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Perspectives

The Big 10: Media executives call out the industry’s biggest challenges

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While it is appealing to start off a New Year with rosy predictions, it is also important to take a clear-eyed look at the road (and roadblocks) ahead. We asked a few of our members what they see as the biggest challenges the digital media industry faces today.

Here’s what leaders at ten diverse media companies see as the biggest challenge in the year to come:

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Scott Bailey, President, TEN Automotive Division
@TENenthusiast

Monetizing scaled social audiences and the content made for these channels is a challenge. We see the benefit of being a first mover and building a large social audience. That said, the benefit today lies heavily in the marketing value it provides in driving traffic to our sites and leveraging it to convert fans into paying customers through subscription offerings like Motor Trend OnDemand. We are able to monetize through advertising, but the nature of the monetization on social is more challenging to do at scale, as it requires a more custom approach compared to more traditional, turnkey placements/buys.

Jordan Bitterman, Chief Marketing Officer, The Weather Company, an IBM Business
@JordanBitterman @weathercompany

Our industry must build a parallel world adjacent to the current one dominated by Google and Facebook. This new world must be scaled, intelligent and open. Currently, 85 cents of every new dollar are going to the two biggest players because they have been solving for scaled and intelligent – and have done a great job doing so. But, an open garden is increasingly becoming a requirement for sophisticated advertisers who want partners who are flexible on data and transparent on pricing and performance.

Jim Brady CEO & Founder, Spirited Media
@jimbrady @spiritedmediaco

It’s hard to pick a “biggest” challenge, as there as so many. But, to me, refining user experience remains a crucial one. There are still way too many sites alienating readers for a quick buck by hammering them with pop-ups, unnecessary slideshows, pagination, interstitials and more. Yes, we need to make money. But gouging readers to the point where we drive them away is an abysmal long-term audience strategy. Treat your audience like you don’t care about them, and they will surely return the favor.”

Steven Smith, President of Digital Media, AccuWeather
@accuweather

In 2017, we continue to hurtle toward a ubiquitous global user audience, accessing data from every imaginable kind of device with a greater focus on personalization, localization, service and mobility. Content providers are going to have to step up to meet the needs of an audience that wants fast, relevant, and localized—and provided consistently regardless of device, from smartphones to connected refrigerators. That makes strong partnerships with vendors a necessity, from Cloud storage providers for scaling data to meet demand demands to robust content management solutions to help port news from format to format and device to device. And of course, the audience will continue to demand content that is more timely and relevant than ever.

Joy Jones, Vice President, Global Products, Associated Press
@AssociatedPress

The biggest challenge we face is building diverse streams of revenue that support innovative storytelling. In 2017, digital media companies must bridge the current divide between creating compelling stories that attract interest and attention, and the opportunities for monetization that are increasingly concentrated on just a few of the largest platforms. The industry is not going to be successful if there’s too much focus on trendy stories that spin up on a one-off basis or so-called native ad content that lacks authenticity. We need immersive and captivating high-quality content that engages diverse audiences and creates a wide fan base across emerging media platforms. That diversification of revenue will be critical to building and maintaining a sustainable engine for digital media innovation.

John Kosner, EVP, Digital & Print Media, ESPN
@JKosner @ESPN

Establishing timely and trusted cross-media measurement is an enormous challenge — but a critically important one. People consume media on an ever-growing number of platforms and devices and we must establish accurate ways to measure the total audience we reach and their engagement with content. That means having clear, trusted standards and metrics — which measure across TV, apps, web, OTT and more — and do so both in- and out-of-home. The connection people have with digitally-delivered content and advertising continues to grow enormously. But so does fake content and ad fraud. Trusted and transparently-measured environments will become ever-more valuable.

Beth Lawrence, EVP of Digital Ad Sales, Scripps Networks Interactive
@ScrippsNet

A big challenge in digital in 2017 will be the ability for clients and consumers to separate the wheat from the chaff. We all know digital is here to stay and continues to be a more important revenue driver every year. But the quality of digital content has been under the radar, and in the final analysis, marketers care what brands they associate with. Period. Content matters; quality content rules. It will be a year of cleaning up, properly measuring and delivering great results in digital.

Matt Minoff, SVP, Digital Platforms and Strategy, Meredith Corporation
@mattminoff @MeredithCorp

The biggest challenge will continue to be capturing consumer attention as existing platforms grow and new platforms emerge.

Vikki Neil, SVP/GM of Scripps Lifestyle Studios
@ScrippsNet

In digital, you must stay open to all ideas that come your way, but disciplined enough to say no to many. You must move quickly and not wait for perfection, but perfect what you do daily. There’s not time to develop a long-range plan like a traditional media business offers. From my seat, the biggest challenge is a combination of making the right bets, and moving as fast as humanly possible to understand the space before your competitors, so that you can build the best offering for consumers and advertisers. It’s impossible to be everywhere across all opportunities, so choose wisely, go quickly and iterate daily.

Alex Skatell, Founder and President, Independent Journal Review
@AlexSkatell @TheIJR

The biggest challenge for media is building community. The strategies that have propelled many digital media companies into large audiences are largely commoditized, so you need to figure out how to connect your content and communities together in a deeper and unique way.

Brendan Spain, VP, Advertising – Americas, Financial Times
@spanishbrendan @FT

The biggest challenge for digital media in 2017 will be for quality publishers to cut through the noise – of ad fraud, fake news, and non-human traffic – to command fair market pricing for their trusted brands and influential audiences. Evaluating and leveraging these trusted environments will continue to be both important and difficult as the market weighs chasing scale and audience against quality and transparency.

Domenic Venuto, General Manager, Consumer Division, The Weather Company, an IBM Business
@dvenuto @weathercompany

As we look at the 2017 media landscape, there is potential for a massive upheaval on multiple fronts with the forecasted political uncertainty. The industry is resilient and adaptable, and we must remain focused on building great products for fans. And perhaps anxiety is unwarranted.

Industry-Research

Publishers increase mobile investment

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Mobile is an ever-increasingly important platform in digital publishing as consumers spend more time on their devices. In fact, three-quarter of publishers (75%) stated they will increase their mobile investment in the next 12 months, reported AOL’s 2016 Publisher Outlook Report, which surveyed 300 publishers in the U.S.

Further, nearly half of the publishers plan on increasing their mobile investment up to 25% more and 10% plan on increasing their investment from 50-100% more in the next 12 months. Publishers also anticipate video ad sales to be the top revenue performer of the year.

Ad blockers, quality creative and quality experiences are top challenges publishers face today, while better audience metrics, interactive and engaging ad units, mobile-first video and faster ad loads offer big opportunities.

Publishers rank their biggest mobile opportunities as:

  1. Better audience metrics – 43%
  2. Interactive, engaging ad units – 43%
  3. Mobile-first video (creative and formatting) – 42%
  4. Faster ad loads – 42%
  5. More mobile web-based content – 42%
  6. Cross-screen tracking and measurement – 40%
  7. Customized / personalized creative – 39%
  8. More app offerings – 38%
  9. Mobile commerce – 38%
  10. Gamification of content – 27%

And rank their primary challenges as:

  1. Ad blockers – 49%
  2. Quality of consumer experience – 44%
  3. Quality of content/creative – 42%
  4. App installations – 38%
  5. Measurement deficits – 31%
  6. Platform and service costs – 30%
  7. Off platform monetization – 30%
  8. Off network traffic / audience – 27%
  9. Lagging advertising spend – 27%
  10. Inadequate revenue/ROI – 24%

Distribution platforms for content have also emerged this year. Companies like Facebook, Apple, Twitter and Snapchat are all trying to attract readers to keep using their platforms while consuming publisher’s content. Over 90% of publishers believe distributed media has had a positive effect; 53% report it’s “extremely positive.” By and large, publishers also said that syndication is vital with approximately 25-50% of their traffic coming via syndication referrals.

More and more publishers are increasingly assessing new and alternative monetization strategies beyond advertising. For now, more than 75% of publishers pursue subscription and ad supported business models. Of those focused on subscriptions, over 75% expect to grow their subscription choices in the next 12 months.

While publishers are still very dependent on advertising revenue, the way of doing business has changed. Seven in 10 publishers (71%) sell inventory via programmatic with many using a private marketplace. Private marketplaces allow publishers to offer their own inventory to buyers in a more transparent and controlled environment. More than half of publishers (56%) depend on at least one private marketplace and 28% use multiple PMPs.

Publishers continue to evolve with the times, building new technologies, developing new revenue sources and even creating internal agencies to develop new creative. Publishers must continue to re-think how people are consuming content, how to deliver it, how it lives across platform and how to monetize it beyond advertising dollars.

Perspectives | Revenue

Playing poker: betting big on the brand

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Brands. Conventional wisdom is that they matter less and less in a world gone digital — that consumer media brands no longer serve as the anchor to media experiences because the tidy packaging that came from a magazine, newspaper or a TV show has been blown up. And what’s been left in its place is an endless stream of content competing for the attention of millions of goldfish swimming in social media.

The reality is that, in a world with a multitude of options just a tap away, the brand is more important than ever. More and more the brand is a proxy for trust, which represents consumer (and advertiser) confidence in value. Do I find this report from the Associated Press credible? You bet. Will I be entertained by this show on HBO? Likely. Will this new car review on The Edmunds help me with my car purchase decision?  Will this video from The Onion make me laugh? Does the AccuWeather forecast help me plan for an outing? Yes, yes, yes!

Focusing on consumer needs offers the greatest opportunities in expanding a digital media business. What needs are being left unfilled and how can your brand uniquely deliver on those needs? Meeting these needs in a reliable, ethical manner builds a valued relationship between brand and consumer. This deep relationship takes time and trust. It isn’t measured in the sort of hockey stick adoption rates crowed about in the social sphere. Media brands aren’t a value-add, they are, by definition, valued. Why do you think that so many new social media platforms lead with these media brands? They are building their credibility and trust by leveraging the credibility and trust the media brands already have.

Consider the brand a big pile of poker chips. Each poker chip represents the trust of 1,000 of your most loyal consumers. As you consider new opportunities for your brand, you’re playing those poker chips. If you play them wisely, you’ll build a larger pile of chips and have even more opportunities. If you play them haphazardly, your pile will likely shrink. It’s ok to make some big bets, just make sure you’re aware of the risks.

I’ve been asked a lot about native advertising in the past year. It seems to come up more and more given the growth of adblocking. Native advertising is nothing new. Packaging experiences for advertisers to inform, entertain or engage their targets and customers is tried and true. Your brand equity is exactly why the advertiser wants you to deliver the content for them. The trust in your brand is exactly why the consumer is open to quality native advertising within the context of your content. You’re just playing another hand of poker.

And, as the power of brands allows for native ad plays, strong media brands are able to find revenue opportunities that provide growth outside of traditional advertising streams. Sure, subscription models are terrific, but they aren’t right for every media brand, no matter how loyal the audience.

On December 1st, we’re launching an event for our DCN members called Power of Brands — I encourage anyone responsible for marketing, product innovation, digital strategy or revenue generation to attend. We’ll spend the day hearing from brands who have expanded into new revenue lines. Whether it be experiential marketing, subscription products, licensing into products or digital formats, e-learning or face-to-face events, these opportunities for growth start with a strong relationship between the consumer and the brand. And digital isn’t a simple question of disintermediation. Digital offers endless opportunities for new points of genuine connection.

Innovation | Revenue

What Drove Hearst to Invest in Ride-sharing Service Via?

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Darcy Frisch, vice president of Hearst Ventures, discusses the unique model, business structure and future of Hearst Ventures’ newest investment, ride-sharing service Via.

Hearst Ventures is always on the lookout for the next big thing in the technology space that can help impact consumers’ lives. The group’s newest investment, ride-sharing company Via, shows big promise in the on-demand transportation sector and has a unique business model that provides an attractive price point and sophisticated technology that differentiates the company from the ever-expanding market competition.

Can you give us a brief background on Via?

Frisch: Via is a ride-sharing service that allows you to reserve a seat in a car using an app on your smartphone. Using Via’s app, customers drop a pin in the location where they’d like to be picked up and where they’d like to be dropped off. Via’s technology matches the request with a nearby vehicle that can fulfill the ride, and dynamically coordinates the route to include other users going in the same direction.

We think there is pent-up demand for transportation alternatives in Manhattan and other major metro areas. Via offers a solution to riders who want to share the cost of their ride, but are looking for, and willing to pay for, more convenience and comfort than what is currently offered by mass transit.

What Hearst Ventures finds particularly compelling about Via is its software platform: an automated dynamic routing system optimized for many variables ranging from traffic conditions to predicted demand along routes traveled. The software—not the vehicle driver—chooses the route and ensures that the customer will always be picked up and dropped off within two blocks of their pin drops. It automatically communicates critical information about the location of the vehicle as it approaches and clearly instructs the customer, through the app, on where to meet their driver and vehicle.

Can you talk a bit about Via’s plans for expansion?

Frisch: Via has been expanding its service in Manhattan gradually over the past year or so and demand for the service has been extraordinary. At the time Hearst invested, service was operating limited hours and in a zone from 32nd Street to 110th Street. Very recently, Via announced that it was extending its hours of operation to be 6:30 a.m.-9 p.m. and expanding its service zone to cover from 14th Street to 110th Street, river to river. Via also has plans to expand into other metro areas in the U.S., and eventually internationally. The first two targets will likely be Chicago and Washington, D.C.

Tell us a little about Via’s pricing model and how the company keeps costs so low.

Frisch: There is a pre-pay option on the app where customers can use money they have already loaded, at the five dollar per-ride price. If customers pay for each individual ride, the cost is seven dollars per ride. If there is more than one person being picked up, each additional rider is charged at 50 percent of your per-ride price. The company keeps the cost low by matching vehicle supply and customer demand. The drivers are independent contractors, licensed by the New York Taxi and Limousine Commission, and are called to work based on what Via expects demand to be on a given day, at a given time. Fully utilized, a vehicle can make three to three and a half loaded trips per hour. Ideally, Via’s vehicles will run at full capacity, but there will always be times of less-than-full utilization. The supply of drivers and vehicles is being managed to grow with demand for the service. The two will expand together.

Tell us more about the founders and the team behind Via.

Frisch: The founders, Daniel Ramot and Oren Shoval, are impressive entrepreneurs. In their home country of Israel, they grew up with Sheruts—shared taxis and vans—that are a popular and effective means of transportation. Ramot and Shoval are both graduates of the elite Talpiot program of the Israel Defense Forces, and clearly have the engineering skills, training and experience that made them able to build the Via technology and successfully roll out the service in New York. Their team is divided between New York and Tel Aviv. The engineering team resides in Tel Aviv, under Shoval, and the operations and marketing teams are based here in New York with Ramot.

What separates Via from some of its competitors?

Frisch: We think there is a lot of room for new transportation solutions in Manhattan. Via is offering a new type of service that combines the low price and sharing aspects of mass transit with the personalization and convenience of a for hire taxi or limo ride. Also, the software and technology platform that I described before is a defensible advantage that Via has over its competitors.

What about Via ultimately made it an attractive investment for Hearst?

Frisch: Hearst Ventures has been interested in on-demand service models and we have spent a good deal of time thinking about these businesses. On-demand transportation is particularly interesting because it is a very large market opportunity that is in its early days of disruption by smartphone hailing services like Uber and Lyft. We spent a long time thinking about the market, and Hearst President and CEO Steve Swartz challenged us to find a company for investment that offered a real competitive advantage to the market counterparts. When I came across Via, I honed-in on its technology platform as something that would differentiate the service. The automated routing system that enables the shared service and the low price point is truly groundbreaking.

Via’s management team is rock solid and their business model is new and different. The timing feels right, since well-funded companies already in the space have educated both the drivers and riders that it is very easy and convenient to transact using smartphones. With this new round of funding, Via can expand and grow more quickly. We are very excited about working with them as they do.

VIA