The Effect Of Technology On Those Who
Package And Distribute The News
Villanova University
Executive MBA Program
March 15, 2008

Media Content Distributors Face An
Ever-Changing Landscape
• The “news” was historically distributed
via a limited number of outlets
• Technological advancements have
drastically changed this landscape
• Traditional content distributors
(networks, newspapers, etc.) must
embrace new technology to stay relevant
R5 examines the effect of these changes from the perspective of
those who “create” the news

Agenda
• Situation analysis
– Historical media trends
– New media trends
– Advertising revenue trends
• Definition of Key Issues
• Strategies & Tactics
– Emerging business models
– Case study

Timeline
Internet
Internet is
“Traditional” becomes
Supplemental
media Integrated
1950’s - 1995 2001 - 2007
1995 - 2000
• TV, radio, print • dot-com crash
• Internet boom
• Advertising is • eCommerce
begins
predictable begins
• Lots of VC
• Smarter use of
funding
technology to
• Build it and
drive business
they will come
• Broadband
• Test, learn, tear
connectivity
down, rebuild
• Digital
generation
How has this affected media companies?

Historically, Media Distribution Was
Limited To Only A Few Outlets
• Primarily broadcast media
– Radio
– Television – the evening news
– Newspapers – one daily paper
– Magazines – Saturday Evening Post
– Cinema Reels

How Has Technology Changed The
Game?
• Proliferation of broadband and the
Internet (Web 1.0)
– 24 x 7 cable (CNN was first big player) and
hence 24 x 7 news cycle
– Hundreds of channels (TV & radio) – niche
players everywhere for every demographic
– Internet, cable and satellite television, satellite
radio, wireless technologies
– More choices in content sources and format,
but still uni-directional from provider to
consumer

Internet Allows For Content
Aggregation…
• With Web 2.0, users can package and
present personalized content
• RSS/XML feeds of news/events
• XML feeds of audio/video podcasts
• Portals such as iGoogle, My Yahoo, iTunes/iPod
allow easy collection and presentation
• Space and Time-shifting of content
This makes for highly targeted and impactful advertising
possibilities

…And More Collaboration
• User generated content vs institutional
created content
• Users interact with content – give them a
“voice”
• Citizen journalism (camera phones)
• Blogs (Twitter)
• Social bookmarking
• You Tube
• My Space / Facebook
• Mobile devices enable real-time use of
these technologies

Ubiquitous Connectivity
• Huge broadband penetration, WiFi
everywhere and emerging 3G networks
• 52.6% of US households and nearly all
corporations have high speed access
• Almost all consumers are mobile
• Smart phones
• Blackberries
Source: Leichtman Research Group October 2007

Constant Connectivity + Internet =
More “Trusted News Sources”
• National and International sources for
news in addition to local sources
• Plethora of niche focus sources for
content traditionally available locally
• Globalizes news, jobs, real estate,
classifieds, personals, weather
• Advertising revenue will continue to
decentralize with the wide availability of
information

The Line Between News And
Entertainment Has Blurred
• Jon Stewart, Stephen Colbert, Howard
Stern
• Blending/Blogs by authoritative data
sources
– Henry Blodget
– Walt Mossberg
– John Paczkowski
– David Pogue
– James Fallows
“Don’t Trust Anyone Over 30…”

Changes In Consumption Have Had A
Significant Affect On How Dollars Flow
• “Networked generation” spends around 3
hrs online per/day
– 70% use some form of social networking site
• MySpace, Facebook, Bebo
• Significant reduction in traditional media
use since 2005
– Television down ~17%
– National newspaper down ~14%
Source: Business Insights Ltd. Management Report 2007

Advertising Changes Are On The
Horizon
• 62% of marketers believe TV advertising
has become less effective
• 87% plan to increase online ad spending
• Many say they will cut their TV ad buys
substantially when Digital Video
Recorder penetration tops 50%
TV advertising is NOT personal, but fire and forget
Source: Association of National Advertisers and Forrester Research

US Advertising $ % by Media
Estimated
Source: ZO Advertising Expenditure Forecast October 2007

2007 US Advertising Revenue
• 17 companies compared across all 5 major
ad sectors: online, print, TV, radio, outdoor
• Total US ad revenue across all 17
companies grew 9% (‘06 to ’07)
– $53 billion to $58 billion
• Online ad revenue grew 28%
– $14 billion to $18 billion
• Offline grew only 3%
– $39.5 billion to 40.6 billion
– Helped significantly by the inclusion of affiliate fees
(and global revenue) at CBS, Viacom, and News Corp
• Online ad revenue grew by $4 billion
• Offline ad revenue--in all other media--
grew by $1 billion
Source: Silicon Alley Insider

2007 US Advertising Revenue
Source: Silicon Alley Insider

The Google in 2007
The year-over-year growth of revenue on
Google.com (US)--approximately $2
billion--was more than twice as much the
growth of ad revenue in all of the offline
media companies in this sample
combined.
A single media property, Google.com
(US), grew by $2 billion. All the offline
media properties owned by the 13 offline
media companies mentioned,
meanwhile--all of them--grew by about $1
billion.
Source: Silicon Alley Insider

What are the key issues?
Media Companies
• New technology forces rapid changes in
how consumers want information
packaged and delivered
• Highly fragmented and competitive
content-delivery business will continue to
challenge loyalty and viewership
Both of these will change the way media companies make money

Content Distribution Challenges
• The content distributor faces many key
questions:
– How do you remain a relevant and trusted
source of information?
– How do you keep users coming back?
– Do you have the technology systems in place
to allow distribution of content to multiple
formats and platforms? Are they efficient
across multiple platforms?
– Do you give your users the ability to
personalize and customize their experience
with you?
– How do you evolve with technology changes?
– How do you make money?

Objectives…there are only 2
1. Stay relevant
2. Stay in business…and grow

Strategies
• Externally, continuously assess
consumer awareness and use of new
technologies to determine trends and
preferences
• Internally, rapidly identify and assess
new and emerging technologies to
determine viability for media distribution
and packaging

What Can Help Make it Happen?
• Leverage technology solutions to:
– Understand your user / audience
– Target them in terms of content and
distribution
– Allow your users to interact
– Integrate efforts so that distribution to multiple
platforms and technologies is economical
– Set-up systems and metrics to monitor and
integrate technology trends
– Pilot new and innovative ways to generate
revenue based on personalization and
customization

Content Distribution – Examples of
How It Has Evolved
• Newspapers
– Wall Street Journal, Washington Post, NY
Times
• Started as print distribution
• Evolved to integrated online services, some
subscription based
• Offer aggregation, collaboration, and
connectivity on multiple platforms
• Television, Cable, Satellite Broadcasters
– ABC, NBC, Fox, CBS, PBS, CNN
• Traditional over the air distribution
• Evolved to integrated online platforms where
content presented in multiple platforms for
multiple mediums
• Video On Demand, IPTV, Internet video
streaming

Content Distribution Examples
• Radio Broadcasters
– Clear Channel, Citadel, NPR affiliates, “Mom
and Pop”
• Started as over the air radio stations
• Evolving to integrated online platforms where
content is presented in multiple platforms for
multiple mediums
• Internet radio, iTunes integration
• Last.fm, iLike
• Evolution key to long term viability
– Mergers, acquisitions, downsizing
– Ad revenue
We’re still in an evolutionary phase – this requires balance!

Behavioral Targeting
What Do They Know About You?
Touch
Company
Points
Conde Nast 34
New York Times 45
Walt Disney (ABC, ESPN) 64
Yahoo 811
Source: comScore and New York Times

Behavioral Targeting Working

Behavioral Targeting Working

Behavioral Targeting Working

Behavioral Targeting Working

Behavioral Targeting Working

Behavioral Targeting Working

Behavioral Targeting Working

Contrasting The Transition Of The
Business Models
Now
• Subscription-based services
• Advertising-supported services
Emerging
• Personalization & customization
• Understanding the new platforms
Disconnect between new media platforms and advertising
dollars spent

Evolution Is Not Complete
For example, NY Times print vs. on-line

Case Study
• WITF, Inc
– Public broadcaster with television, radio,
magazine, and web content distribution
mediums
– Underwriting move from unidirectional
broadcast mediums (TV/Radio) to web
– Called for restructuring of functional silos to
support content distribution workflows in new
technology realm
– Still rapidly changing and evolving – the
challenge is staying relevant on all platforms
with global competition
– New initiatives
– NPR/PBS recognize media usage trends and
are also trying to stay relevant as individual
entities and through local affiliates

So What Should Media Companies
Do?
• Ad focus – mass  niche
• Go where the audience is (virtual worlds,
gaming, social & mobile networks)
• Two-way interaction
• Target areas where you can be the best
Efficiently leverage technologies to drive this both
internally & externally

Back-up

Conclusions
• In new media world, personalization &
customization is key for content
distributor and advertiser
• Traditional media can remain relevant by
placing greater focus on Customer
Relationship Management
• Meet users on the platforms they expect
on their schedule
• Constantly maintaining trust, once
broken, almost irrevocably lost
• Leverage technology to enable new
business models and optimize existing
ones

US Advertising $ by Media
5 yr growth 02 v 07: +20%
Estimated
Source: ZO Advertising Expenditure Forecast October 2007

US Advertising $ by Media except
Internet
5 yr growth 02 v 07: +14%
Estimated
Source: ZO Advertising Expenditure Forecast October 2007