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Innovation & Ideas in Media & Entertainment – Part1

by (March 2, 2012)

This is the first of the series of articles on Innovation & Ideas for the Publishing industry. The publishing industry has been hit by declining revenues from its traditional advertising as well as falling subscriptions. The industry has not been able to monetize the internet effectively,  although a number of media-focused startups have been able to generate large revenues. Mobile has given this industry a new channel to return to its rightful share of revenues, however media publications have to understand the fundamentals of building effective solutions for this channel. This blog series intends to educate the CIOs and IT decision makers in the publishing industry about the trends, opportunities, issues, challenges and threats in mobility and how you can benefit from this.

In this article we talk about some of the trends in mobility and how media firms are leveraging these trends for monetization and increasing subscriber bases.

With the rapid proliferation of smartphones and tablets, an increasing number of individuals are moving away from conventional communication applications such as SMS and voice calls to more sophisticated applications such as video streaming, music apps, mobile browsing and social networking. Phones are now used more as personal infotainment channels, which people carry wherever they go. Individuals use these mobile devices for almost everything they do, ranging from accessing social networks to checking out local deals.

One of the most popular activities on mobile devices is accessing a newspaper, magazine or watching a favorite video. Media & Entertainment is expected to expand exponentially in 2012 driven by innovative advertising models, new content formats & content monetization techniques. Rapidly evolving technologies will further drive the growth in this sector. Media companies who are struggling to cope up with the declining revenue are now looking at mobile as the next best alternative to boost their revenue and enhance reader loyalty.

Below are a few trends that we believe will influence the media and publishing industry in the near future.

1) 2014 Mobile app usage to exceed Desktop app usage. 
According to Global Mobile vs. Desktop Internet User Projection, 2007 – 2015 by Morgan Stanley, mobile app users are poised to surpass desktop users by early 2014. Mobile usage is growing & platforms such as Apple & Android are taking a big share of the internet market worldwide. iPad and Androids have redesigned the reader behavior and trends. In the context of growing popularity of mobile, it becomes imperative for the publishers to monetize and generate revenue through this medium.

2) Mobile advertising growing faster than Web advertising
When television commercials were launched a few years back, advertising on the medium was considered a better alternative to newspaper ads. However, today mobile has evolved to become the default medium to target people across all walks of life. Currently mobile is used for accessing news and information and connecting with friends on Facebook & Twitter, and this growing usage of mobile has forced advertisers to look at mobile as a mainstream ad channel to hit the target group. Mobile has become a critical part of the marketing mix along with web and television. We are seeing a huge shift of advertisements budgets from conventional channels to mobile. In 2011, the mobile ad spend was close to $1bn and it is expected to increase to $4.5bn by the end of 2012. According to Flurry, as quoted in one of their blog posts, “US app inventory is not only growing at a staggering rate, but also poised to absorb the equivalent of the entire US Internet display advertising spend by the end of this year…”

3) Personalized experience to transform the interaction with readers/ audience
With a plethora of magazines, web portals and news channels, aquiring and retaining the attention of viewers and readers is one of the critical challenges faced by the media industry. Companies now realize that the success is in delivering relevant content based on unique personal and professional interest, location and age. Companies like Flipboard, Pulse, Zite, Google Currents, Twitter and Facebook are investing significantly on user data analytics which will help media companies to increase the relevance of the content. We expect this trend to grow and more publishers will focus on analytic driven targeting and content personalization to enhance reader/ audience experience.

4) Monetization of mobile apps: Increased use of analytics for boosting ad revenue
With increasing number of channels, publications and other applications, advertisers and brands are posed with the challenge of increasing competition and declining ad revenue. Traditional mass media advertising are no more effective in reaching and influencing the target group. With more users now shifting to mobile as primary media and entertainment channel, advertisers are compelled to treat as an important advertising channel. Due to the real-time, interactive features of mobile, the channels offers unparalleled opportunities to the advertisers and brands to target users with ads based on their unique preferences and permission. Advanced technologies like geo targeting combined with other analytical tools help advertisers run highly impactful location based campaigns which are trackable and precisely measurable. Companies like Millennial Media, Jumptap, Mobclix & Google Admob have demonstrated the potential of mobile advertising. For publishers, this opens a new and additional revenue channel which can help them boost their ad revenues.

5) Lastly, social media channels will evolve as publishing tools
Due to the growing popularity of social media channels, engaging audiences and building interactivity through social media will continue to make a difference for media and publishing industry as publishers look to reach bigger audiences through digital innovations. Almost all the media and publishing houses have a presence on social media channels, however they are currently used primarily to promote content and reach out to a larger audience, and it has been effective to a large extent. This being said, we believe there is a huge untapped potential beyond content promotion sharing through these channels. Social media channels have the potential to serve as publishing medium with a wide scope for content delivery and dissemination. Many big brands are currently moving towards this direction. Social Reader launched by Washington Post and the Facebook app launched by Guardian are the first examples that come to mind.

In summary, the media & publishing firms should look at mobility as a long term revenue generating channel, invest in this technology and build personalized services for users and analytics driven targeting options for advertisers. Building a long term view on this channel is more important than getting an app out. This will need building this side of business brand brick by brick rather than take quick fix approaches. In the next article, we shall discuss some of the monetization options for publishers in this space and which options will survive long term sustainability test.

Paul Joseph
Head of Media and Entertainment
paulj@rapidvaluesolutions.com

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