Digital media companies face fierce competition for the eyes, ears, and wallets of customers. But those who succeed have the potential to win big. With the rise of new content platforms and the emerging promises of web3, media companies have to evolve faster than ever to deliver the right experiences to the right people at the right time.
The pace of critical transformation has been accelerated by the global pandemic. Audiences have always been fickle media consumers. However, Covid-19 drove a massive, rapid change in consumption habits. People have become more demanding and expect better digital experiences to meet those demands.
In conversations with media executives, we’re hearing three major trends that savvy organizations should consider before launching new initiatives.
The first trend is around data-centricity. Companies are awash in data, and the differences between sinking and swimming hinge on developing a strategy that leverages their customer (reader/viewer/subscriber) data. By gathering all of the information they have—from multiple first-party sources, as well as financial and operational data—into a single repository (which may be a data lake, data warehouse, or other cloud-based platform) companies can effectively manage and use their data.
With a data platform in place, organizations can begin to unlock insights from every angle. Internally, the data can be used to aggregate customer-level insights to create models that achieve acquisition, growth, and retention goals.
Externally, the insights can be used to develop better user experiences that incorporate learnings from across the customer journey. This enables media companies to provide unique experiences that align with the brand. Data also allows products and services to operate more effectively, particularly personalization, recommendations, and the like.
Improving customer experience
The next trend is a focus on providing optimal customer experiences. According to McKinsey:
“The CX programs of the future will be holistic, predictive, precise, and clearly tied to business outcomes. Evidence suggests that the advantages will be substantial for companies that start building the capabilities, talent, and organizational structure needed for this transition. Those that stick with the traditional systems will be forced to play catch-up in the years to come.”
One of the most effective ways media companies can improve the customer experience is through personalization. Countless studies have shown that personalization not only drives better engagement for media brands, it is welcomed—even demanded—by consumers. As audiences continue to expect more relevant experiences, media companies require more proficiency in data science to deliver on those expectations.
Diversifying revenue streams
The final trend is the disruption and diversification of revenue streams. In the past two decades, media companies have built strong digital products and services yet relied on traditional monetization paradigms such as advertising and indirect distribution channels. However, ad-based business models are no longer a sufficient primary revenue strategy for many media companies. This has triggered a shift to monetize their content in other ways, particularly through direct audience-based revenue.
Take The New York Times, which has focused on subscriptions as the key driver of growth. They leverage news, as well as additional content and channels (including cooking, audio, and games) to drive engagement and ultimately readership and subscriptions as well.
Disney has been a master at diversifying revenue streams. If you merely look at their Star Wars franchise, Disney has taken advantage of opportunities to cultivate new fans, deepen customer experiences, and generate new revenue streams. They’ve licensed the brand to Lego to produce Star Wars-based kits; built out new in-person experiences like Galaxy’s Edge at Disney World in Orlando; and added new fans and their subscription revenues by producing the Mandalorian series exclusively for their streaming service Disney+. Disney proves that quality content leveraged omnichannel drives business outcomes. Last quarter, their parks business reported a $2.45B operating profit and streaming added 11.8 million new subscribers.
The future: bumpy but bright
The evolution of digital media may be bumpy, in part because there’s an array of forces at play, such as developments in the web3 sphere, like the metaverse, NFTs, and blockchain, among others. Despite that, we expect the ventures that survive will continue to recognize the primacy of their audiences, by keeping an eye on and leveraging data-derived insights.
As digital businesses diversify their revenue streams, and adopt and adapt to new distribution and delivery mechanisms, the players must think differently and broaden their perspective and knowledge of their customers. Those that invest the time and effort to foster innovation will be the ones that thrive, no matter what changes come their way.