Mikal Rohde

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Mikal Rohde

  1. 1. Media revolution Some thoughts for reflection Elvebakken VGS Mikal Rohde; October 29, 2009
  2. 2. We are in the beginning of a digitalized media revolution. The changes we see will effect all marketing processes. Change in media consumption happens more rapid than we are able to recover The users takes control, and we have to live with it
  3. 3. ”There will be no media consumption left in 10 years that is not delivered over an IP network. There will be no newspapers, no magazines that are delivered in print form.” Steve Ballmer, CEO Microsoft in Washington Post summer 2008 ”Printed news will become occasional luxury items” Craig Newmark, founder of Craigslist ”The truth is that the newspaper business is still a huge industry and will be around in one form or another for the rest of my life” Chris Anderson, editor in Wired and author of “The Long Tail” “News is eating itself: needs new media business models for journalism”. “Search will see its overall share of online ad dollars swell from 45% this year to 48% in 2009 as other segments slow down.” Paul Brandshaw, Birmingham City University 3
  4. 4. But Google delivers…… 4
  5. 5. So what will the future bring? We don’t know!!
  6. 6. What do we know… • Few companies truly understands how to survive and prosper in the internet age • The understanding will be key to be able to navigate in a world that is under constant radically change • Effective and international free distribution encouraging new services from new players • Tagging and tracking users and their interest and behavior will create customer segment down to one • The user engagement will create new exiting services • In the “old days” media decided what the ad cost was. Now the advertiser decide • Our ownership models doesn’t work as well
  7. 7. Two major challenges in the media business today Finance Structural Media business collapse changes 7
  8. 8. What will be the position after the wave? 8
  9. 9. Schibsted The Economist, August 2006 Schibsted - a worldwide exception within newspaper business
  10. 10. Not afraid to cannibalize ourselves Aftenposten vs. Finn - Cars Aftenposten NOK million FINN 150 120 117 107 90 85 87 90 80 12 29 43 83 95 60 64 96 98 99 93 86 72 68 30 56 44 26 24 22 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 E2006 Aftenposten and FINN charge approximately the same for an ad, about NOK 200-300 10
  11. 11. Online activities’ share of Schibsted’s operating profit (EBITA1)) Quarterly Percent Rolling 12 months average 140 130 131 120 110 100 93 90 80 70 64 66 60 5346 62 50 45 30 43 28 43 40 29 29 2315 30 24 20 20 6 8 13 15 10 1 0 0 2 15 -4 -10 -2 -20 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2002 2003 2004 2005 2006 2007 2008 11 1) Reported EBITA excl. associated companies
  12. 12. Split online vs offline revenues and EBITA NOK million Revenues 3,448 3,574 3182 3,487 3,359 3,450 3,179 3,622 23% 25% 3536 2,907 25% 2,432 2,497 2,260 2,643 2,557 2,697 16% 18% 20% 20% 20% 24% 10% 12% 13% 15% 7% 9% 9% 77% 75% 75% 93% 91% 91% 90% 88% 87% 85% 84% 82% 80% 80% 80% 76% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2005 2006 2007 2008 Adjusted EBITA 515 443 407 388 345 361 319 47% 322 299 251 245 251 38% 60% 197 41% 51% 224 193 59% 45% 62% 37% 33% 37% 49% 34% 139 57% 62% 53% 88% 59% 51% 49% 41% 55% 38% 40% 66% 63% 67% 63% 43% 109% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2005 2006 2007 2008 Print Online 12 Note: EBITA excluding operating loss from new initiatives and income from associated companies.
  13. 13. Not less audience, but different Daily readers (000) 2047 2000 Total 1985 1912 Paper 1847 Online 1696 1655 1571 1522 1500 1481 1384 1403 1391 1393 1368 1380 1358 1343 1349 1376 1334 1356 1321 1294 1228 1222 1168 Totally we 1062 reach more 1000 people 866 664 537 500 435 364 266 149 81 22 0 97/2 98/2 99/2 00/2 '01/2' '02/2' 03/2' 04/2' 05/2' 06/2' 07/2' 08/2' Source: Forbruker & Media.
  14. 14. Speed of change increasing Introduction of new technology in USA 120 100 Telephone 80 60 Cable TV Million Radio 40 users 20 0 Internet (World Wide TV Web) 1995 2000 2005 1930 1970 1980 1945 1975 1985 1940 1950 1960 1990 1935 1955 1965 1920 1925 Source: Morgan Stanley, The Internet Advertising Report
  15. 15. 7 trends in media consumption 1. From periodic to “just now” 2. Fragmentation 3. Mobility 4. Ego orienting (web 1.0 to 3.0) 5. Demand for speed in development, but not everything works 6. Modern consumers have “some of each attitudes” 7. Digital overflow creates mental limitation
  16. 16. We hope they live forever… 62% Buyer of 60% newspaper 50% 40% 41% 30% 23% 20% 20% 18% 18% 10% 8% 10% Under 30 years 30 – 39 years 40 – 49 years Older than 50 years Part of population
  17. 17. Less time reading printed newspaper …. not only newspaper……
  18. 18. US population vs Newspaper readers 350 000 000 300 000 000 250 000 000 Population up 118% Gap 200 000 000  Working women  Youth 150 000 000  Single households  Immigrates 100 000 000  New technology  Shift in behavior 50 000 000 Daily circulation up 33% 0 1940 1950 1960 1970 1980 1990 2000 2005 Wilkinson INMA 08 18
  19. 19. News consumption Evening News, 1945-1970 6:00 7:00 8:00 9:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 23:00 Wilkinson INMA 08 19
  20. 20. News consumption change Morning news, 1970-2000 6:00 7:00 8:00 9:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 23:00 Wilkinson INMA 08 20
  21. 21. News consumption change Diversified , 2000-> 6:00 7:00 8:00 9:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 23:00 Wilkinson INMA 08 21
  22. 22. Increased complexity Wilkinson INMA 08 22 Source: Mediaedge:CIA
  23. 23. Media companies challenge Disruptive media Lower revenue Lower cost Push New Pull Editorial Search Today Do we have the right business models to support High revenue the new age? High cost Traditional media
  24. 24. Storm, climate change or hurricane? Print product New user New players habits Technological Radical innovation innovation Economical down scaling
  25. 25. The new Media World! Top sites US (Alexa): • Google • Yahoo • YouTube • Facebook • Live • msn • Wikipedia • Blogger • MySpace 25
  26. 26. Analog vs. digital Digital reflex camera Digital camera Analog camera
  27. 27. Readers use the newspaper different today • Traditional • Today – General news • Conclusion – Information • Info in depth – Last news • Telling a story • Inspiration – Kept updated • Relaxing – Get known • Education – Common information • Self esteem – Participate in day to day discussions • Knowledge for analysis – Daily routine • Individual knowledge Kilde: NGN prosjektet 2008
  28. 28. News as product • Dictated by production and distribution • Owned and controlled • Centralized • Once a day • One way • One message fits all • Perfection as a standard
  29. 29. Network model • Collaborative • Not all owned, joint platforms when feasible • Enabling other to build content to your services • Extracts minimal value to grow to maximum size • Critical mass faster, cheaper • Sharing ad system • Tailor-make content and distribution systems to be able to sell content • Build traffic from other sites
  30. 30. Not anymore: Content was king Consumer/conversation is king The battle of: Source: Earl Wilkoinson, INMA
  31. 31. Digitalization makes everything possible • Digitalization is changing the media arena • General content is “free” • Aggregation services will grow and new services will be built on your content • Advertisers will demand effectiveness for ad spending via content relevancy – context, geo, behavior and demographics • New business models will change roles of players • User habits change • Business rules change • New players enter the market • Not only a technical issue – Prices, terminals, access and regulation 31
  32. 32. What will disruptive technology do? • Substantial shift in business thinking –threat towards current business models • New opportunities – also for the media sector if we understand what to do for the customers and advertisers – New products – New business models – New advertising platforms - network 32
  33. 33. Basic elements in future media platforms News This is where everything happens Classified Connecting content and behavior TV Know all about users Phone Targeted ads and content Everything will be digitalized Everything will be accessible Freedom to choose is huge Different demands Different needs Different settings Type of Access Access quality Access price Black box Access User Content
  34. 34. Media business model today Navigation 34
  35. 35. A challenge? 35
  36. 36. Ad market ahead • Traditional media channels will be threaten – Offline to online – Advertisers demand ROI – Ads and listings will be sold on action basis – User knowledge in depth will tailor-made ads • Revenues will follow traffic, service and users – Transaction based payment – The largest traffic and best service win
  37. 37. Fase 2 Media & Kommunikasjon
  38. 38. This is not a Google presentation, but….. They have a natural position in the discussion. Google didn’t build their business based on broken rules, they established new rules of the new age, that’s what we have to understand….
  39. 39. Factors of Media Use Technical revoulution Ad User solutions Behavior Factors of Media Demo and Use Available Socio Trends Time Accessibility Convergence Of information IFRA Scenarios of Media Use 39
  40. 40. Find customer differentiators
  41. 41. Context Driven Business Content User Ads and Context More content 41
  42. 42. Are you willing to pay for content? You have to offer something different • Tailor made content • Exclusive content • Exclusive distribution • Your content 42
  43. 43. Long tail Large advertisers One to many One to one Small advertisers Online offer today New opportunities
  44. 44. # 2’s challenge in Europe! RPM Google network ! Alternative network Time RPM = revenue per 1000 search
  45. 45. What do we need to do? • Take the Google medicine! • Create an advertising network based on “the Google philosophy” – Build the network strong by; • Seek local strong partners on traffic • Build and control the ad system our selves • Build more intelligent contextual systems for advertisers
  46. 46. What do we need? Distribution - network Content Context Geo Ad handling system Sales Demographics Behavior Search Ad format Ad format
  47. 47. Examples And proved a Tailor maid ad We analyze the text
  48. 48. Helt ny iPhone 3G 16 Gb selges kr 4.000,- Ulåst i ny forpakning Litt brukt iPhone 3G 8 Gb selges for kr. 2.000,- Åpen for alle nett Content match between product Helt ny iPhone 3G 16 Gb selges kr 4.000,- Ulåst i ny forpakning for sale and the cover text in the Litt brukt iPhone 3G 8 Gb selges for kr. 2.000,- Åpen for alle nett newspaper
  49. 49. Mobile – why will that be the new arena for ads? • New technology will provide much more traffic • All handset providers will follow the Apple way to make handsets • Cost of communication will be predictable • We know where you are • We know what you do and are interested in • Everything will be available on the mobile • We have all kinds of advertisers and messengers to connect to you
  50. 50. The time is now! Mobile 1.0 Mobile 2.0 Proprietary Standards Walled Gardens Web Services First to market Web as a Platform Brand-centered User-centered Today Birth of the mobile 2009 Price High Lower Flat rate Speed Low Acceptable - High and getting higher Content Poor (www) Better (time, place & Good personalization) Handset Poor Difficult to use still Good (iphone, Ericsson X1, etc.)
  51. 51. Mobile content usage In bed Lunch Commuting Commuting Breaks Breakfast On the sofa 06.00 24.00 Need for a differentiated ad system
  52. 52. ”The most obvious large space of advertising is the mobile internet” ”The next big wave in advertising is the mobile internet ” ”By these products, the advertising gets more targeted because phones are personal ” ”Yes, mobile will be a larger business than the PC-Web. But it will take a few years”
  53. 53. US Mobile Advertising Revenue Silicon Alley Insider Transaction based ads also on news sites
  54. 54. Different navigations News aggregator Content for all news stories, clustered Other stories Persons in the news today
  55. 55. New business currency • User engagement • New distribution via social medias • Free distribution
  56. 56. 56
  57. 57. Largest sites in Norway
  58. 58. Desired position “Returns on scale” EBITDA margin works for all online 100% verticals? 50-70% Desired position 30-50% 5-30% 0% 1x 3-5x 8-10x Size vs second player
  59. 59. Learn how to earn money in the structure 59
  60. 60. Front pages can do a lot of things but not all We have to index the specific content for monetization and paid content e C e P C M P M Distance from front page Relative importance of search
  61. 61. Web TV viewers – new record • Aftonbladet’s web TV had more than 1,13 million unique visitors per week • “Fanthomas” to date had 8.000.000 viewers. • VG live TV has an average of 250,000 UV per week, an increase with 18% since 2008 61
  62. 62. Mobile What is mobile? • We have to define our position in mobile • Value creation – Content – Apps/browser – Ad network • How to build successful services • Timing – Handset – Data traffic
  63. 63. Owned vs. outsource Editorial Ads Editorial Ads Production Distribution Production Distribution
  64. 64. Revenue models • Where is the value? • Where are the opportunities? • New open ad network • New industry networks • Hyper local networks • New ad models (behavior, context) • New measurement
  65. 65. Today’s traditional revenue model Subscriptio n Ads 50 % 50 %
  66. 66. Many new revenue models are needed For å redigere footer > View > 66 Header and Footer
  67. 67. Process for monetization via ad network Methods Context Behavior Geo Own distribution Demo Network Distribution Format Banner Text links Web, mobile, TV Sale System Self sale Ad handling Self service Auction model Agencies Billing Flexible usage
  68. 68. Alternative models for ad network Alternative Conclusion Rationale  Separate activity  Not attractive  To small alone to challenge Google  Limited profitability individually  Cost synergies – system and sale  Cooperation  Recommended solution  Higher revenue per click due to more effective action and wider distribution  Large network that will attract more local distribution  Give most revenue on short term  Co-operation with Google  Not attractive  Not attractive to let the largest competitor to run our prime business
  69. 69. Why should we build our own network? Online media represent a substantial inventory Market - # of searchs Marked - # søk*) 10-15% Owners Control fees and revenue share Distribution partners Increased revenue up to Google level. Be an alternative to Google Marked - -## sidevisninger**) Market of page impressions 65-70% Advertisers An alternative network for performance and action based ads
  70. 70. The big picture Distribution System Sales News Self Service Directory Methods KAM Direct Bing System KAM Agencies Yahoo Agencies Other Classified Own *) Sale Other *) Own sale = sales from independent brands
  71. 71. Value creation for an ad network Main contribution Relevant web Gross revenue traffic happy advertisers and distribution partners Price per click Match rate Click rate 71
  72. 72. Alternative traffic attractiveness High effectiveness Search Directory Classified Search oriented Vertical Content oriented Pull portals Push Vertical news News Communities Low effectiveness
  73. 73. “No content will be sold, if we neglect to offer the buyer a easy and effective way to pay”
  74. 74. E -reader Who will control this business? Would you like to own the value chain, or only be a content provider?
  75. 75. Content the users are willing to pay for? • Exclusive and unique articles (if presented well to the user) – Historical archive, print, pictures and video – Guides (travel, business) – Time limited subscriptions (PDF newspaper for a day, football match) – VOD and POD – Pictures and other relevant content • Subscription services – Fix and recurring subscriptions (PDF newspaper, football video, film channels) – Payment for e-reader news services (tailor-made content) – B2B services (new agent) • On time payment for listing fee – Listing of items for classified services • Goods sold – Books, magazines – on e-reader or as PDF to web – Music, videos • All kind of mobile content (alternative to CPA) 75
  76. 76. Summary • Readers worth less (online less than print) • More competition (All types of channels are challenge your business with more advanced services and user offers based on your content) • Lower cost (New productions are more effective to produce and distribute. Ads are available with without any sales effort form several sales network) • Share some of your platforms (You don’t need to own your own platform to create traffic and visitors. The marketplace is not exclusive any more) • Content will be free (We dream about that users are willing to pay for content provided. The wide range of producers and contributors (professional and private) will still do the content free in general. Unique content or distribution presented as the user will have it will enable some willingness for payment )
  77. 77. Recipe • Face the challenge • Get out of the box • Use the tools for the new age • Think network economy • Just do it …….if you don’t do it, somebody else will do it for you
  78. 78. “The best way to predict the future is to create it”
  79. 79. Verdikjeden i medieproduksjon Tekst Papir Foto Desking Nett Video Prod system E-bok Regi Mobil Research TV Kreativt Publisering Format Brukergenerert innhold
  80. 80. Utviklingsløp Basis Kunnskap (VGS 1) Forventninger VGS 3 Fagkunnskap (VGS 2) VGS 2 Drift og fordypning VGS 1 (VGS 3) Mål og mening
  81. 81. Modell for opplegg Tekst Foto/video Basis Produksjon Desk VGS 1 VGS 3 Grunnmur VGS 2

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