Distribution Deals: Necessary Evil for Media Brands?

The consensus is clear. Media brands must get their content in front of consumers, wherever that may be. Big media brands that are accustomed to commanding premium CPMs on their Web sites, players such as CBS, Wall Street Journal Digital and new online network partners News Corp and NBC Universal, have begun the process of pushing out their content.

And while few industry watchers dispute the notion that content providers could be left in the dust if they don’t distribute their content across the Web, a bigger question looms. Once that content is strewn here, there and everywhere, how will media firms prove the value of their brands to advertisers when asking higher CPMs on their own properties?

The Value is in the Audience

Many media sellers and observers stress, when selling placements on branded publisher sites, the value proposition is not about the content per se. Rather, it’s in the audience attracted to those sites by that content.

“Our selling proposition is we’re selling the audience that comes to the Wall Street Journal… It’s the high income decision makers,” said Jason Schaeffer, director of business development at Wall Street Journal Digital, previously Dow Jones Online. “If you go outside our site… the audience may be diluted, and it may be a different type of audience,” he continued.

People who visit branded sites also may be more loyal than those viewing their content on partner sites, believes Randy Kilgore, chief revenue officer for video network Tremor Media. “When somebody chooses to go to the Wall Street Journal or Fox to consume content, there’s a higher value… It’s probably a loyal audience,” he said.

What follows, added Kilgore, is the ability to reach those dedicated users on a regular basis on branded properties. “You’re not just getting them once, but you’re able to establish some reach and frequency. Reach is a big differentiator in terms of how much budget you get.”

Media firms will need to be creative in terms of what products they offer advertisers in order to differentiate their properties and ad opportunities from those of distribution partners. For instance, said JupiterResearch Analyst Barry Parr, “If you are SF Gate, and you can’t come up with a package for your advertising in terms of distribution and audience and environment that’s better than what Yahoo can do with your content, you should find another job.”

Hearst’s SF Gate, the online component of The San Francisco Chronicle, is among the hundreds of newspaper sites partnering with Yahoo to publish the portal’s HotJobs listings and possibly swap other content and tools down the road.

Or Not?

Shawn Riegsecker, chairman and CEO of local media planning and buying service, Centro, isn’t so sure the audience is where a media brand’s equity lies. “That audience that visits your site is the same audience that visits Yahoo….It’s not the audience, it’s the environment,” he told ClickZ News. “The challenge to the publishers is to make sure the experience and the environment when someone reads a story on their site is a vast improvement to the experience on a portal.”

However, Riegsecker, whose firm helps agencies buy media on local sites, including several newspaper sites, does see value in media firms pushing their content across the Web — if they do it right. “I look upon them distributing their content as more of a marketing vehicle. [Media companies] use it as a hook, not as a revenue opportunity, to get people comfortable with their brand,” he said. “Content providers need to be incredibly conscious about someone else building their brand off of their content.”

Despite the general consensus that content distribution is necessary, many acknowledge media firms may have to reckon with advertisers wondering why they should pay more to be on their sites alongside content that’s cheaper to run against elsewhere in partner networks.

“There’s no question that [advertisers are] going to ask that,” said Riegsecker.

Tremor’s Kilgore concurred. The question of media brands proving value to advertisers as distribution deals play out, “seems relevant, for sure, but the trick is figuring out what happens next month,” he said.

“It’s always been a concern: the fear of disintermediation from the user,” said Wall Street Journal Digital’s Schaeffer. “But you can’t fight the natural behaviors that have developed on the Web,” he continued, adding, “If we can’t make money on our content that’s where we get in trouble.”

The Revenue Factor

Many distribution agreements are based on revenue share models, but it remains unclear whether content providers expect to derive substantial dollars from them. “I really don’t have a sense of where the actual numbers are; these models are just starting to be worked out,” said former CBS News President Andrew Heyward, now senior advisor for consulting firm Marketspace.

CBS launched its Interactive Audience Network in April, aligning with AOL, Microsoft, Comcast, Brightcove, CNET Networks, Sling Media and others to distribute shows like “CSI: Crime Scene Investigation” and “Survivor.” Its News and Television Stations Group joined with video network Voxant recently to send local news content across the Web.

Wall Street Journal Digital also has sealed video distribution deals with Voxant and Brightcove. The publisher’s video deals “in general are very small,” according to Schaeffer, who said Wall Street Journal Digital receives a slotting fee and payment from distribution partners for use of its content. “Down the road I imagine these relationships will evolve,” he continued, noting he expects the company will be able to continue charging premium CPMs to advertise on its own Web properties.

These deals are “more like placing bets on the potential future rather than the here and now,” said Kilgore.

When it comes to ensuring content providers are earning enough and protecting brand value, “The challenge becomes to have the content so distinctive that the notion of your brand travels with it,” said Heyward.

Discovery Channel is doing just that, allowing users to grab a branded widget featuring posts from its “Everest Beyond the Limit” blog for placement on their own customized news homepages, blogs or personal sites. CBS has also paired with various social tool providers to enable users to post its branded content on their sites.

“It’s incumbent upon media companies to weigh the pros and cons, and not just the immediate pros and cons,” of distribution deals, said Jim Satloff, CEO of Inform, a company that provides links to relevant content from around the Web to sites like Washingtonpost.Newsweek Interactive’s WashingtonPost.com and Condé Nast’s Portfolio.com to build pageviews and increase time spent.

“They need to put a stake in the ground and say, ‘Look, this is what’s going to happen in five years,” he said.

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