Established, high-profile media entities and less known content players presented their cases at the recent OMMA Global New York and the Future of Media Forum. The most interesting takeaway: there’s no magic formula for a media company to become profitable and competitive in the current market.
Three Consistent Media Challenges
Most media companies face three significant challenges that have a direct impact on their bottom line. They are:
- Creating profitable advertising revenue streams. For traditional media publications, such as magazines and newspapers, the elephant in the room is the fact that their offline advertising continues to yield a premium over their online counterparts despite an overall reduction in their subscriber base. Meanwhile, online properties face competition from a broader array of offerings, lower CPMs (define), and excess inventory all of which combine to place further downward pressure on pricing. Despite the blurring line between advertising and editorial, many media entities haven’t succeeded in providing effective branding environments with sufficient reach for mass marketers.
- Developing online subscription revenues sufficient to support media operations. While many argue that few readers are willing to pay for content, there are notable exceptions such as the wsj.com, ft.com, and economist.com. This problem is partially attributable to making paid content free online to lure audiences online during the Web’s early days. It’s now critical for content players to find niches where readers are willing to pay, while offering some level of free content to attract an audience.
- Leveraging social media engagement. For most media players, social media helps disperse their content quicker, enables them to connect with new and broader audiences, and gather information in ways that more conventional distribution channels don’t. Social media spans a range of options. Among the most mentioned were Twitter, Facebook, and blogs.
No one mentioned the issue of aligning revenues with expenses. That’s a particularly large hurdle, especially for established businesses that saw cost structures evolve during more economically favorable times. In a weak market, every company must make tough decisions. For businesses that need to keep their current models going while exploring new ones, this is especially difficult.
Three Ways to Leverage Existing Media Assets
Despite the challenges confronting media firms, there are ways to improve their ability to compete profitably. While no one way is a silver bullet, testing options should better position companies as their business models evolve. Here are three ideas to consider:
- Assess content for specialized niche products. Analyze your content offering to determine if there’s a demand for additional content or other format by examining traffic, reader feedback, and testing.
- Create niche paid products for hard-to-get content. Consider whether you have content that’s unique or hard-to-get. For example, Yahoo’s Rivals.com is a subscription product that provides in-depth college sports information for avid fans.
- Re-package existing content. Assess the breadth of publishing options, including iPhone and Kindle applications. For example, The Economist packaged published obituaries into a book (“The Economist Book of Obituaries”) based on the popularity of this content.
- Use strong content as an affiliate marketing driver. To strong content environments, add affiliate marketing where appropriate for incremental revenue. One area that’s already part of the publisher’s offerings and ripe for this type of revenue opportunity is product and event reviews. Economist.com does this for its book reviews.
- Extend customer relationships. Examine your customer base to determine whether there are special target audiences for other products. Do readers only visit one specialized area of your content? Where it’s possible, track revenue per customer to assess how you’re growing your business. Also, leverage the information you have about your existing readers. Direct marketers, who have faced mature market factors longer, have found ways to accomplish this. While many of these options may not be sexy, they can generate revenues with limited investment. Among the factors to analyze are the size of your house file and its various segments.
- Sell existing readers different products. This may require thinking about how readers use your information. Recent examples include wine offerings to readers of “The New York Times,” “Wall Street Journal,” and “USA Today.” Another approach is Martha Stewart’s licensed retail products.
- Leverage customer information responsibly. Remember that this requires permission from readers to use their information. Options include co-registration and list rental, particularly when postal addresses are available and there’s purchasing history. Given the decline in direct mail lists, this may be an opportunity for publishers.
- Develop new advertising models, particularly ones that extend the brand experience. Experimentation can help publishers to extend their offering in ways that create new value for both the media companies and marketers. Track campaign effectiveness as well as revenue generated and related costs since additional development and support may be needed.
- Create sponsorships and other unique advertising opportunities to expand brand impact. For example, NYTimes.com has a sponsor for its tools. The drawback is that this required tailored work by both the media company and the advertiser.
- Develop targeted e-mail newsletters. These afford an opportunity to deliver specialized content to these niche audiences while creating a branded experience that works for marketers. DailyCandy has accomplished this by extending its network to additional cities.
While today’s media marketplace is challenging, there are options that enable smart businesses to extend their reach and profitability. These require analysis of your options and a willingness to test different approaches while rationalizing your costs in line with your sales.