Concerns about fake news and potential Russian involvement in the U.S. 2016 general election is reaching fever pitch that was highlighted last week with multiple congressional hearings, and, digital advertising is in the crosshairs. And, like many challenging discussions about digital advertising, transparency is at the heart of the issue.
Digital compliance for political ads
The proposed Honest Ads Act, a bipartisan effort to govern digital advertising according to the same rules followed by traditional broadcast media regarding political advertising, and is the one tangible fallout from the investigations.
The act calls for all politically-oriented digital ads to be declared at purchase, clearly labeled in the creative, and available for consumer access via a searchable interface. Among other things, the buyer must disclose their contact information, candidate and/or campaign, ad flight duration, number of impressions/views, and targeting criteria. The platform must collect this information and retain it for at least four years. It applies to digital platforms with at least 50 million unique visitors a month for the preceding 12-month period that have political ad buyers who spend at least $500 within a calendar year.
In a nutshell, it requires publishers know their ad buyers, ensure ads comply with (regulatory) policies and provide consumer access to these ads and any associated targeting criteria. Sounds familiar?
Transparency starts with the buyer
As The Media Trust announced a few short months ago, our Digital Vendor Risk Management (DVRM) platform provides real-time visibility and insight into non-compliant activity and threats operating in an enterprise website and mobile app environments. More than a risk management framework, DVRM operationalizes client-specific digital asset policies, continuously evaluates digital partner compliance, and actively facilitates the resolution of violating behavior.
The crux of this solution is the ability to identify and manage an enterprise’s digital ecosystem participants, from ad tech up to the source buyer, and authorize their presence. In addition to privacy regulation and escalating security concerns, the Honest Ads Act is just another reason why enterprises need to know their partners.
DVRM – A simple solution to a complex problem
Applying a political lens to DVRM it’s evident that the platform is already satisfying most of the requirements to enable transparency and accountability. Advertising supply chain partners register via an online portal; ads are uploaded and continuously scanned according to targeting criteria; client-specific policy violations are flagged; and, ads are stored for historical reference.
Self-regulation forces a new digital approach
Major platforms have announced their approaches to address congressional concerns and hopefully stave off the vote, let alone passage, of the Honest Ads Act. However, this self-regulation will need to extend to others meeting the requirement threshold, like ecommerce and media publishers.
Regardless of Honest Ads going to vote, changes are in the air. As an industry that has largely grown via self-regulation, the signals are obvious. It is incumbent upon the industry to embrace these changes, especially with the DVRM platform as an easy way to codify and operationalize your policies.
Chris Olson founded The Media Trust (@themediatrust) with Dave Crane in 2005. He currently serves as CEO, where he drives the company’s vision, direction and growth plans. Prior to establishing The Media Trust Company, he spent four years as the chief operating officer and board member at Spheric Media. From 1998 until 2000, he was the vice president, global equities at Commerzbank; and from 1993 until 1998, he was the vice president of electronic trading at Salomon Brothers, Inc.
With their enormous size, influence and well wishes to do good for humanity, the American tech giants have long escaped the regulatory and legislative scrutiny of Washington. But increased attention on how Russian operatives may have used Facebook, Twitter and Google to meddle in the 2016 U.S. presidential election — and a mounting anti-Silicon Valley sentiment — are providing an opening for regulation to finally come through. Most Americans don’t necessarily trust the tech companies, yet they maintain high approval ratings, enormous clout and popularity for their products and services.
Google, Facebook, and Twitter have all faced the House and Senate Intelligence Committees this week, and the EU is on its way to passing legislation that will maintain data protection and privacy in Europe. After many years of avoiding regulation, the tech giants are finding themselves cornered from the left and the right, with some sort of American intervention on tap. The question is just how effective it might be, and how much the tech companies’ lobbyists will water down those efforts.
The argument for accountability
Take the case of Google. Among some of Google’s media rivals who are critical of the way the search giant surfaces news stories, the effort to increase government regulation has been dubbed “Project Goliath.” Yelp’s disdain for the company has grown over the years, and recently led to the filing of a federal antitrust complaint against Google for scraping photographs from Yelp reviews.
The News Media Alliance, which represents 2,000 news organizations, in July started advocating for antitrust exemptions in the hopes they might help bump against the Facebook-Google advertising powerhouse (Google is the world’s largest recipient of advertising revenue). The European Union has also fined Google $2.7 billion — the largest antitrust fine the EU has imposed on a single company — for favoring its services over rivals in search results.
And that’s just one company. Amazon, Apple, Facebook, Google, and Microsoft — what New York Times’ senior technology correspondent Farhad Manjoo collectively calls the “Frightful Five” — have been waging a battle over an anti-sex trafficking bill. The bill’s promoters want to curb legal protections for sites that host content promoting sex trafficking, but critics say the bill’s language could restrict free speech. Facebook and Twitter, to name two of the frightful, are continuously in headlines over the platforms’ influence on politics both nationally and globally.
And we can’t forget about Amazon, the massive online retailer that now owns brick-and-mortar Whole Foods and recently clocked more than $1 billion in ad revenues in the third quarter.
Tech lobby ‘armies’
The amount of pressure on these companies, and the momentum with which it is finally cascading, makes it likely that some amount of regulation is bound to happen. Ahead of their Congressional hearings, both Facebook and Twitter madechanges to their advertising platforms, with more transparency around political ads in the hopes that self-regulation might ward off a harder fist from Washington.
Yet the power and money of these technology companies, and their influence on Capitol Hill, also means regulation will be hard-earned and hard-won. The New York Times’ Cecilia Kang writes:
“Internet companies are deploying some of the largest armies in corporate America to battle on Capitol Hill. House and Senate staffs say lobbyists for the big technology companies have swarmed their offices in recent weeks. Amazon, Apple, Facebook, Google and Microsoft have sharply increased their lobbying spending — a combined $14.2 million in the third quarter, up from $11.9 million a year earlier. Facebook, which has faced the most scrutiny over the election, increased its third-quarter lobbying budget this year by 40 percent, to $2.85 million.”
To say the rivals and critics of these companies don’t stand a chance in circumventing the giants’ power might be an exaggeration, but money talks. The IAB has also come out in defense of these internet companies, arguing that the problems within their industry are best left for them to solve on their own — not with the help of Washington.
Inspiration from the EU?
If U.S. players in this struggle are looking for inspiration for regulation, their European neighbors might be a good source. Compared to Washington, the EU is much more suspicious of the industry’s altruistic proclamations, and is demanding changes to Facebook and Google’s business practices that emphasize privacy for and consent from consumers regarding their data. Given the EU has already launched a taskforce aimed at protecting WhatsApp user data from Facebook, one can imagine the strict clampdown on tech will continue.
Will the U.S. match up? Likely not. But if the media cycle continues the way it has been in the U.S., and the critical voices here stay loud, it’s safe to say tech’s free pass is long gone.
Apple recently announced that iOS 11 will include Intelligent Tracking Prevention (ITP) in Safari. In a nutshell, ITP will go beyond merely blocking 3rd party cookies by segregating any cookie after 24 hours without interactivity on its parent domain’s website. The segregated cookie could still be used for log-ins, but not for tracking and/or retargeting purposes.
Despite a chorus of cries that this move will “sabotage” the current economic model of the internet, I actually think this is just Apple trying to keep up with consumer expectations. For years, Apple has attempted to block 3rd party cookies, although ad tech companies have worked to bypass Apple’s efforts. The thinking has been that consumers only want to be tracked by companies with which they have a relationship. ITP simply ensures that consumers can only be tracked by the companies with which they have a current relationship. There are some kinks, for sure, but overall it makes sense.
After reading some of the reactions to Apple’s move, I had to step outside just to make sure the sky wasn’t actually falling. The response from the ad tech industry has not been surprising. The ad tech lobby has a long track record of protecting legacy models, even when they are probably not the best path for long-term success. However, calling Apple’s move one that will “harm consumers by distorting the digital advertising ecosystem and undermining its operations” seems pretty far off base.
Given the industry’s fear of government regulation, I’m surprised the tech giants aren’t more supportive of private sector moves like Apple’s that seek to address underlying consumer concerns. As we see in the EU’s forthcoming General Data Protection Regulation (GDPR), governments can and will step in if the industry does not demonstrate that it can effectively self-regulate. When our trade bodies fail to step up and put into place strong guidelines that address customer concerns about important issues such as privacy, we put ourselves at risk of increased government scrutiny (many states already have privacy bills in the works.)
Instead, ad tech companies have dedicated massive amounts of capital and resources to developing new ways to track consumers, build larger and more sensitive profiles of consumers and deliver highly targeted ads. For the most part, the returns for investors have been terrific. For consumers – not so much. The well-documented reality is that digital tops the list of consumers’ least favorite forms of advertising. And tracking (aka “targeting”) is one of the aspects of digital advertising cited as particularly irksome.
Think about it: Right now, 67% of digital ads are direct response ads designed to get consumers to click. This is the equivalent of the junk mail cluttering your email inbox and those direct marketing ads that stuff your mailbox and end up in landfills. On top of that, digital ads are often overloaded with calls to unknown 3rd party servers, which dramatically slow the down the page. Worse, on mobile, it not only damages user experience, it soaks up more of a consumer’s data plan.
It’s no wonder consumers are downloading ad blocking software at higher rates each year. It’s no wonder that almost no one ever intentionally clicks on an ad. Suffice it to say that the claim that reducing the persistence of tracking cookies will harm the user experience is absurd. And frankly, a model that relies on these cookies to create an experience that’s driving ad blocker adoption is not one we need to defend.
Contrast that dynamic with Apple. Countless books have been written on how Apple is dialed into the wants and needs of consumers. The company boasts a loyal customer base and for good reason: Consumer experience is the priority. ITP is an extension of Apple’s consumer focus. Given the company’s track record as compared to the current state of digital advertising, ITP is likely to join the long line of successful consumer-friendly features developed by Apple. And if we want to have the same kind of success in the digital ecosystem, respecting the consumer and creating an experience they enjoy must be at the foundation of our advertising efforts.
On their 20th birthday last September, the digital magazine Slate reported 17,000 paying subscribers for their membership program, Slate Plus. Today, that number is at 35,000.
The surge in subscribers owes in part to the Trump bump—Slate Plus membership jumped by 46% after the election. But the underlying catalyst is that Slate has gone all-in on loyalty to lower their dependence on platforms like Facebook and monetize their incredibly loyal audience. By launching new podcasts (and using them as platforms to promote Slate Plus), revamping their newsletter, and doubling down on comment moderation, Slate has committed to creating engaging content that keep readers coming back.
That commitment necessitated a shift in how Slate thought about measurement, moving away from a focus on unique visitors to a metric that matched their primary goal. Establishing engaged time as a “North Star metric” enabled teams across the organization to put loyalty at the forefront of their initiatives.
Connecting the dots between audience loyalty and engaged time
Digiday’s Lucia Moses regarded Slate’s loyalty initiative with a healthy amount of skepticism: “Introducing a new measurement approach isn’t easy, though. Publishers may like to talk about engagement, but there’s no industry standard for it. … And measuring loyalty, as Slate is trying to do, is murky anyway.”
In short, fostering a loyal audience sounds great… but how do you measure it in a way that makes sense for the whole company? That’s a question Slate’s Director of Research Anna Gilbert has spent a lot of time thinking about.
Gilbert and her team considered the number of unique visits and returning visitors to represent loyalty, among other metrics. Ultimately, they chose total engaged time—how long visitors actively read, watch, or listen to a piece of content—because it helped them measure the sincerity of their visitors. “When we have first time visitors that come to Slate and read two or three articles and spend a minute and a half or two minutes, we want that to be reported and credited in this loyalty initiative. And we think that those everyday visitors, or those twice-a-week visitors, are also captured really well,” said Gilbert. “They’re worth far more than drive-by visitors who quickly leave the site.”
Wherever a reader is in the funnel, whether they’re a first time or everyday visitor, Slate is now able to answer the question: “Are they staying on Slate longer?”
Implementing a new metric and acting on insights
Gilbert acknowledged that rolling out new metrics can be hard because it requires figuring out how you move the needle. “If you write more stories, that leads to higher unique visitors. It’s a pretty clear relationship. If you’re at the end of the month and you’re not close to your goal, you know tangibly what you can do. Whereas with engaged time, the levers are not as clear. You need to figure out how to reframe your thinking around it.”
Slate’s partnership with Parse.ly has helped every team to align behind engaged time as their core metric. “Seeing engaged time in the Parse.ly dashboard helped us make a much smoother transition from unique visitors and the Big Bang Facebook days to a more real relationship with our most loyal readers,” said Gilbert.
The editorial team uses the Parse.ly dashboard to track which stories are getting the most engagement, while the sales team employs it for storytelling to prospects. The product team uses Parse.ly’s API to power Slate’s infinite scroll reading experience, which recommends relevant content once a reader has finished an article. As for identifying levers, Gilbert’s team is analyzing raw engagement data made available through Parse.ly’s Data Pipeline to identify factors—like referral traffic or publication time—that correlate with a high amount of engaged time.
What about staff working on Slate Plus? “They’re one of the most data driven teams at Slate. They’re constantly using Parse.ly to monitor engaged time in combination with subscription and marketing data from other sources to figure out what’s working or where new opportunities might lie,” said Gilbert.
The future of monetizing loyal audiences
As more and more publishers turn their sights to subscriptions as a viable source of revenue, Slate’s journey to fully focusing on loyalty offers a roadmap to success.
And Gilbert has hopes that the industry at large will come to see the value of standardizing engaged time. “When our sales team goes out and does pitches, they definitely talk about Slate’s loyal visitors and how much time they spend with our content. But they still show the UV number. I think establishing a clearer relationship between engaged time and revenue generation—so that we’re talking about revenue per minute instead of revenue per pageview—will help frame why engaged time matters for more than just editorial tracking.”
The UK TV industry has always punched above its weight class. Smaller than Oregon, with a population equivalent to that of California and Texas (66 million), the British TV sector is a vibrant £14 billion a year ($18.58bn/yr) business, which has created formats, content, and executives, who have made their mark around the world.
So, what the can media organizations everywhere learn from their smaller cousins across the pond? Here are seven ideas and considerations (not, by all means, unique to the UK) worth exploring:
1. Consider moving millennial orientated services online only
We know that millennials consume content differently. They’re more likely to watch video content on devices like smartphones and laptops than older demographics. They’re less likely to watch TV-like services on an actual TV.
Against this backdrop, in 2016 the BBC made their youth targeted TV network, BBC Three, online-only. In part, the move reflected the fact that younger audiences are increasingly consuming less linear TV. But, it also yielded major savings (estimated at c.£30 million / $39.6 million p.a.) as the online-only service requires less original programing, and isn’t burdened with the same transmission and distribution costs.
The BBC’s move didn’t just make financial sense, it was also an effort to more explicitly take content to the spaces that their younger audiences inhabit.
2. Explore opportunities for ad free options
British viewers have grown up in an environment where TV advertising is much less pervasive. The BBC, for example, has no adverts at all, just trailers for other BBC programs and services.
“Seven in ten (67%) say they like to watch TV programs and films on demand to avoid adverts, or because there are no adverts,” UK communications regulator, Ofcom, recently noted.
This preference – coupled with the use of ad blockers on web based TV services – should be a cause for concern, given the continued importance of traditional advertising. One potential solution, explored by the UK’s oldest commercial broadcaster ITV, is to offer a premium IP delivered service that mirrors the ad-free experience provided by HBO and Netflix.
In 2013 the network launched an iOS app that allowed Apple users to watch the last thirty days of their content (from five different TV services) without advertising, as well as live simulcast of ITV3 and ITV4, for £3.99 ($5.27) per month.
The service, called ITV Hub+, has now been rolled out to other platforms including Smart TV’s. (It also costs £3.99 a month.) Will consumers pay more for this convenience? Evidence suggest they will, and this is therefore a model that other broadcasters may want to emulate.
3. Be everywhere
Given the range of ways in which audiences consume – and access content – it’s increasingly incumbent on broadcasters and other content providers to be as accessible as possible.
The BBC iPlayer, an internet streaming, catchup, television and radio service from the BBC, which celebrates its 10th anniversary this year, has always been available across wide range of devices, including mobile phones and tablets, PCs, gaming devices and Smart TV’s.
BBC Three, their youth orientated service, doesn’t just live on the BBC’s own app and web services, it also has its own YouTube channel with full episodes – and entire series – available to watch.
Other UK broadcasters have followed suit. The ITV Hub, for example, is now available on 30 different platforms, including Google Chromecast, and Xbox. At the end of 2016, the broadcaster noted that consumption (the measure of the number of hours watched) is up by 43% in the past year; and, interestingly, that Live TV accounted for c.30% of all requests.
4. Embrace bingeing, archive access, and offline viewing
On-demand services like Amazon, Hulu and Netflix have changed viewing behaviors. As a result, traditional broadcasters need ask whether they too should go “all in” and do things differently.
That might mean releasing new series in their entirety, offering new content for download and offline viewing (which the BBC and others offer) as well as providing “digital boxsets” so that audiences can binge on older shows.
These moves are not just designed to protect revenues and audience share, they also reflect evolving consumers behaviors. Failure to respond to these expectations means that traditional broadcasters risk being left behind.
5. Serve better ads, because audiences still watch a lot of TV
It’s not just online ads that are often terrible, many TV commercials aren’t great either. And yet, we continue to watch a lot of TV, creating prime conditions to deliver strong, effective, advertising to captive audiences.
“The average time spent watching broadcast TV across our 15 comparator countries,” the UK communications regulator noted, “was 3 hours 41 minutes per person per day in 2015.”
That’s a lot of screen time (most of it live viewing) which, when coupled by the mass audiences TV can still reach, continues to remain attractive to many advertisers.
6. Innovate and experiment with new forms of ad delivery
TV’s mass reach makes it an appealing medium for advertisers. Yet, at the same time, we also know that audience’s attention is increasingly fragmented. For many younger audiences, TV is already the second screen, and has been for some time.
As far back as 2012, the Pew Research Center found that 58% of smartphone owners used their phone to keep themselves “occupied during commercials or breaks”. But, Pew found, respondents were often engaged in second screen activity related to what they were watching. This resulted in advertisers trying to find new ways to engage audiences on their second screen. (See some great examples below targeting Game of Thrones fans).
How some advertisers have tried to engage Game of Thrones fans on Twitter.
Personalization, time-shifted ads and the use of products (like Sky AdSmart in the UK) to serve different ads to different households (or different people in the same household) against the same content, may still be relatively small markets, but they’re expected to grow quickly. As such, they’re a technology that broadcasters need to be doing more than keeping an eye on.
7. Recognize online revenues can be a major growth area
In 2016, TV revenues in the UK were worth £13.8bn, a figure which is remarkably resilient considering that TV revenues in 2011 stood at £13.3bn.
Key UK TV Industry metrics. Source: Ofcom/broadcasters/Ampere Analysis/Advertising Association/Warc/BARB
The sector’s revenue mix has also proved to be surprisingly durable. In 2016, 30% of UK TV revenue was generated by advertising, compared to 29% in 2011, subscriptions accounted for 46% of revenues in 2016 and 44% in 2011, and broadcasters enjoyed 30% of total UK display advertising in 2016, down just 1% from five years ago.
However, this relative stability doesn’t mean that sector can rest on their laurels. Finding new revenue sources, remains important. And in this space, online revenues are growing fast.
In 2011, online revenues were worth £0.3bn for UK TV companies. Jump forward to 2016, and this figure was £1.7bn, a substantial increase. Given this rapid growth, and stagnation in other areas, expect more efforts to be focused on this space.
Final thoughts
“Despite fundamental changes in the advertising market over the last ten years,” writes regulator Ofcom in their latest UK Communications Market Report, “the television advertising market has remained very resilient due to its primacy in providing mass audiences.”
That’s not going to change any time soon, but as viewing habits on both sides of the Atlantic continue to evolve, so broadcasters and advertisers need to refine their strategies accordingly. This means finding new ways to capture attention, serve relevant – and increasingly targeted – ads, and experiment with new revenue models.
Three areas that I believe merit more attention are: more flexible pricing models – recognizing that many audiences love to watch certain shows, series or events, but that they don’t necessarily want (or can afford) a year-round subscription – simulcasting shows (nationally and internationally) to prevent piracy, and identifying opportunities to both reduce churn, and discourage the illegal sharing of logons and subscriptions.
What we see in the UK, as well as here in the US, is that although TV’s business model is changing, there are opportunities to diversify both content distribution and income strategies. How broadcasters continue to respond to the challenges – and opportunities – presented by digital disruption, is a subject many of us will continue to watch with interest.
Damian Radcliffe is the Carolyn S. Chambers Professor in Journalism at the University of Oregon, a Fellow at the Tow Center for Digital Journalism at Columbia University and an Honorary Research Fellow at the School of Journalism, Media & Cultural Studies at Cardiff University. (And, by way of disclosure, Damian is originally from the U.K.)
The first dot-com boom was about tech startups collecting millions of eyeballs. About five years ago, there was a resurgence of that kind of thinking in digital media. BuzzFeed, Upworthy, Gawker, and many others made an art of clickbait headlines and viral listicles and quizzes. But the focus on “vanity metrics,” like sugar-spun cotton candy, wasn’t really good for them, or the bottom line.
As traffic declines and clickbait fatigue ensued, many of these publishers tried to reach audiences through their social channels and bore the brunt of algorithmic changes. This left them wondering if the chase for views, shares, and clicks would really pay off. Those measurements are imperfect at best, and often misleading at their core. However, doubling down on what really matters can move businesses forward so that they can surmount this problem. Beyond the obvious shift toward subscriptions, engagement, and impact, publishers know that the real difference-maker for their business is serving their most loyal customers.
Highs and lows in the chase for numbers
The underpinnings of how we got into this mess can be traced to two overarching reasons.
The first is the psychological boost of the numbers game. Just as a Facebook user beams when she sees the number of likes and shares skyrocket on an individual post, so too do advertisers and news publishers when they see rising numbers for corresponding clicks, views, social shares, impressions, and the like. In a competitive industry where measuring popularity can and often is boiled down to who has the biggest following, a quick glance at the numbers can settle — or aggravate — any existing tension.
Of course, the real point to metrics should be creating a long funnel that gets to something bigger. Metrics should assess genuine leads, conversions and end goals. But it’s easy for marketers’ performance measurement ABCs — acquisition, behavior, conversion — to be shoved aside when views and impressions — sometimes paid for in promoted posts or campaigns — already captivate so much of the budget. Still, paying for a click might not amount to anything at all.
Zane McIntyre, co-founder and CEO at Commission Factory, boils down this unhealthy relationship in AdExchanger with a strong case in point:
“When advertisers conduct tests to determine the best thumbnail for video views, for example, advertising ‘reach’ is determined by the number of people who see it — if only for a moment. But then viewers quickly leave, often after the premise they were promised is under-delivered. It’s a vanity metric and can be easily manipulated with clickbait and paid content promotion, both of which can get content in front of a targeted audience quickly and cheaply.”
Trust issues
This brings us to the second big trend fueling the vanity metric craze: trust in (sometimes unreliable) parties whose skewed metrics leaves little room for proper assessment. The often-tense relationship between publishers and platforms is just as much of an issue here as it is anywhere else. When Facebook and Twitter allow you to pay for promoted posts or tweets, the idea is that you sacrifice some amount of control to the gatekeeper in hopes of gaining more control (in the form of a following) with audiences.
But Facebook’s repeated metric discrepancies have included miscounting Facebook Live reactions, misreporting the average duration of video viewed, and over-reporting on the amount of time spent on Instant Articles. That’s highlighted the necessity for accountability, transparency and third-party verification in performance analytics. It’s an onus on the social giant, already reeling from issues of trustworthiness, to circumvent these problems. But it also lights a fire under publishers and marketers to take metrics back into their own hands — and not relinquish control purely for the sake of ego boosting and more reach.
Metrics that matter
In response to criticism over its misconstrued metrics, Facebook has established partnerships with verification partners. Automated analytics too, should be “machine recommended, but human approved,” as strategist Nasr ul Hadi emphasized at this year’s Online News Association conference. At ONA, the broader issue of getting distracted by the wrong numbers became a talking point.
The close cousin of measuring and increasing impact is increasing engagement, with the hopes that deepening a relationship can lead to a sincere boost in vested interest and more subscriptions. Take the efforts of GateHouse Media, with its chain of local newspapers. The large publisher launched a campaign last summer called “Newsroom Hero,” which profiled GateHouse Media journalists as more than just journalists. The campaign kept the focus on the positive influence and impact reporters bring to communities — whether in their reporting, civic engagement as volunteers, or in their own families. It’s the first such campaign for the publisher to focus on impact, and their hope is to translate that into more meaningful metrics — beyond the raw numbers of 35 million monthly digital visitors and nearly 23 million weekly readers.
Increasing engagement shouldn’t be mistaken for solving the metric conundrum. It’s hard to point to impact as a cost-cutting national chain of local newspapers. But as MediaShifts’s Jason Alcorn points out, it’s a milestone for a local news chain to talk in the language of non-profits, who aim for impact to satisfy funders and subscribers.
It’s a tall order indeed to turn numbers, whether high or low, into actionable insights that deliver real leads and results. But the fact that this inner conscience is being spoken aloud more and more shows that vanity metrics are no longer in vogue — and the quest for meaningful measurement might just lead to better business results for everyone.
Over the past 20 years, the “digital transformation” of the publishing industry has been—for the most part—a slow, incremental process. For too long, the publishing industry was mostly concerned with digital replicas, ebooks, and other superficial “transformation” efforts which, in fact, didn’t so much transform the business as copy legacy models in electronic form.
Suffice it to say that legacy media models are oriented around the process of producing a book, magazine, or newspaper and not necessarily based on the experience and circumstances of the digital consumer. As digital transformation enters a new, more advanced phase, many publishers are recognizing they have an opportunity to provide products that raise the value proposition to customers.
What does it all mean?
The term digital transformation can be defined as a multitude of activities and attitudes that a business could potentially pursue. But what digital transformation really requires is that business owners adopt the customer’s viewpoint and change their business philosophy accordingly – from a process orientation to one that is customer-centric.
Publishers in education, reference and professional segments are beginning to execute operational change which supports this evolving viewpoint. And of course, there are “born digital” media organizations that aren’t wedded to legacy models. However, some of the best examples come from sectors outside media. Amazon.com is frequently cited as a proponent of the customer-centric view and their willingness to continue to rethink their operations from the customer perspective results in initiatives such as ‘one-click’ ordering to their recently announced wireless checkout process. Payment is made automatically via the Amazon app as the customer leaves the store. And we’ve seen what Amazon-owner Jeff Bezos has done in terms of transforming processes at The Washington Post since he acquired it.
Creating an environment where change can occur is no easy thing. Detailed and comprehensive change management activities need to be adopted to help guide an organization through this process. By definition, a legacy business model carries with it deeply entrenched legacy processes that need to be changed, adapted, or discarded in order to forge a new environment for success. Engaging in a formal digital transformation initiative endorsed and supported by the highest level of management is a requirement, and nothing less will suffice if the business is going to succeed.
Where to start
Before this can happen, though, it’s important to understand your starting position. A complete review of the current state of the business is critical to defining your future objectives and targets. Digital transformation is a process that takes place over time, along a spectrum of capability, where the endpoint is a business (or a product line) that has been digitally transformed. Points along that spectrum should be predetermined, well-defined objectives, which also serve as opportunities to reevaluate and reassess whether the business is going in the right direction.
Recently, I was asked to conduct a workshop with an educational publisher that recognized the business imperative of digitally transforming their business. This is not an unsophisticated publisher; they realize they are still too far removed from the consumer experience and must establish new business processes, product development strategies, and distribution/access models to remain competitive over the next 20 years. That’s a tall order for any organization, which is why the digital transformation process needs to be embedded into the organization in a consistent and repeatable manner. So, I took a team of senior executives through a day session to explore how this transformation process could be executed within their organization. An important takeaway from our meeting was the recognition by the group that taking on too much to quickly will doom a transformation project before it has started.
On a project I worked on several years ago, we avoided this trap in three ways. We:
recognized that our content and editorial workflow needed to become digital-first;
identified three to four workflow products to implement early in the transition; and
implemented a number of quick wins such as metadata improvement, copyright clearance integration and the implementation of process improvements with our distribution partners.
Doing the first brought uniformity and control to the creation and management of content, while the second enabled the team to learn by experience. The third built confidence in our ability to execute. During the first and second year of this project, as progress was made on these initial initiatives, the team gained the time necessary to test their market and product assumptions directly with customers.
As a result, toward the end of the third year, the publisher had established and expanded range of integrated products combining traditional textbook and reference content with assessment, collaboration, and other tools that improved their effectiveness and established a sound foundation for further digital growth. Across a variety of products, they had begun to adopt a customer-centric publishing model with revenue models to match.
Leading long-term change
Generally, the critical components driving the success of the transformation effort will be collaboration, resources, leadership, a clear understanding of business value, creativity, and a deep understanding of customer wants/needs. No one person can affect all these factors. Therefore, a strong statement of intent from senior management, ownership of the process by the senior leadership team for the business unit, measurable performance factors, quick wins and identifiable success stories are critical to creating an environment for transformation success across the business.
Securing executive buy-in to support this transformation effort (led by the CEO reporting to the board) must be a given. The imposition of technology on businesses today is so vital to medium- to long-term business viability that this effort demands the active support of senior management. An effective tool in this process is the establishment of targets and key performance measures tied to the desired improvement in the customer experience. To drive change, these objectives should represent significant “step change” performance improvement. Setting these out clearly helps prevent back-sliding and guards against good-enough results masquerading as real change.
Taking an organization’s senior management through a workshop like this one is the first step in a good first step in driving a true digital transition process. But because digital transformation will ultimately touch every part of the organization in some way, all staff must be included in the process. All employees must understand the importance of the effort to the success of the business, how the process will unfold, its impact on their work and what their contribution will be.
And remember that a digital transformation effort is never over. In a truly customer-centric organization, the business will always be anticipating changing behavior, rapidly adapting, expanding capabilities, and building new and better customer solutions. Increasingly, legacy processes do not allow for that type of flexibility and that’s the imperative for digital transformation.
Michael Cairns has served as CEO and President of several technology and content-centric business supporting global media publishers, retailers, and service providers. He blogs at personanondata.com and can be reached here.
A year after Apple announced the arrival of the subscription app model as part of a wider sweep of changes it made to its App Store policies, the size and scope of this new app category is exceeding analyst expectations. It is also paving the way for content companies to grow audience numbers and engagement.
Content companies that embrace the model can plan their business with high confidence that they will attract high-value users and generate a predictable cash flow. This is because consumers who buy into subscriptions commit to a recurring fee and – generally speaking – stick to their decision. Their resolve is inextricably intertwined with a concept known as the Sunk Cost Fallacy. Simply put, people who have invested time or resources in something don’t want to see it go to waste. Think of the times you rented a movie and, even though it wasn’t great, you watched it to the end. Now you’ve got the gist.
Consumer commitment colored by this fascinating bias bodes extremely well for companies that offer subscription apps. In fact, as far back as 2014, research found consumers would buy into subscription apps if the price was right. Specifically, the Branchfire research into consumer attitudes toward subscription apps found that “$10 a month is the sweet spot for subscribers.”
Are subscriptions right for you?
Fast forward, and the range of subscription apps has expanded to include much more than streaming media providers like Netflix and Spotify. Data provider App Annie reports that “in-app subscription revenue from non-game apps, particularly within the media streaming, news and dating categories, is rapidly increasing.” Overall, App Annie forecasts revenue for non-game apps to grow at an incredible rate of 25% – reaching $33.8 billion in 2021.
It’s good news that subscription apps are gaining traction. But not all media companies that can offer their app as a subscription model should do so. If you’re asking users to open their wallets, you need to offer value for money.
A crowd-pleaser across the board is fresh and relevant content. Obviously, media companies do this by definition. That said, in order to merit a monthly recurring cost, the content must be exclusive, or engaging – or both. Regularly releasing new features is also a plus.
Finally, apps that remove the friction from navigation, or help users accomplish important tasks (book a reservation, register for more information, streamline sharing) are also a hit with time-crunched consumers and multi-tasking mobile users.
Do your homework
Before you decide to release a subscription app, do your homework to make sure your audience engages frequently, and deeply enough, to merit the investment in the first place. This is where audience measurement data around the who, when and why of app usage in the form of behavioral data and insights is a must. Even better if this data spans all the platforms that encompass consumers’ daily routines.
Finland’s Verto Analytics focuses on precisely this, quantifying the user journey from one device to another and measuring from the point of consumer interaction across all platforms, media, content and devices. In April Verto posted high-level research into news access and engagement across platforms, highlighting how (and when) valuable audience segments engage with news content.
The day-in-the-life data and visualization underscores the importance of offering content to consumers on their terms – and across all platforms. But it also reveals interesting “windows of opportunity” during the day when content companies might use their presence to interest consumers in a subscription offer.
Raising awareness of your app is an important top-of-the-funnel activity. However, you also need additional data to plan your app marketing and acquisition campaigns – and ultimately benchmark your performance against your peers.
You must also consider several important criteria, which are raised in the 2017 Subscription Apps Report, such as: What is the proper price range for a subscription app? How long is too long to wait for a user to convert and commit to paying a recurring cost? When are the best months to reach and engage potential users?
Compare costs and contexts
The report finds that it costs $161.38 the cost to convert an app user into a subscriber. However, the number may skew high since the subscription app category Liftoff tracks includes Dating Apps, Utilities, and Finance. These types of apps vary significantly in the value they offer and the monthly subscription fee they charge.
It is essential to remember that subscription apps (and their users) are about long-term gains, not short-term bargains. Granted acquisition costs high, but media companies can also increase conversion rates by using all channels at their disposal – including email, push notifications and print ads in their own media properties – to reinforce their value proposition.
Provided they are powered by appropriate messaging and effective targeting, subscription app campaigns can engage and re-engage audiences all year long. This is very different to other categories, such as commerce, which take their cues from seasonal triggers such as holiday sprees or back-to-school shopping.
Companies that offer subscription apps have a huge window of opportunity in which to run campaigns and hit targets. Liftoff also finds that there are some stand-out months, such as September and March, when the “cost to acquire a user who subscribes to the app pays dividends beyond the promise of a more predictable business model powered by more sustainable revenues.”
Above all, keep in mind that driving high conversion rates for your subscription app a journey, not a destination. Regardless of your app subcategory (news, lifestyle, sports) or your campaign objective, your results will be determined by your ability to orchestrate all of your channels to take advantage of all the opportunities to communicate with consumers in ways that are easy, engaging and effective.
Peggy Anne Salz is the Content Marketing Strategist and Chief Analyst of Mobile Groove, a top 50 influential technology site providing custom research to the global mobile industry and consulting to tech startups. Full disclosure: She is a frequent contributor to Forbes on the topic of mobile marketing, engagement and apps. Her work also regularly appears in a range of publications from Venture Beat to Harvard Business Review. Peggy is a top 30 Mobile Marketing influencer and a nine-time author based in Europe. Follow her @peggyanne.
Chris Olson founded The Media Trust (@themediatrust) with Dave Crane in 2005. He currently serves as CEO, where he drives the company’s vision, direction and growth plans. Prior to establishing The Media Trust Company, he spent four years as the chief operating officer and board member at Spheric Media. From 1998 until 2000, he was the vice president, global equities at Commerzbank; and from 1993 until 1998, he was the vice president of electronic trading at Salomon Brothers, Inc.
