For this reason, it becomes perfectly clear that search will need to do the heavy lifting in persuading advertisers of the medium’s credentials as the preeminent media choice.
July 16, 2008
In June the En-Score for the Australian Internet hit 345.55, up from 307.12 in June 07. As a refresher, the En-Score is a measure of online engagement, whether across an entire market, a single industry or specific site. The score is a reflection of audience ‘quality’ as opposed to a pure audience metric detailing the number of people (or browsers) visiting the site. The hypothesis is that any digital channel should have a single point of reference indicating depth of engagement, not just the size of its audience.
In the context of the broader market, this score is also a fair indicator of the average household’s dedication to the Internet vis a vis other media options, particularly television. As the index moves north of 400 some very serious questions have to be asked regarding the inevitable decline of engagement with other media types. Further cross-media analysis is certainly warranted on this issue.
For digital publishers, in particular, this continued upward trend in the market’s En-Score is an important indicator that the medium is taking a larger slice of the attention economy - to the detriment of mainstream media.
Breaking down June’s aggregate figure into specific verticals, such as news, entertainment, finance, automotive, careers, real estate and multi-category commerce, illustrates very comprehensively the overwhelming domination of entertainment as a digital genre (en-score: 23.8) - more than three times the engagement associated with news (6.8) and finance (6.9), and more than twice that of e-commerce (11).
Within the entertainment category, the star performer is TabOnline (14.5), followed by nineMSN Games (9.2) and iTunes (5.7). In the music sub-set, iTunes has a slight lead over AOL Music (5.2), but a significant lead over Yahoo!7 Music (1.7) and BigPond Music (0.15).
Compared with the top entertainment sites, the news category pales in comparison and doesn’t bode well for the sector. The top performer in June was Fairfax (2.9), followed by News Digital Media (2.3), the Weather Channel (1.8) and nineMSN News (1.2). Interestingly, the En-Score for the Washington Post was 1.2, well ahead of some Australian online news services, including BigPond News (0.4) and Yahoo!7 News (0.4).
12 months earlier (June 07) the news category had an En-Score of 6.3, compared to the current figure of 6.8 - a difference of 8%. Over the same period, the medium’s En-Score rose 12.5% (from 307 to 346), suggesting that over time online news providers are loosing share in the attention economy comparable to their offline peers.
July 11, 2008
The VM Index closed down a further 1.7% this week to 615.18. And for the first time in several weeks, a number of stocks closed in positive territory, such as APN up almost 16% to $3.45, followed by Austar (AUN) up 8% and Seven (SEV) up 7%.
But this wouldn’t be the VM Index if it didn’t contain some bad news. The majority of stocks continued an almost never-ending deterioration in value, with the largest drop reserved for Mitchell Communications (MCU), down more than 17% to $0.51. At the start of the year the stock sat at $1.09. Other negative positions included realestate.com.au (REA) and News Corp (NWS), both down 7.5%; Photon Group (PGA) down 7.7% and Fairfax (FXJ) down 6%.
With the index close to 600, it is perhaps too convenient to conclude the ‘end of the world’ for media-related groups. Instead, it is probably wiser to conclude that this is the start of a long-term realignment of industry fundamentals and company valuations. In other words, public media groups will simply have to re-adjust to the market’s re-rating of future earnings for mainstream media.
For investors who have held on for this long, their pain is acute, but for others who have not been previously exposed to media stocks, their are some real value opportunities in the sector - with one caveat - don’t expect prices to ever return to January 08 levels unless the relevant companies completely reinvent their corporate structure and core product offerings.
July 6, 2008
Digital advertising is a peculiarly asymmetrical place. When the effectiveness of one piece in the strategy begins to wain, another piece is devised or conceptualised. The coincidence of a decline in the online display market currently (or at least its confirmed slow-down) with the emergence of social media (and associated applications), as a panecea for this increasing budgetry void, should not be lost on anyone.
Yet in the haste to create a new poster child (mobile is next), a healthy dose of scepticism has gone MIA. This is not to say social media technologies are a convenient but ineffectual fade - far from it. This maturing of the Internet to include peer networking, open sourcing and meta-data architecture is clearly the genesis of a transformation in communications which will impact every facet of human endeavour in the long-term.
Like Grandpa Jo said about Wonka Vision: “It will change the world.”
Yet, what has been the overwhelming response of the commercial world to this obvious inflection point in world history? In short, to give itself a choice between either a CPM or CPC deal! Is this as good as it gets?
As previously discussed on these pages, the context of most social media platforms experiencing high levels of activity and recency is one of High Context, where networks of individuals discuss, debate and share information of a personal and private nature. There is simply no room for advertising and its ROI considerations, no matter how sophisticated the targeting.
This is not to say there is no allowance for commercial entities to engage a market via social media architecture. In fact, if done with consideration of its High Context pedigree, a commercial social media channel can have some extraordinarily positive implications for the brand.
Faced with an option to design and build a customer-centric social network, or at the very least, pay good money to participate in a more broadly designed social paltform (like Facebook), the organisation must recognise the very investment in technology which empowers customers to ‘collaborate’ is already an implicit act of brand reinforcement.
In other words, the organisation is now in the game but should play in the backroom, mindful that being subtle in a High Context environment will be always be recognised by participants; there is simply no need to force the issue.
The challenge, however, is to avoid building short-term ROI templates around these social media investments, where next quarter’s sales figures have a higher priority than longer-term customer retention issues. If this can’t be avoided, then the advice is simple: avoid social media altogether as a marketing mechanism.
If, however, the organisation is prepared to commit to social media architecture as part of a broader CRM and Customer Experience Management (CEM) strategy, then consider the following points as a guide to building the required dynamic:
- Can the platform be designed around the particular needs of customers as opposed to a list of wants?
- Recognise that a customer base fragmented by geography, socio-demographics, technology and even psychology will enrich the platform, and hence provide greater value back to customers. Fragmentation/segmentation like this is a strength;
- Always provide the option of anonymity without penalising the user through a lesser experience. The architecture’s priority is to encourage collaboration between customers, not to probe into a customer’s identity;
- Insist on transparency with regards to issues and opinions expressed by constituents. The more diversity of opinion, the higher the incidence of collaboration;
- Encourage storytelling around experiences before encouraging customers to open their wallets;
- Be prepared to intervene in issues by way of professional advice; never let matters go unresolved.
If these points suggest the organisation is expected to make a commitment to understand a customer’s lifestyle and their own networks, then that is indeed the right conclusion. If, however, the resident CMO is scared of the ‘C’ word, then for the sake of not wasting everyone’s time, the CMO should also drop “social media” from their lexicon as well.
July 1, 2008
The virtue of simplex thinking is to explain or interpret complex and disparate data through the use of simple, elegant metaphors and models. Hence the development of the Engagement Scale, or En-Scale for short.
The purpose is to define and compare web sites and services using a single number which reflects the site engagement of a typical user. The scale is based on a simple algorithm which weights session times, frequency as well as pages per session. The source for this analysis is Nielsen’s Netview data, which has been denegrated in the past for its lack of representativeness.
The En-Scale doesn’t rely on audience figures, instead it focuses on site engagement metrics recorded by the sample. In effect, En-Scale recognises the panelists as a type of useability group, though in the case of NetView the sample is significantly larger than any other comparable resource.
Further, the sample is genuinely ‘objective’ in terms of how they navigate and engage with the site. That is, the panelists are not conscious of themselves as research ’subjects’ and adjusting their behaviour accordingly.
This is the first time (to VM’s knowledge) that Australian digital publishers have been compared to each other based on a an objective performance ratio. In the case of En-Scale, the higher the number, the higher the engagement or visitor association.
As the above example illustrates, over a 12-month period (from May 07 to May 08) some publishers have improved their position, including Fairfax, Google and YouTube, while others have experienced a signficant decline in their En-Scale, most notiably Yahoo!7, eBay and Fox Interactive. It’s clear from the above data cut that applications (search, IM, bidding engines etc.) have an immediate impact on a site’s En-Scale.
For this reason, it is preferable to compare scores within a particular subject vertical, like news and information, than it is to compare a set of very disparate sites.
Moving forward, En-Scale will be deployed each month, enabling a month-by-month account of changing scores, following a remit to better understand the relationship between the changes in a site’s En-Scale and its audience share. For example, could En-Scale act as an early warning mechanism of comparable changes in audience numbers? VM will explore the issue further.
En-Scale should also be applied to specific demographics as well. Case in point: eBay.
The online auction site has an En-Scale of 10.98 (May 08) which is very high. However, breaking that down into age segments reveals that for the 12 to 7 age group the En-Scale is 3.6, while for people older than 35, the score is 14.1 which is close to a market high.
For the record, the site with the highest En-Score in May 08 was Facebook on 14.7, followed by Electronic Arts on 12.3 and Stardoll on 11.18. eBay was fourth on 10.98.
