Oracle: Capitalising On The Digital Age
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Oracle: Capitalising On The Digital Age

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Based on, and including, interviews with a global panel of experts from world-leading institutions, Capitalising on the Digital Age outlines future revenue models and strategies that media and ...

Based on, and including, interviews with a global panel of experts from world-leading institutions, Capitalising on the Digital Age outlines future revenue models and strategies that media and telecoms firms should consider adopting in order to prosper in a world where the value of traditional business models is slowly being eroded.

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Oracle: Capitalising On The Digital Age Oracle: Capitalising On The Digital Age Document Transcript

  • CAPITALISING ON THE DIGITAL AGE www.oracle-marketing.com/MediaFutureTrendsReport Oracle Capilising on the Digital Age.indd 1 6/11/09 18:12:52
  • FOREWORD & CONTENTS INTRODUCTION When it comes to digital content, control is firmly in the hands of the consumer. The rise of freemium, the growing audiences and professionalism of creative amateurs and shifting market dynamics are revealing new and 3 INTRODUCTION The Future Laboratory and its global expert panel provide some remarkable insights into the impact that current cultural, economic and technological trends will have on consumer behaviour and the business models of media firms. The evidence that this transformation is already in full swing is clear –the rise of freemium, the increasing professionalism of creative consumers and the convergence of experiences across our lives’ unprecedented challenges for telecoms, media & broadcasting companies. three screens (TV, mobile and PC) are just some of the signposts to the digital futures identified. Along with the challenges however, the digital age is also providing fresh and lucrative commercial opportunities. Sales of virtual goods in the US, for 4 DIGITAL DRIVERS FOR CHANGE When you consider how these futures might look, with, among other things, digitally augmented realities, contextual branding, and the growth of emotional profiling, determining a strategy to capitalise on these opportunities seems a tall order. instance, are set to exceed $1bn in 2009, with total spend on such items However, what is also clear from the research is that media and telecoms firms need to act now if they are to survive and prosper as these expected to double again by the end of 2010. A new economy has emerged. transformations unfold. Falling advertising revenues and the widespread availability of free content are eroding the value of traditional business But at a time when the price of digital content edges ever closer to zero, while a fragmenting media landscape makes consumers ever more fickle, 6 DIGITAL FUTURES models. The pace of change may be dizzying and our understanding of what the digital future looks like uncertain, but the report helpfully indicates a how do organisations prove their offerings are worth paying and coming number of priorities in navigating the challenges and opportunities that lie ahead. back for? What are media firms’ current capabilities and how will these need to change? 8 DISTRIBUTION FOR ACCESS The importance of building and maintaining trust is highlighted. Trust is seen as the key to gaining access to more profitable relationships with customers and competitive differentiation. Users will need to feel comfortable enough to enter the new type of relationship needed for personal, contextualised experiences. To address some of these questions, Oracle commissioned an independent report from future trends consultancy, The Future Laboratory. The objective The benefit of preparing for a more complex network of partnerships is also emphasised. The report argues that in the long run, digital media will of the report was to explore the steps that media companies and telecoms firms should be taking in order to ready themselves for what our digital future holds. 10 CAPITILISING ON THE DIGITAL WORLD be characterised by alliances between specialist providers. This also applies where companies have ambitions to be the ‘recommender’ of choice or the ‘Orchestrator of the Dance’. The need to develop and prepare for new revenue models is another recurrent theme. Rather than focusing on the main item, companies will Based on, and including, interviews with a global panel of experts from increasingly concentrate on the value of add-ons, customisation or personalisation. world-leading institutions, Capitalising on the Digital Age outlines future revenue models and strategies that media and telecoms firms should 13 THE NIMBLE GIANTS These three priorities are not a leap into the unknown. They are simply different ways for media and telecoms firms to do what they’ve always done: build their audience, deliver content and ensure they get paid for it. consider adopting in order to prosper in a world where the value of traditional business models is slowly being eroded. 14 And looking at these priorities, there are steps that media and telecoms firms can take now to stand them in good stead for the challenges ahead. ORACLE’S It is a question of having in place the systems to support these new ways of working. Organisations need to ask themselves whether their current By Gordon Rawling, PERSEPECTIVE capabilities are suited for the work that is going to be needed. Senior Marketing Director Customer management strategies are the foundation for developing deeper relationships with customers and building this trust. The supporting Oracle Communications systems however need to go beyond the simple retention of customer data. In the coming digital world, customers will expect a seamless experience across all of their devices, whether mobile, PC, TV, e-reader or some other connected gadget – and businesses will have to support this expectation, able to track and manage activity irrespective of the channel. Systems need to provide intelligence on the customer bases’ habits, preferences and the different segments that exist within it. Only with this intelligence and analysis will the business be in a position to begin Key contributors: making the personalised recommendations and offers that build trust and foster deeper customer relationships. Security too will play its part with businesses needing to strike a fine balance between the necessary safeguards and overly cumbersome procedures. • Patrick Barwise, London Business School • Carsten Beck, Copenhagen Institute for Future Studies Extending communities of partners brings a whole new level of complexity to operations. Ensuring that the organisation and its partners are • Hugh Garry, BBC Radio 1 quickly rewarded for their work could mean supporting the transactions of millions of customers and allocating money • James Kirkham, Holler instantly to the right pots. Businesses will need the control and flexibility to be able to charge for any service or • Gianvito Lanzolla, Cass Business School event according to payment type, network or geography. • Martin Lindstrom, author of Buyology • Klaus Mogensen, Copenhagen Institute for Future Studies The channels for delivering content are another consideration. How will media firms enable their own • Ian Pearson, Futurizon3 teams and partners, quickly and easily, to package their content for the different digital channels, get it on the network and out to the audience? How will intellectual property be protected and • Anders Sandberg, Future of Humanity Institute, University of Oxford royalties managed? • Richard Windsor, analyst at Nomura International These are just some of the questions that media and telecoms firms should be asking themselves. As broadband capacity around the world increases and high-end phones become ever smarter and enter the mainstream, the trends identified in the report are only likely to 1 http://news.bbc.co.uk/1/hi/technology/8320184.stm accelerate. Media and telecoms firms need to decide now where they see their place in the digital future and what they have to do to get there. The report points to technology being a central component of any such plans. www.oracle-marketing.com/MediaFutureTrendsReport www.oracle-marketing.com/MediaFutureTrendsReport 3 Oracle Capilising on the Digital Age.indd 2-3 6/11/09 18:12:54
  • DIGITAL DRIVERS FOR CHANGE drop in sales over the same That’s despite sounding less distribution channels that Digital media experiences into a three-dimensional period. News International clear than traditional phone they threaten to take on are becoming more wrap-around immersive is planning to stop offering lines. professionals. sophisticated. Besides experience. so much of its newspaper At the top end of the Teenage and early-20 interactive action movies, it content free online by market, on the other hand, something viewers want to will be possible to ‘walk into’ FREERANGE introducing a paywall. The the bar is being raised. be more actively involved a film’s set or wander around CONSUMPTION UK government is even Consumers’ experiences of in filmmaking. Setting the reconstructed ancient Consumers want their proposing to divert parts broadband lines in the home the agenda for future city of an historical drama. devices to switch between of the television licence and high-speed wireless behaviour, 64% of them have This augmented reality, lifestyle modes, adapting fee intended for the BBC networks are increasing participated in one or more with wrap-around video to a myriad of public and to supporting commercial their expectations of up- content-creating activities visors, and ultimately contact private contexts. Already This section contains an channels. market communication. on the internet, according lenses will start in the home Personal Video Recorder overview of the case for The economic downturn High definition television to the 2008 Pew Internet & before going mobile. (PVR) services such as Sky+, and trend towards an that hurt advertising budgets sets are leading a parade of American Life Project. Semantic searching will V+, Slingbox and Sony’s ever-more digital planet has coincided with a trend new domestic entertainment Citizen video journalists, change users’ relationship LocationFree are becoming from a corporate and towards free digital content. technology, with 3-D and bedroom bands, amateur with technology. Anders more popular. The BBC’s consumer perspective. This holographic services on film makers and games Sandberg foresees the iPlayer is now commonplace includes the social, cultural, FREE-FOR-ALL their way. software hobbyists are ability to record all of his and available on mobile economic, lifestyle and Consumers know they can Clearly consumers’ making ever greater conversations and then devices such as the iPhone. technological forces that are get content free. News in expectations are pointing contributions to digital search through them to Technology is to be seamless, shaping a digital world, and particular is easily available. in both directions, towards media. The distinction remember what was said versatile and instantly move the area forward to a Illegal downloading of a polarisation of quality. between professional and when. Drunken evenings available. Inline experiences new state of play. music and games has set Consumers want basic amateurs breaking down, need not be so hazy the next are becoming the norm, as a precedent. It’s easy and, services to be cheap or blurring somewhat into a day. He also predicts it will be hardware links seamlessly via TURNING POINT though theoretically criminal, even free, and are willing to ‘ProAm’ possible to search through digital content sharing. Apple Digital media this year largely goes unpunished. sacrifice quality for the sake The trend to participate in other people’s photographs TV is preparing systems to passed a milestone: for In economic terms, the of saving money. On the digital media is more widely on the internet to find images sync notebooks wirelessly to “Users don’t want ‘In some markets, the first time in any major supply of something that other hand, where they do based. Social networking of oneself when a bystander HD/3-D or even holographic to be overwhelmed such as Scandinavia, market, the internet has now can be copied tends towards see quality, they are willing and micro-blogging are mass in someone else’s snapshots. screens. Users will be able to with choice such free content is being become the biggest target of infinity; its value would to spend. But the quality phenomena. It will even be possible to leave the home and continue that it becomes touted almost as a advertisers’ money in the UK. tend towards zero. Value is needs to be demonstrably The trend is drawing the search through video. watching on their mobile human right. This The convergence of device what they had been impossible to discern According to a report by PwC shifting, therefore, to unique worthwhile. user away from being a digital media will reflect enjoying on the TV. what content is year saw Sweden’s for the Internet Advertising products, services and The market is moving consumer and towards being Bureau, advertisers have experiences. towards a sophisticated a participant. consumer needs. Lifestyles All this is essential to worth consuming. Pirate Party win two spent more online than on austerity where consumers are increasingly mobile and delivering the ‘freerange’ They want decisions seats in the European television in the first half QUALITY POLARISING are ever more selective MEANINGFUL, the smart phone is leading content experience, and to b e e a sy.” I a n Parliament. The of 2009. Digital advertising The price of free content, about what they will pay for. IMMERSIVE & into the convergence of being ‘open’ is allowing Pearson, Futurizon3 current generation of grew 4.6% to reach £1.75 generally, is lower standard. SOPHISTICATED telephones and laptops. the user to enjoy countless digital natives is used billion, making it the biggest The fact that consumers PARTICIPATION Technologies are set to Device functionality is digital experiences, no to getting content ad market in the country. are getting used to poor CULTURE develop ever faster. Memory integrating more into matter how casual or formal. “On the other hand quality footage, for Digital media is lending chips are getting cheaper, daily life, with GPS (Global Functionality is becoming they also want latent free and may well There is a sting in the tail, however: the turning example on YouTube, visibility to consumers’ more powerful, more energy- Positioning System) and LBS almost ‘alive’ and enabling power – the ability to grow up seeing no point for digital has come as bespeaks a lowering in creative efforts, and efficient and therefore more (Location-Based Service) users to live their lives access a huge range reason for why they overall advertising budgets their expectations. The encouraging them to environmentally friendly. making it possible to know intelligently and efficiently whenever they so should pay for it.” slumped 16.6%. Falling same trend can be seen in engage more. The creative Their capacity, according to where you are and where via tips, alerts and feeds. choose.” Carsten Beck Klaus Mogensen, advertising revenues have telephony, where free online consumer is so empowered some calculations, doubles your nearest sushi bar or Copenhagen conversations with VOIP by good quality production every 2 years (Anarconomy cobbler is. Augmented , Copenhagen Institute been particularly hard on Institute for Future newspapers. The Financial (voice over internet protocol) equipment and editing p25). reality is on its way, digitally for Future Studies are gaining market share. facilities as well as easy enhancing everyday life Studies Times Group reported a 10% 4 www.oracle-marketing.com/MediaFutureTrendsReport www.oracle-marketing.com/MediaFutureTrendsReport 5 Oracle Capilising on the Digital Age.indd 4-5 6/11/09 18:12:57
  • DIGITAL FUTURES Companies are going to have ENGAGEMENT OVER can save money by reducing fan page administrator, and are beginning to stress to work hard to cope with CONTENT headcount. gave her exclusive material the specialist analysis they the changing reality of the Over the coming decades, Besides enjoying the output for the sake of increasing the can offer even more. The digital industry. media companies will choose of ProAms, firms will engage buzz around the product. The Financial Times, for example, Media companies will to work with the growing with them in order to tap key here is that the company now puts its Lex columnists choose to distinguish network of professional into who these influential had found access not just to on Bloomberg Television. their offering. Meanwhile, amateurs worldwide, or trendsetters know. This will creative enthusiasts, but to telecoms companies will ProAms. Their creativity is be useful to the companies’ opinion makers, says Kirkham QUICKEST RELIABILITY enter the new paradigm of a source of freshness and own productions as well as In certain contexts, speed content distribution. Both innovation which firms will their marketing efforts. PARTNERS AND will be the differentiator that types of companies need wish to harness. Media firms James Kirkham of the digital COMPETITORS leads users to have faith in a strong reputations; both and telecoms companies will agency Holler tells how he At the same time as engaging given company. This matters need to get much closer to want to offer resources to was working on a follow-up with ProAms, firms will need for example in providing the consumer. enable the ProAms to shine, series of the E4 sitcom In to compete with them. They financial news to traders, for The new battle lines in this be that secure production Betweeners this year: he will have to justify the need whom receiving information landscape will be between facilities or lucrative found a Facebook fan page for professionally-produced early means making a deal those making digital content marketing services. This will with 40,000 fans that was content. This requires more at a better price. Already and those recommending lead, says Mogensen, to updated regularly with good focus on quality, particularly Bloomberg is monitoring what users should consume. many media firms becoming content. He thought it such a because the ProAm output how fast its breaking news The recommenders, says more like consultancies, perfect channel to reach the will be good. Hugh Garry is compared to Reuters by Gianvito Lanzolla, have the perhaps shrinking in size. audience that he hired the of BBC Radio One says measuring it in fractions of upper hand. Being trusted Crowdsourcing after all material generated by users a second. News providers will be key to success in all of will outgrow what he calls generally need to show these areas. its current ‘YouTube-cats- they are better at delivering on-skateboards image’. He information than Twitter. predicts ProAm culture will make video as good as the music heard nowadays from “I don’t think it’s a bedroom bands. binary, black and LEGITIMACY AND w h i te t h i n g . A l l CREDIBILITY publishers should The companies that survive be thinking about the coming changes will be ones that focus on doing what what makes them they do well. The trend is different. Even their currently shifting away from own brands give trying to do everything, as them a personality in Telefonica’s walking away from Endemol, and AOL’s and identity which forthcoming demerger from in many cases they Time Warner. have been building NEO SPECIALISM for centuries. All Specialising more in what publishers need to they do well will help be looking at what companies persuade consumers that they are they specialise in.” qualified to offer something John Ridding, CEO of more than the ProAms can. the Financial Times News providers, for example, 6 www.oracle-marketing.com/MediaFutureTrendsReport www.oracle-marketing.com/MediaFutureTrendsReport 7 Oracle Capilising on the Digital Age.indd 6-7 6/11/09 18:12:59
  • DISTRIBUTIONFOR ACCESS A new economy will to know more about them. Deepening Intimacy Emotional Connection As multiscreens allow telecoms companies cannot emerge for digital media Indeed users may come The culture of As well as the customer’s different members of a do this alone. He predicts “Contextual branding will become the norm. The distribution in which the to realise how valuable their recommendation will situation, their feelings are household to watch diverse partnerships between entire world will be based on timing and context in key dynamic is consumers data is, making them hold take more account of the going to play a larger part in content at the same times, financial institutions and the future and few, if any, ads will live outside this trading in their private out for good enticements, customer’s situation in any the digital future. Emotional ad profiling can be tailored to telecoms companies. space.” Martin Lindstrom, author of Buyology details in exchange for says Carsten Beck. He given moment. profiling will be one element the individual. Whoever cracks that nut, he highly sophisticated speculates that consumers in the navigation system: Just as consumers’ says, is sitting on a gold mine. customisation. could raise the price they set ANTICIPATORY technology that measures expectations will rise for “If consumers are going to give up their preference on giving up their data, as CONTENT your skin humidity and content aimed specifically Digital Revenue for single-subscription payments they can more Recommendation Culture they begin to expect more Predictive software and temperature is already at them, so too will they In a world where the price easily check and monitor, they will need to have The digital future will not from content makers and finer localisation capabilities possible. The synthetic come to expect adverts that of digital content tends real confidence and trust in the brands they use. mean tuning into a particular media firms. will enable brands to better personalities of virtual are relevant to them at a towards zero, and the value Micropayments will probably benefit only the very TV channel knowing that target consumer whims. assistants are set to become particular time and place. lies in providing a service, largest of companies.” Andrew Freeman, Harris something good is likely to Telecoms’ Unique Access In the future, semantic more sophisticated. retainers will become crucial be on that channel: there will Telecoms companies are functions will add more Emotional engagement Digital Lubrication in the future to creating International’. be a service that allows you uniquely positioned in the meaning to simple data. and depth of connection, One territory that is yet to be brand loyalty and stickiness. Building on this desire for strategy of selling a large to navigate the plethora of digital industry for getting Over the coming decade, meanwhile, will replace conquered is that of offering This is partly because the experience rather than selection of low-demand, choice, recommending what to know their customers technology will recognise eyeballs as the dominant digital financial services, says profiling necessary for content, the value of content often specialist items, which you would want to consume. intimately. The very nature of that a person is in one place trading currency in media Gianvito Lanzolla. recommendations demands comes not from the song or has proved profitable for This is important as the their business allows them to every weekday at 7 am and and means of evaluating ‘Booming digital markets,’ long-term relationships. film or programme, but the live the likes of Amazon. In some volume of content grows. know much more about the at another one hour later, marketing effectiveness. says Lanzolla, ‘are triggering experience of consuming it. situations, prices would have As of September 2009, consumer: where they are, says Carsten Beck. It will then the need to have an Freemium This is why Prince could to be below iTunes’ current iTunes features some 75,000 what they spend money on, deduce a morning commute Supertising infrastructure for online Revenue models are give away copies of his minimum of 59 pence. Why applications available for what content or applications and make entertainment Technologies that allow the payments.’ A standardised also engaging with the last album with magazines else pay to access a news download. One feature of they download. That puts choices accordingly. Spotting recommending of content to system that works across consumer’s expectation of and newspapers around article, if 59 pence buys the the ProAm output will be the them at an advantage for a coffee break at work or a individuals will also be used platforms would fit in free content. The freemium the world, as the returns whole newspaper? need for it to be classified by tailoring future immersive shopping trip will change the to tailor advertising that is with the direction of the model for example offers a he would receive from the interest or quality. experiences to the individual. nature of recommendation. relevant to them. It is already digital industry. Handling service free, charging only concurrent concert were Crowdcharging Companies need to think possible to link information micropayments in particular for add-ons or premium greater than anything he Crowd-sourcing is a great Privacy for Sale INTIMATE in terms of situational such that dog food adverts is only worthwhile when products. could earn from the album. way to save money, There is a trend towards DISTRIBUTION consumption. only go into households there are enough of them. Often the monetised part Likewise, stars such as particularly in development people being more relaxed Companies will push further where supermarket data A digital payment service of a brand switches from Madonna, U2 and Jay-Z have and marketing: Twitter about their privacy. Social into how well they can know show that dog food is would need to be sufficiently the tangible, free product, left their record labels to sign paid no more than $6 for networking is making us the user. This will change the bought. large. Lanzolla says the to the intangible experience. up with concert promotions its Birdie logo according more open about our nature of their relationship giant Live Nation, giving to Wired Magazine. But it lives. Companies need to with their customers, to them a more secure income could also change revenue persuade individuals that recommend not just on the from the fervour for live models whereby companies the new world of tailored basis of past behaviour, but performance than relying on charge contributors for the immersive entertainment will to suggest something new falling album sales. privilege of participating in be so worthwhile that the that the consumer may not the creative process. consumer will want providers have thought of. Micropayments Matt Hanson is preparing Pay-per-click alternatives a film called A Swarm of “We want to take this to another level. Profiling will also feature in the digital Angels by seeking 50,000 your tastes on the basis of what your friends like world, with small charges for contributor-donors. Each changes a 2-way relationship between a company separate items of content. is charged £25 and has and a customer into a 3-way dynamic involving This allows consumers more voting rights in production company, individual and their friends. A company’s flexibility in their choices. decisions. The plan is to The model is especially release the film under a marketing task will be to persuade consumers to suited to capitalising on what Creative Commons license, regard them as legitimate members of their social Chris Anderson has termed meaning that only some of networks.” Daniel Ek, Spotify the ‘Long Tail.’ This is the the rights are reserved. 8 www.oracle-marketing.com/MediaFutureTrendsReport www.oracle-marketing.com/MediaFutureTrendsReport 9 Oracle Capilising on the Digital Age.indd 8-9 6/11/09 18:13:01
  • CAPITALISING ON THE DIGITAL WORLD This section explores money for. Consumers need customisation in exchange for customers’ data throughout the emerging strategies to be persuaded that what customers relinquishing some the organisation, in all necessary for thriving they are receiving is reliable privacy. Only by winning user aspects of processing and and indeed surviving in information, authoritative confidence will companies storage. They need to guard the digital media market analysis and entertainment gain access to individuals’ against threats from within of the future. Change is of the best quality. In the lives. Distributors need to and without. And as attacks unavoidable. ‘Strong, future, media companies will know where the consumers become more sophisticated, entrenched positions,’ have to stand out from the are, what they’re doing security measures need says Richard Windsor, ‘will crowd of ProAms. They will and who their friends are. to update constantly, not migrate into the next have to gain trust through Location Based Services will intelligently learning from generation.’ Telecoms and more ostentatious displays of become more significant themselves. media companies need to high quality, stronger editorial as the mobile device The challenge will be to do begin work now to press voices and more exclusives. becomes the primary route this without inconveniencing their respective advantages Whilst trust is vital to for distribution. Speed of users. Security processes will in order to make money in marketing quality, it is also service, the ability to deliver have to be fast and smoothly the new landscape. key to getting closer to the an experience on demand or integrated into an easy, user. Such access is crucial even anticipate needs, are seamless user experience RELATIONSHIPS OF to the coming generation also necessary to draw the (regardless of which channel TRUST of distributors. Users user closer to the company, they select). An always- Trust is to become the need to feel safe enough making a recommendation on culture will mean that new coinage. Minting it is to enter the new type of offering work. authentication must be the top priority. Trust will intimate business dynamic Companies need to possible on the move, and be the most important that will be necessary for become masters at managing cannot just take place at the “Advertising need “Basically, freemium part of a brand, the key customised services based on relationships with their point of log-in. not be the dominant has two elements. to gain access to more recommendations. customers. Systems need Security will have to get revenue stream. The It has elements of profitable relationships It is imperative for both to apply intelligence to smart, with contextual with consumers, and an media and telecoms what they know about a information becoming majority for us will be being very attractive, important distinguisher to companies to start customer, for example, to part of the process, and subscriptions, perhaps and it has an element compete with rivals. immediately on making trust spot the risk of defection. systems grading levels 6 0 % a ga i n st 4 0 % that if we don’t know the critical element in the Barring any setbacks from a of security for different advertising. I believe the quality already, BRANDING TRUST branding. They cannot afford security breach, there is an services. Interoperability is in a freemium model, we will infer that Media companies are having to rush trust building later. opportunity to capitalise on also important to security because content to work harder to convince a trend away from consumer procedures if partnerships the quality is low. consumers that what they CONTEXTUAL INTIMACY privacy in digital media. of companies are to offer a ultimately wants to Freemium is a very produce is worth paying Only trustworthy companies Companies can design the seamless service. be free,” says Ek. ef fe c t i ve st rate g y attention to and worth paying will get the chance to offer experiences they offer to because you get the BECOME THE “ M o st c o m p a n i e s reflect changes in the way benefit of free and people relate to each other: RECOMMENDER proceed far too the signal of high Paradigm Shifts: customer relations can be As we have seen above, in the quickly in order to quality on the things Changes in digital media require changing how one thinks designed to feel rather more future, consumers will think gain revenue,’ warns of the industry: like social networks. less of media distributors which are not free.' Lindstrom, ‘Trust is • Valuing Content > Valuing Experience (Ian Pearson) and more of recommenders, Dan Ariely, writer of not generated and • Content > Recommendation (Gianvito Lanzolla) SECURING SECURITY helping them navigate the Predictably Irrational. • Consumption Economy > Attention Economy With future relationships sea of digital choice. Indeed built in one day – it (Anders Sandberg) between companies and in the long run, the digital takes years – and • Straight Ads > Contextual Ads (Martin Lindstrom) consumers based so much media landscape of the unfortunately few • Controlling Product > Controlling Market on trust, the primary threat is future will feature a company brands seem to have (Karl Mogensen) of a data scandal. Companies that dominates by dint of its the patience to wait.” need to protect their recommendation service. 10 www.oracle-marketing.com/MediaFutureTrendsReport www.oracle-marketing.com/MediaFutureTrendsReport 11 Oracle Capilising on the Digital Age.indd 10-11 6/11/09 18:13:03
  • (continued) THE NIMBLE GIANTS AND TOP PRIORITIES The company consumers companies will increasingly turn to when deciding what concentrate on the value of The future digital executive: content they want will be well add-ons, customisation or placed to profit. It will be the personalisation options, or, • Strategic Thinker: They must be able to position a company that can offer the where possible, a retainer fee. telecoms company at the centre of the industry or best content navigation based The app market shows the discern what parts of a media firm’s output can be on the individual’s tastes value to be had from services. given free away. and lifestyle. It will compete Whilst they can stand alone, • Decisive Editor: They need to give editorial clarity Digital media will see the chargeable slice is a slice of ‘middleware,’ which sits As companies jostle for their with rivals on customisation they can also serve as to content to make their offering unique and lend a competition between of a large enough pie. atop systems, to co-ordinate position in the partnerships as the key element of the extensions of more traditional vision of what the user experience should be. companies who dominate different applications, that will offer the seamless consumer’s digital experience. products. Jamie Oliver, for • Cooperative Ally: They will have to be adept at because of their size and ADAPTABILITY foster efficiency, and make digital experience, the prize All this depends on being example, has taken his recipe working in partnerships, fully accepting that their those who are able to The new digital landscape development easier. role will be go to the company trusted enough to profile books further, launching an company cannot prosper alone. innovate nimbly. Smart is sure to include surprises. Adaptability must be a core that who can occupy the users and deliver quality. app for mobile devices. • Honest Broker: Their task is to earn the consumer’s strategies will prevail: One key characteristic of value at the top of any digital centre ground, becoming Brands need to develop trust with a good track record for quality content and successful digital companies organisation. what Lanzolla calls the the most effective GETTING FREEMIUM handling personal details. BULK UP TO WIN will be agility. This will be Orchestrator of the Dance. recommendation algorithms RIGHT • Respectful Partner: They need to deal with user’s Several of the strategies essential for the consumer BECOME THE Securing that role will depend to compete with rivals for the The essence of the freemium sensitivities over giving access to a more intimate we have considered work to enjoy inline digital ORCHESTRATOR not only on the products and position of Recommender. model consists in stratifying relationship with a company. better if done on large experiences. Companies need In the long run, digital media services a company can bring Scale will be an advantage the product correctly, scales. Carving a dominant to work efficiently to ensure will be characterised by to the negotiating table, but for this role, ensuring a deciding what should be role in the distribution chain a seamless service not only alliances and partnerships more importantly on the breadth of content from free and what commands a third parties involved, the that extends the reach of depends partly on having a when it involves numerous between companies that market share that it has. He which recommendations premium. This can be done more sophisticated such payment systems much further. big market share. Effective third parties, but also when it specialise in their own areas. recommends building scale as are made. Knowing the by enhancing the quality procedures need to be. There is scope for several recommendation depends involves constant change. None can succeed in offering a short-term positioning. consumer so intimately will of the charged product, or, As the digital marketplace financial services to move into on breadth of choice. The Smart practices can be a fully converged service from prove particularly profitable more daringly, by deliberately becomes more fragmented, digital forms, ranging from the freemium model only works if adopted, such as the use production to delivery. because of its value for making the unpaid version companies must be prepared administration of household marketing and advertising, if less appealing. Transitioning not just for subscriptions, but bills to professional investors “The problem the industry also for tiny transactions that trading on the move. needs to overcome is PRIORITIES these can be done without from the free to the paid breaching trust. proposition needs to feel occur in large quantities, as Within the whole that executives often New strategies are especially urgent for those companies whose revenue streams are worthwhile. in the micropayments model. production and distribution cling to what they know currently under threat, such as newspapers. The future digital landscape, however, will MANAGING REVENUES Billing must be geared up to chain, charging mechanisms and what is familiar to demand radical changes from all who wish to participate in the new economy in sight. With telecoms providers SMART BILLING this, ready for intermittent need to be interoperable. This Starting now is imperative. Priorities can be drawn up in the following action plan: them. Business models realising that profiting Billing systems need to adapt relationships that consist of is in order to accommodate a long-term series of brief the number of third parties must be flexible, with • Bid for Trust: commit to and work on gaining trust from consumers as a matter of primarily from data to reflect changing revenue companies ready to transfer service cannot last models within a company, but encounters. involved. urgency commit wholeheartedly • Capture Quality: specialise the offering into what your company is good at. much longer, and many they also need to conform media companies, such as to a new landscape in which BECOME THE BANK to change..” Carsten Beck, • Emphasize Service: reconsider the business model by structuring value added services newspapers, seeing declining partnerships dominate. One significant strategic Copenhagen Institute for around everything the customer sees online revenue as a more pressing The presence of more third opportunity lies in fashioning Future Studies • Build Scale: grab market share to be better positioned for future partnership building predicament, new offerings parties requires companies to a new digital financial system • Seize Adaptability: develop flexible ways of working that can accommodate rapid are needed quickly. Decisions assign revenue into multiple “The bottom line is that change have to be got right about directions, ensuring money no company can win by • Get Closer to the Consumer: improve Customer Relationship Management systems revenue models and when to ends up in the correct pots. itself. Companies will need • Develop Recommendation: perfect intelligent ways of customising the offering adopt them. The user needs barely to to become orchestrated • Ensure Security: forge safe storage and processing systems By treating the consumer notice, if at all. The more in order to get the total • Smoothen Billing: make charging systems as seamless as possible as a long-term customer • Position for Partnership: prepare to ally your specialist offering with suitable partners amount of revenue that is rather than a one-off sale, • Intuitive Experience: make the user experience as intuitive, human and compelling as out there, which is pretty possible media firms and telecoms impressive. The point companies will be able will be to build firepower Success in the digital media of the future depends on offering a new deal: consumers’ to offer more products for free. Rather than to get the biggest attention will be more valuable, ensuring some content is free; and customers will focusing on the main item, profitability.” Gianvito enjoy premium bespoke experiences at an exciting level of sophistication courtesy of Lanzolla. Gianvito Lanzolla, companies they trust. Cass Business School 12 www.oracle-marketing.com/MediaFutureTrendsReport www.oracle-marketing.com/MediaFutureTrendsReport 12 13 Oracle Capilising on the Digital Age.indd 12-13 6/11/09 18:13:04
  • ORACLE’STAKEON CAPITALISING ON THE DIGITAL AGE The Future Laboratory challenges and opportunities media and telecoms firms can Extending communities and its global expert panel that lie ahead. take now to stand them in of partners brings a whole provide some remarkable The importance of building good stead for the challenges new level of complexity to insights into the impact that and maintaining trust is ahead. It is a question of operations. Ensuring that the current cultural, economic highlighted. Trust is seen as the having in place the systems organisation and its partners and technological trends will key to gaining access to more to support these new ways of are quickly rewarded for their have on consumer behaviour profitable relationships with working. Organisations need work could mean supporting and the business models of customers and competitive to ask themselves whether the transactions of millions media firms. The evidence differentiation. Users will their current capabilities are of customers and allocating that this transformation is need to feel comfortable suited for the work that is money instantly to the right already in full swing is clear enough to enter the new going to be needed. pots. Businesses will need the – the rise of freemium, the type of relationship needed Customer management control and flexibility to be increasing professionalism of for personal, contextualised strategies are the foundation able to charge for any service creative consumers and the experiences. for developing deeper or event according to payment convergence of experiences The benefit of preparing relationships with customers type, network or geography. across our lives’ three screens for a more complex network and building this trust. The The channels for delivering (TV, mobile and PC) are just of partnerships is also supporting systems however content are another some of the signposts to the emphasised. The report argues need to go beyond the simple consideration. How will media digital futures identified. that in the long run, digital retention of customer data. firms enable their own teams When you consider how media will be characterised In the coming digital world, and partners, quickly and easily, these futures might look, with, by alliances between customers will expect a to package their content for the among other things, digitally specialist providers. This also seamless experience across different digital channels, get it augmented realities, contextual applies where companies mobile, TV and PC – and on the network and out to the branding, and the growth of have ambitions to be the businesses will have to support audience? How will intellectual emotional profiling, determining ‘recommender’ of choice or this expectation, able to property be protected and a strategy to capitalise on these the ‘Orchestrator of the Dance’. track and manage activity royalties managed? opportunities seems a tall order. The need to develop and irrespective of the channel. These are just some of However, what is also clear prepare for new revenue Systems need to provide the questions that media from the research is that models is another recurrent intelligence on the customer and telecoms firms should media and telecoms firms theme. Rather than focusing on bases’ habits, preferences and be asking themselves. As need to act now if they are to the main item, companies will the different segments that broadband capacity around the survive and prosper as these increasingly concentrate on the exist within it. Only with this world increases and high-end transformations unfold. Falling value of add-ons, customisation intelligence and analysis will phones become ever smarter advertising revenues and the or personalisation. the business be in a position to and enter the mainstream, the widespread availability of free These three priorities are not begin making the personalised trends identified in the report For more information please contact: content are eroding the value a leap into the unknown. They recommendations and offers are only likely to accelerate. of traditional business models. are simply different ways for that build trust and foster Media and telecoms firms Nicole Forte The pace of change media and telecoms firms to deeper customer relationships. need to decide now where Senior Director, Industry Marketing, Oracle EMEA may be dizzying and our do what they’ve always done: Security too will play its part they see their place in the nicole.forte@oracle.com understanding of what build their audience, deliver with businesses needing to digital future and what they the digital future looks like content and ensure they get strike a fine balance between have to do to get there. uncertain, but the report paid for it. the necessary safeguards helpfully indicates a number And looking at these and overly cumbersome By Gordon Rawling, of priorities in navigating the priorities, there are steps that procedures. Senior Marketing Director www.oracle-marketing.com/MediaFutureTrendsReport Oracle Communications 14 Oracle Capilising on the Digital Age.indd 14-15 6/11/09 18:13:07