Jobs Trend - Editor Out, Content Marketing In

The publishing industry is among the latest feeling the impact of the digital transformation tsunami.  This has a lot of industry professionals thinking about changing careers.  Max Kalehoff, writing in OnlineSPIN, suggests that the growing demand for people with writing and editing skills in the marketing industry is attracting interest from those in the print publishing world.

These career-changers are coming from all sides of publishing, including editorial, sales, research and circulation, and from all levels of experience, from the C-suite down to college students whose only internships were in publishing. Some of them work at the world’s largest publishers facing restructuring, while others are in relatively stable roles at niche publishers and see an opportunity to redeploy their talents.

The change is also being seen in the job postings on job websites and retrieved through search engines.  The number of postings containing the key words "Publishing" or "Editor" has plummeted to half the level of four years ago. 
On the other hand, postings using "Content Manager" keywords have doubled over the same time period, and currently outnumber postings using either "Publishing" or "Editor".
Use of the "Content Strategist" keyword was negligible four years ago, but today there are more job postings for "Content Strategist" than "Editor."

With more conduits for content, there is an increasing need for those who find creative ways to identify, publicize, and promote new uses for content.  In other words, "content strategists" and "content managers."  Kalehoff suggests there's growing opportunity within the marketing field for people who "command written words and storytelling," and with "skills in syndication and audience building."  As the media world becomes increasingly multiplatform, there will be opportunity for those who can develop and exploit these new channels for content distribution, whether within traditional publishing, or within marketing.

Source -  Publishing Industry's Turbulence Create Surge of Talent for Marketers,  OnlineSPIN

Free vs Pirates

There's no question that online content piracy is a problem.  There's some question about how big a problem (in terms of impact on content sales), and growing problems with regard to how to best combat it (copyright enforcement becoming increasingly problematic).

The growing problem with enforcement is that making and distributing digital copies is easy and dirt cheap - and the solutions being offered in policy debates increasingly degrade both digital systems, network security, and individual privacy.  Perhaps its time for a different approach.

A new paper (and forthcoming book chapter) for the National Bureau of Economic Research suggests that a more effective anti-piracy strategy might be to reduce the economic incentives for pirates.  Using new online data sources, and tracking the impacts of natural experiments when large amounts of content were either removed from online markets or made available to them, the study found that having content online significantly reduces online piracy.  Making content widely (and inexpensively) available online can reduce piracy by 10-20%; removing content, or making it significantly more expensive, can increase piracy by a similar margin.  Making distribution of pirated content more difficult and expensive (in this case by shutting down Megaupload.com) increased online content sales by 5-10%.

These results are of a piece with a number of studies that link pricing and marketing strategies with the prevalence of online piracy.  A study for the WIPO found that while online piracy of broadcast signals was rampant, it occurred overwhelmingly under two circumstances: when the content was not legally distributed in the area, or when pricing was set at Western levels (making it unaffordable in poorer areas).  Similarly, a wide range of marketing studies have found that having free or minimal price options minimizes incentives to search out illegal versions.  Those studies also found that content creators can maintain sales and profit levels through the increased volume of legal access, and by engaging in content versioning. 

   Versioning refers to the ability to market different versions of the core content,  For example, music can be made available free online in a low-resolution option, with standard (CD-quality) resolution for a modest price, and in a higher-fidelity version (perhaps with some affiliated goodies) for a higher price.  Versioning has a long tradition in book publishing (hardcover vs. paperback), records (45s vs LPs vs CDs vs DVD-As, etc.), and online radio & video (lower quality streaming for free, but high quality streams requiring subscriptions).

What this suggests is that content creators have an alternative to trying to force digital distribution systems to follow the analog copyright metaphor - particularly when those efforts criminalize their potential audience and markets.  Instead of trying to regulate digital markets to fit traditional business models, they can explore the potential that digital offers for new and increasingly lucrative business models.

Source -  Want to Fight Off Content Pirates? Just Stream Your Show for Free, BloombergBusinessweek
Understanding Media Markets in the Digital Age: Economics and Methodology, NBER Working Paper No. 19634
Monetizing digital media: Creating value consumers will buy, EY.com

History of Market Research

Online research firm Vision Critical has produced an  interesting moving graphic - "Evolution of Insight" - that tracks key events in the developing of marketing research since the 1890s.

It's worth a look.


Source -  Evolution of Insight,  Vision Critical moving graphic

Bundling vs. A la Carte - Implications

In previous posts I've explained why bundling can be a good marketing and pricing strategy, particularly for certain types of information goods, and why a la carte strategies can be appropriate for networks with certain characteristics and in markets where access can be easily restricted.  I've also made the case that in the early years of cable and multichannel video distribution, bundling was arguably the optimal marketing strategy for system operators, as well as for audiences.  Technological advances and the explosive growth in market competition over the last decade or two, on the other hand, have opened the door for the effective use of a la carte marketing of video networks.  The remaining core question is whether shifting to a la carte is a good strategy for video distributors, networks, and audiences.  I'll try to address that issue in this post.

One of the problems with much of the current discussions of forcing a shift to a la carte marketing is that it's largely based on overly simple, and occasionally inaccurate assumptions.
   The one I've already addressed is the argument that bundling forces consumers to pay for channels they don't want.  The problem with that argument is that a consumer's decision to purchase a bundle of networks from a multichannel distributor is not based on a network by network consideration of value, but on the simpler issue of whether the consumer feels that the aggregated expected value of the channels he or she does want is greater than the price of the bundle; from that perspective, whether the distributor includes unwanted "costly" channels is irrelevant. ("costly" in the sense that the distributor pays for carriage rights).
   A second major assumption (unstated but underlying most discussions) is that the a la carte price for a network would be close to what multichannel distributors pay for carriage rights as part of bundle.  The problem with that assumption is that it oversimplifies the market forces at play, and ignores the economic impact of unbundling.  For many of the 800+ cable networks available in the U.S., going a la carte is likely to lead to a pricing death spiral.

   The problem is that while cable networks in aggregate (i.e. bundled) have been quite successful in attracting audiences (gathering 50-70% of viewing overall (a bit less in primetime), all but a handful of networks attract less than 1% of audience viewing (averaged daily viewing).  Of course, some programming draws significantly higher audiences, and demand for networks may be even higher.  Still, most cable networks are likely to attract substantially smaller number of subscribers as an a la carte offering than the potential audience obtained as part of a bundle.
   For example, the total daypart audiences for ad-supported cable networks in the last quarter showed that only 8 cable networks had overall total day ratings of 1 or higher.  Weekly primetime numbers for top networks can be 2-3 times higher, and certain episodes or events (primarily but not exclusively sports) can draw ratings of 10-15.  Actual demand for a channel marketed a la carte is likely to be higher than that (as it's aggregating across shows and over time), but is also likely to be highly price-sensitive.  Even if a cable network could get a 50% buy-in rate as an a la carte offered at the current bundled carriage rate, that would result in a 50% decline in subscription revenues for the network.  (That's one reason pay-tv network subscription prices are in the $15/mo range, while carriage rates for cable networks top out around $5/mo, and most are under a dollar.)
  However, that's not the only impact of shifting to a la carte.  Most cable networks are also supported by advertising.  While a network would likely keep most of its core viewing as an a la carte offering, it would lose the occasional or drop-in viewers, which would have some negative impact on revenues.  More critically, though, is the fact that many national advertisers prefer to buy spots on networks that have a potential reach of 80-90% of the national population.  Few cable networks are likely to reach that goal as an a la carte service without significantly discounting subscription prices.

Unbundling cable networks is likely to have significant negative impact on revenues for all but a few channels.  Those where losses are small are likely to be channels with established record of high-value content, and a fairly broad audience base.   Those channels whose value lies in a narrow niche are likely to find that unbundling will drastically cut their revenues, forcing them to choose between significantly hiking a la carte prices or cutting back on programming costs.  Either of those responses put the network on a potential death spiral where demand (and revenues) continue to shrink as networks try to cope through price hikes or cost-cutting in content.

There is one additional implication of shifting from bundling to a la carte.  Multichannel video distributors face significant costs in building and maintaining their distribution infrastructure.  Those costs need to be recouped through subscription fees.  When the subscriptions are for bundles with a large number of, the per-channel distribution costs are fairly low.  If consumers shift from a large number of channels to only those they are willing to pay for separately (the goal of a la carte), then those distribution costs would have to be paid for separately, or split among the smaller number of channels subscribed to.  In the first instance, that would mean that a multichannel distributor may place a surcharge on access, regardless on how many or which networks are subscribed to.  The alternative is to split distribution costs across the channels; meaning networks would have to pay for their distribution, or add distribution costs to their a la carte prices.  In either case, that's more negative pressure on revenues and demand.

The upshot is that unbundling will result in significantly lower subscription numbers for most, if not all, cable networks.  The lower buy rates will negatively impact both subscription and advertising revenues compared to the current bundling market option.  If networks need to maintain current revenue levels, they're likely to have to significantly boost the a la carte pricing, or drastically cost the price (and consumer value of) their content.  Either strategy could easily result in a death spiral of declining audiences leading to price-highs and cost-cutting, leading to falling demand and audiences, etc. until the network proves to be no longer economically viable.

The "death spiral" problem is aggravated by the fact that there is a new TV distribution system available.  Online video delivery is becoming widely available as broadband Internet access increases.  Over 70% of Internet users already watch online videos, and streaming services like Netflix, Hulu+, and Amazon offer access to a vast archive of current and older TV and movie content.  The TV consumer faced with the issue of whether to purchase, say, Turner Classic Movies channel is not only thinking about whether that channel is worth purchasing, but the value of TCM vs. AMC vs. USA vs. CNN vs. a Netflix subscription and a plethora of free online content.

  Already several million US adults have become "cord-cutters", dropping some or all of their multichannel distribution services in favor of accessing their TV and movie content through online streaming services.  If unbundling drives channel prices up and forces consumers to be more rational in their purchasing of subscriptions to access cable networks, this could trigger a move of consumers to online video.  That move may well be followed by a move  by networks finding a less costly - and more flexible - distribution system that allows more viewer interaction, better usage metrics, and greater capacity for price differentiation.

If unbundling is bad for most cable networks, it's got to be good for consumers, right?  After all, a lot of the political push argues that it's in the consumer interest.  The reality here is that unbundling is likely to result in consumers paying higher prices for significantly fewer channels.  The problem is that bundling acts as a form of cross-subsidization as well as a form of risk aggregation.  When value is uncertain, aggregation through bundling spreads that risk - moving the the consumer from "I'm not sure that program/network is worth the price charged" to "It's likely something in the bundle is worth the price."  Bundling spreads distribution costs across more networks, reducing per-channel costs.  And from the consumer perspective, buying a bundle of channels you're not sure you want while getting those you do essentially subsidizes access to those added channels.  Previous efforts to remove subsidies in cable (the 1992 Cable Act) actually increased prices for most cable subscribers, rather than reducing them, as the politicians and interest groups pushing for the Act claimed.  In telecommunications, cross-subsidies usually are based on high-demand & high-value services subsidizing low value and low demand services.  In this case, it's ESPN subsidizing The History Channel; not the other way around.

Even if the subscription prices of channels don't increase, consumers are likely to reduce the number of channels they will subscribe to. Rather than "bundling forcing consumers to buy channels they don't want," unbundling means that consumers will be able to not buy the channels they don't want.  Audience research shows that for most consumers, almost all of their viewing is confined to 5-10 channels.  Another factor suggesting reduced channel access can come into play when there are multiple channels or networks in a content niche.  If the consumer perceives overlapping value across related niche channels, then the purchase decision is based not on the total value of the additional channel, but the added value that channel is likely to generate above that available in channels already in the a la carte subscription basket.  That makes it much less likely that the consumer will purchase complementary channels, or multiple channels within a content niche.  At least not without some significant cross-subsidy of channel prices. 
  So rather than having access to 100s of channels via bundling, it's likely that most Americans would scale back to 5-10 channels, perhaps with occasional video-on-demand purchase of high-value content.  Gone would be the opportunity for serendipity and the opportunity to sample and establish value for innovative networks and programs.  Thus, unbundling, along with the removal of possible subsidies, is likely to negatively impact general social welfare.  In fact, that's the long-established argument for public broadcasting.
  To illustrate, a consumer who has a low to moderate interest in news is much more likely to subscribe to a single news source than to subscribe separately to multiple news networks offered a la carte.  It's generally given that relying on multiple news and information sources is more valuable than relying on a single source - but a la carte models reduce the likelihood of multiple subscriptions, as the added value of additional news sources decreases as the number of sources goes up.  (When content overlaps, the consumer will base a purchase decision on the added value the additional channel will bring, rather than the full value of the channel.  Thus further decreasing demand for multiple channels within a niche).  I'm sure that most liberals would be upset if Fox News Channel was the only cable news channel subscribed to, just as most conservatives would worry if MSNBC was the only cable news network many people subscribed to.
    In addition, the impact of increased costs will hit lower income groups more than others.  Lower income groups are likely to cut off a la carte subscriptions once their separate subscriptions reach a point where the channels provide a threshold level of content, particularly if the addition of other channels provide minimal incremental value.

So, a complete unbundling and a shift to a pure a la carte marketing approach is likely to have a significant negative impact on all but the biggest high-value cable networks, and be particularly problematic for networks with content of lessor or unknown value, and those targeting small niche audiences.  It's quite likely to increase access costs to consumers (both on a per-channel and aggregate level), and result in their reducing access to networks and content of low or uncertain perceived value.  Not only is this a negative consequence for the consumer, but the reduction in access brought by a pure a la carte marketing approach is quite likely to have meaningful negative social impacts as well.
  It would hurt multichannel distributors as well, impacting the cost and profitability of their multichannel video services, and accentuating their competitive disadvantage as a TV distribution system vis-a-vis online streaming.  The eventual certainty of competitive disadvantage in that field has been recognized by the industry, and is one reason why much of their focus is shifting from multichannel video distribution to becoming a digital telecommunication access point and service provider.

Let me end by saying that a look at the likely impacts of a shift from pure bundling to pure "a la carte" model for multichannel video distribution suggests that there will be serious negative consequences for most groups in the market.  But it's not necessary to completely shift from one extreme to another.  The growth of video-on-demand (VOD) is demonstrating that a la carte can be a viable option for some networks.  The explosion of carriage fee rates for some networks - regional and nation sports networks in particular - suggests that splitting related niche networks and channels into separate mini-bundles, possibly with some a la carte options, would be appropriate and even have a positive impact on consumers and networks, letting the high costs of those channels be born more directly by those that see that value.  (And also hopefully bringing bundle prices back down to where multichannel access, and the social values associated with maximal access, are maximized.)

The market and technology is a a point where a la carte marketing of networks and channels is viable, and where it makes sense for some types of channels.  The same can be said for the intermediate strategy of offering various mini-bundle mixes of channels, programs, and services.  However, there are still a large number of channels, networks, and services where bundling remains the optimal approach, from consumer, network, distributor, and social perspectives.  It's pretty clear that rushing into a overly simplistic "bundling is corporate evil so a la carte must be consumer-friendly" assumption is not a reasonable foundation for policy in this area.  This is an area where an incremental approach that considers what marketing approach is best within a specific context; where consideration is given to the type of content and its content as well as audience interest, social welfare, and the values inherent in having the content accessible and used.  That's the approach most likely to result in positive outcomes.

Bundling vs. A La Carte in TV Markets - History

Yesterday, I provided some insights from economic theory of information in terms of when bundling can be preferable to "a la carte" marketing of TV channels and networks by multichannel video distributors.  The essence was that bundling is actually the optimal strategy for the context of early cable systems and consumers, and has some ancillary social benefits as well.  "A la carte" offerings (in economics terms single-use pricing), may work well in other conditions, and the TV marketplace and distribution technology is moving towards those conditions.

Today I want to explore that transition through a historical look at TV market economics, and how that has shifted over time.  Tomorrow I'll look at what going to a la carte will mean for today's networks/channels, multichannel distributors, and TV consumers, from a business/economics perspective.  To start, let's look at how networks generate revenues from a historical perspective.

  In the U.S., the predominant revenue source for stations, networks, and distributors comes from a mix of audience-based sources.  For broadcast stations and networks, the primary revenue source comes from advertising, and the amount of revenues an advertisement generates is based on the audience attracted.  Historically, broadcast stations who were network affiliates were also paid a fee for carrying network programming, but the amount was, again, based largely on the station's potential audience.  Early cable systems were basically redistributors of TV station signals, and the cable system's revenues were tied to the number of subscribers it could attract (i.e. audience size). 

  When cable networks and channels emerged, they followed one of two basic business models - looking for advertising for revenues, or a subscription-based approach.  The subscription model, Pay TV, used a strategy of offering new, and high-value, content not otherwise available to TV viewers in the market, and revenues were directly audience-based (i.e., the number of subscribers).  Ad-supported cable networks were miniatures of the broadcast network business model, with revenues based on their ability to attract and retain audiences.  These soon discovered that having a focused programming strategy (call it targeting, filling a niche, or branding) gave them a competitive advantage over broadcast networks for the audience segments that valued that type of content more highly.  The broadcast networks offered such content occasionally, but the cable network could be a place where viewers could find it all of the time.  Targeting also had an advantage in the sense that advertising on niche networks were more valuable for those advertisers who wanted to reach that audience segment.  Now there are a few cable networks where the revenues come from sources other than subscription fees or advertising (PBS, C-SPAN, shopping channels, religious networks), but those are still indirectly audience-based in the sense that the funding is based on their programming being able to reach an audience. Bundling allowed cable systems to combine and aggregate the niche audiences by taking advantage of the different mix of high-value networks across audience segments.  Bundling increased the value of, and demand for, the bundled mix of networks, allowing cable systems to increase both subscription fees and the number of subscribers.

Revenues are only one side of the business model - the other are the costs of operation.  For broadcast stations, networks (broadcast and cable), and cable systems, there are two basic costs - the cost of the programming and content, and the cost of distributing that cost to audiences.  The distribution costs for stations is tied to transmission capability, and increasing signal reach is costly.  For networks, they need to find a mix of broadcast stations and/or cable systems to distribute their content for them.  In the early stages of TV, that meant paying stations or cable systems for carriage, with the larger the potential audience pool the more valuable the distribution channel.  Distribution costs for cable systems were substantially different - cable operators face the very high fixed costs of building out the physical distribution network, with very low variable costs.  For them, the key was not building raw audience numbers, but in increasing the percentage of homes past that subscribed.  That brought the marginal costs per subscriber down to affordable levels.
  Turning back to programming costs, there is a general rule of thumb that programming costs correlate with audience popularity (i.e., are more likely to have a high value to some set of consumers).  Historically, broadcast TV markets were constrained in terms of both the number of competitors and in their ability to reach viewers in the market - so the only area open for competition within the market was in terms of the programming content offered.  Competition tended to drive programming costs up.  When cable sought entry, they needed to compete with the existing broadcasters, and the way they could was to offer signals and content that was not easily available otherwise.  In the early years, that meant paying to bring new channels, networks, and content into their market.  There was the added incentive that bringing in more valued networks and programming content increased the perceived value of the cable subscription bundle and allowed cable systems to increase subscription fees.

Things changed as technology opened markets and the newer networks began to establish their value in the TV marketplace.  As TV markets expanded in terms of viewing options, three things happened.  First, cable networks largely went niche.  They didn't have the resources to compete head-to-head with the broadcast networks for general interest programming and audiences.  Going niche let them access lower-cost programming options, yet benefit from the higher advertising value of their audience segment with some advertisers.  As multiple niche networks pulled off segments of the general interest audience, viewing of the big broadcast networks dwindled, impacting their ability to generate advertising revenue.  The third result is that some of the niche networks developed their brand identities and established their value to the point where having those networks as part of your channel bundle became essential for cable systems.  That let those channels switch from having to pay for coverage, to having cable systems pay for their network signals.  They had established such a strong expectation of value for their content among a large enough segment of audience, that carriage was mandatory.

The shift in viewing and advertising impacted revenue growth for broadcasters and networks, yet competition drove programming costs ever higher.  As a result, everyone started looking for new revenue streams - and carriage fees looked like a viable option.  However, as more stations and networks sought to take advantage of this potential revenue stream, those costs were passed on to multichannel video subscribers, increasing the costs of the bundle.  In most cases, the added revenues were not used to increase the value of the programming offered (and thus the value of the network to the viewer), but as a replacement for lost advertising revenue.  Increasing price without increasing value will inevitably reduce demand for the network, and lower demand results in smaller audiences - particularly in ever-more competitive TV markets. 
  One factor compounding this is the growth of online video options, many of which combine access to high value content with pricing models well below those available from multichannel video distributors.  Another is the fact that eventually the value of carriage fees will ultimately be captured by the owners of the content rather than its distributors (the fee depends on the ability of the copyright owner to limit access rather than any unique aspect of the distribution channel).  Finally, as competition in the marketplace advances to the point where most content is available over multiple sources and viewing options, stations, networks, and distributors are finding that having sole access to high-value content is a critical form of competitive advantage.  This is the reason why so many networks and distributors are focusing on delivering unique content (not available elsewhere), and why bidding wars are escalating for reliably high-value programming like sports and major cultural events.


From an economic perspective, what this means is that in an increasingly competitive TV marketplace, players are increasingly looking for carriage rights fees as a revenue source, and towards developing a (niche) brand that emphasizes high-value content as a way of increasing demand and value for their outlet.  The bidding wars for high-value content drive programming costs higher, and unique content increases the value of the station/network to distributors, allowing stations/networks to try to increase carriage fees collected from distributors, in part to cover the increased programming costs.
  Increasing carriage fees mean that the cost of existing bundles is increasing.  If the fee increase isn't matched by increased perceived value of the bundle, that will eventually lead to a reduced demand for the bundle.  If the multichannel distributor persists in the bundling tactic, eventually price increases will hit a point where the cost of the bundle exceeds the bundle's perceived value by a sufficient number of consumers to trigger a fall in subscriptions.  There are increasing indications that we're nearing that point in the U.S..  In particular, there's a growing awareness that the bidding wars for sports rights among a growing number of sports-niche channels is driving big jumps in carriage fees and forcing many multichannel distributors to start thinking about pulling sports networks from the basic bundle, and marketing them as a mix of mini-bundles of sports channels and/or a la carte offerings.
  Establishing a reliable brand - in other words establishing a more consistent level of expected value for content - is critical from a consumer demand perspective.  As mentioned yesterday, a key advantage of bundling for consumers is that the consumer can mitigate for highly variable and uncertain expected value for content by aggregating across multiple channels and over time.  When value is uncertain, it depresses the likelihood of purchase.  Aggregating across multiple options means that instead of wondering whether a single program or channel is worth purchasing, the consumer only needs to consider the likelihood that among the bundled options is enough value to justify the purchase.  So, if offered a la carte, the consumer's decision shifts to the question of whether they'll receive value in excess of the price they pay for that specific content or channel.  This works best when the content is known, high-value, and where such value is relatively consistent across the content offered.  That's pretty close to the goals of branding.
  Changing technologies are also enabling the other key feature needed for single-use pricing to work - the ability to collect payments and restrict access to the content/network to those purchasing. The growth in pay-per-view and video-on demand offerings from multichannel distributors amply illustrates the technological capacity to offer networks on "a la carte"basis.  The growth in niche branding and the success of many channels in building brand value among audience segments similarly demonstrates that, for some networks or channels at least, viewers may have a sufficiently developed idea of the expected value of a network and its programming options to facilitate "a la carte" purchase decisions.  The continuing evolution of the TV marketplace looks to be providing a context where single-use pricing models may be viable and practical. 

In essence, the transition from broadcast local markets for TV to global, digital, highly competitive marketplace is leading to a situation where bundling is becoming less optimal, and a la carte network marketing is becoming increasingly viable, at least for some networks and channels.  While much of the clamor for a switch is politically motivated, the reality of the current TV marketplace is that the ability of multichannel distributors to engage in "a la carte" marketing models for (some) networks is becoming increasingly practical.  Additionally, the growth in carriage rights fees is making the idea of a single basic bundle increasingly unaffordable and unsustainable as a marketing approach.  The disparity between the growing bundle price and the online video distributors' significantly lower prices is causing many TV viewers to re-evaluate their TV viewing habits and shifting their viewing preferences to lower-cost alternatives.  (A phenomenon known as cord-cutting.)

While the early technology and market structure of TV program delivery provided a viable foundation for developing and supporting bundling as a marketing and pricing strategy for cable, the evolution of the TV marketplace (and technologies) is reaching a point where a la carte marketing strategies are becoming practicable.  And for some (but by no means all) networks, a la carte marketing structure might be preferable.

But is switching to a full a la carte marketing model a good idea?  A lot of that depends on what will be the longer-term impact of a switch, particularly if competition, and programming costs, continue to escalate.  I'll address that next.

The Hidden Issues of Bundling vs A la carte marketing - theory

The presumed "debate" over bundling vs a la carte marketing and pricing models for multichannel and online video delivery seems to be heating up over the last year, and looks to become an increasiningly critical question with the rapid increase in rights fees for channels and programs. (For  those not up on the jargon, bundling refers to the approach by cable and other multichannel distributors to offer packages of channels at a set price to consumers, while "a la carte" means that channels are offered, and priced, seperately).

The problem is that some of the criticisms of bundling are misleading and problematic, and almost none have taken a look at the downstream implications of a switch to a full "a la carte" model.

Taken in extremis, the critical argument is that bundling is a nefarious (possibly illegal) strategy employed by the giant multichannel operators to force subscribers to pay for channels that they don't want.  There's several problems with that position.  First, bundling is a well-established marketing and pricing strategy in information economics that is, in some contexts, socially optimal and can maximize consumer welfare.  For example, newspapers are bundles of news stories, features, ads, etc., as are magazines, and even TV networks.  In a slightly different way, Netflix and Hulu are bundlers, offering access to a range of content offerings for a fixed monthly fee.  On the other end of the continuum is what the media industry is calling "a la carte", or in economic terms, single use pricing models. (There is actually a wide continuum of options between a single bundle and single unit pricing models, but I'll focus on the extreme cases).

The field of information economics has long indicated that bundling is a valid pricing/marketing strategy, and in fact can be socially optimal under certain conditions - when the bundled offerings have uncertain or highly variable value to consumers, and when the consumers cannot be easily differentiated.  This is important, because when the audience can be easily differentiated, then the supplier can charge some more than others for the same set of goods.  When it can't, then the social surplus (the difference between what a consumer gets in value above the price paid) goes to the consumer.  When the supplier can differentiate access, then they get to capture some or all of that consumer surplus through differential pricing.
  There are two other important social advantages with bundling - it allows consumers to sample and establish values for content (which gives unknown, low-interest, and/or low-value content the potential to establish a market), and it allows the benefit of serendipity (finding important or valuable content unexpectedly).
  As for the argument of forcing people to pay for channels they don't want, that's hogwash.  When content is bundled, consumers base their purchase decision on their individual aggregated expectation of value.  That is, consumers look at the likely content offerings, and aggregate their expected values for the content they want.  If their aggregated value is higher than the price, they buy; if not, they are free to not buy the bundle.  The advantage of bundling is that it can accommodate a wide range of value choices and ways to hit that aggregate value target - for one consumer, access to sports channels and content may create that aggregated value, to another, it may be a combination of access to news, science, and history channels; to another, it could be PBS, Nickelodeon, Cartoon Network and Disney.  In all of these cases, the consumers base their purchase decision on getting the content they want, and everything else just comes along with the bundle.  No one is forcing anyone to "pay for" channels they don't want.  Bundling can also be looked at as the high-value channels cross-subsidizing low-demand channels.

In the early days of cable and multichannel distributors, the content was pretty clearly the kinds of new channels and content that makes bundling the best strategy, for distributors as well as consumers.  It was also a good strategy for the various cable networks/channels - enough so that in the early days most paid cable operators to get into that basic bundle.  Getting into the bundle was particularly important for networks/channels that used advertising as a primary revenue source - being included in the basic bundle gave them access to the largest potential audience, while letting those in the audience sample their programming without added cost and letting networks build the demonstrable audience base that provided value to advertisers.  And the payments from channels to cable operators helped to subsidize the price of the bundle, again helping them grow the market.  Another advantage of bundling is that, in maximizing potential audience, it spread distribution fixed costs (which tend to be quit high among multichannel distributors) over larger numbers of subscribers and reducing the per-subscriber cost of distribution.

However, the cable/multichannel market has changed, increasingly moving away from the type of content that bundling is the optimal strategy for.  Most networks have now established their expected value to consumers. In addition, technology now permits greater ability to control which channels are accessible by which subscribers, allowing more differential marketing options.  Technology has also expanded video delivery options, some of which face significantly lower costs. The most significant shift, though, is in the rights fees paid for content.  Rather than subsidizing the price of the bundle, the shift to the multichannel distributor paying rights fees, and the rapid rise in the amounts of those fees, are pushing the price of the bundle to a level where consumers are taking a second look at their willingness to pay.  Particularly when the Internet is providing a range of content alternatives at substantially lower prices.

The industry and market may be approaching the point where offering a single bundle, or a few tiers with dozens of networks/channels, may not be the best marketing strategy for either the multichannel distributor or the TV consumer.  But are we at a point where a pure "a la carte" strategy is optimal for either the distributor or consumer of TV networks?

The economics of information suggests that single-unit pricing (pure "a la carte") works best when there is a group of consumers that has established a reliable, and relatively high, set of expected value for the specific set of content - and where distribution of that content can be restricted to only those consumers.  The technological capabilities for differentiation are increasingly there.  Further, some channels/networks that have done a good job of establishing a relatively high set of expected values for their content through branding (ESPN, Nickelodeon, Disney, etc.),  at least for some portions of the audience.  For those, going a la carte, or minibundling (a small group of networks with similar content or brands), may be marketing/pricing strategies worth exploring.  However, for other channels, going a la carte alone may not be a viable option.
   For example, during the recent CBS/TimeWarner rights fee squabble, TimeWarner offered to let CBS market its network "a la carte" at whatever price it wanted.  An offer that CBS rejected out of hand, suggesting that it felt that going solo might not be a great business strategy at this time.

The CBS reaction points to another issue, which I'll address more fully in a separate post; that most networks/channels get funding from multiple sources, some of which are tied to audience size.  The problem with going "a la carte" is that consumers would then apply their purchasing logic to the individual sets of channel(s) being offered separately.  That is, TV consumers will pick which channels they'd be willing to pay the market price for, and which they wouldn't - and viewing habits suggest there are few channels that wouldn't face huge drops in audience if they went a la carte, particularly if the price was more than minimal.  With  the potential of significant declines in audience-based revenue streams, that could create a pricing death spiral for many channels.

Let me close this piece by referring back to the social side-benefits of bundling.  With bundling, the consumer retains most of the consumer surplus value, instead of it going to the distributor (with minibundling) or the network (with a la carte).  Bundling maximizes consumer access to the broad range of content choices; giving new content and channels the opportunity to establish value with consumers, and allowing for viewers to benefit from serendipity or to access the occasional content a channel might present.  Finally, bundling maximizes potential audience for channels, allowing them to benefit from audience-based revenue sources, and lower per-subscriber distribution costs.

Bundling can be a reasonable and consumer-friendly pricing strategy in theory, at least in some circumstances.  Still, circumstances can change, and there are also other economic issues to consider.

Future of Digital - Social

The BI Intelligence slide show at the IGNITION: Future of Digital conference last week also had a lot to say about Social Media.  Here's some highlights -

  As noted in the previous post, Social Networks are becoming the gateway to the Internet - for the last two years, people spent more time on social networks than they did on Web Portals.
  Facebook is the dominant global giant of social media (i.e., the Google).  About 1 of every 7 people in the world are active Facebook Users (at least once a month).  And Facebook is truly global - it's the leading social media site for most of the world, with a few notable exceptions.  Several countries have banned or severely limited Facebook service, and in some countries a native language alternative dominates.  While Facebook supports more than 70 languages and dialects, it seems to be less successful outside the English and Indo-European core languages. 

(A glance at the map shows most of the countries with a different leading social media service speak non-Indo-European based languages.)

  With the recent public stock offering for Facebook, there's been a lot of focus on Facebook's ability to monetize its reach and user base.  Google dominates the digital advertising market, although it's share is slowly falling as more channels and online advertising opportunities develop (including Facebook).  This led the BI Intelligence folk to ask the question Facebook investors ponder: Will Facebook ever be bigger than Google?  They don't think so, offering this analogy - Google is like advertising at a store, while Facebook is like advertising at a party.
  While Facebook's ability to drive referrals to e-commerce sites is growing rapidly, those numbers remain minuscule compared to Google and other online portals/search engines.

  In fact, at the moment the biggest challenge to Google's supremacy in digital advertising revenues looks to be from e-commerce sites.  In-store advertising has always had the advantage in that it reaches buyers while they are shopping, and proper ad placement (targeting) can put the ad's message in front of prospective buyers.  Amazon is already generating more than $1 billion a year in advertising, and U.S. online retailers are generating more than 20 billion ad impressions per quarter. With retail sales shifting online, there's a lot of opportunity for growth.

Then there is the new category of "social commerce," sites and services that blend marketing and commerce.  Revenues are still in the early market stages, and are experiencing the type of explosive growth common in the early stages of diffusion.

  The "Social" online markets are still in the early development and growth stages, but there's good evidence that social sites are finding ways to monetize their user base - through advertising, in-game fees and purchases, and through marketing and linking arrangements.  Perhaps not as much, or as fast, as hoped by the people and institutions buying stock at Facebook's Initial Public Offering, but the potential is there.

Next up - Mobile

Source -  The Future of Digital [Slide Deck],  Business Insider

Boom in TV Tweeting - Impact of Social TV

Tweets about TV have boomed, according to an article in the Wall Street Journal.  This July saw more than 75.5 million comments about TV posted on Twitter and other social media systems.  That's compared to 8.8 million generated the previous July (2011).  The article goes on to talk about how the comments are beginning to influence the writing of shows.
  The writers at Covert Affairs added a scene to the season's final episode to specifically address continuing fan questions about the eyesight of a major character.  When Vampire Diaries had one of the vampire characters violate the "unwritten law" that vampires can't enter a dwelling without an invitation, there was an immediate flood of comments and questions seeking an explanation.  The comments kept coming well into the next season before writers finally provided an explanation in a later episode.  The record for per-viewer social TV commenting is cable program Pretty Little Liars, which received on comment for every one and a half viewers for an episode this August (1.6 million comments).
  Program producers note that the huge number of comments over a month are primarily produced by a much smaller number of active social TV users.  July's 75 million social media comments, for instance, were produced by about 8 million viewers (out of 113 million TV households in the U.S.).  Some consider it important to keep the support of fans who are the most active social media commenters.  Matt Corman, creator and executive producer for Covert Affairs put a positive spin on the situation - "Fans who watch the show can become grass-roots organizers for the show... In politics they say don't ignore your base."  Others like the chatter, but would rather it not come while watching the program.  Brad Falchuk, creator and executive producer for Glee (the show with the highest average commenting last year) quipped "I would love to do an episode that was so amazing you got fewer Tweets."
  You can also see the growing importance of social TV - commenting on and discussing TV programs on social media - in the rise of analytics firm Fizziology, which is monitoring pre- and post-premiere social buzz for a number of this fall's slate of programs.  Fizziology's big winners - Fox's The Mindy Project, NBC's The New Normal and ABC's 666 Park Avenue.  NBC is using social metrics to complement traditional ratings research, as a means of indicating viewer passion and involvement.  For example, NBC's Go On generated significantly higher ratings that The New Normal, but The New Normal generated more than two and a half times more social buzz - with many of the commenters starting to quote the show's characters.  At this point, however, the value and precision of social metrics is unsettled - at best they can be a reflection of viewer interest, attention, and involvement that can be combined with traditional viewership metrics to gauge public awareness and interest.
  That can be good enough for some in the industry.  NBC used the social buzz around the London Olympics to support increases in cross-media advertising deals.

 "It was a really bright, shining example of how social could fuel ratings," said Peter Naylor, NBC Universal's exec VP-digital media sales. "People were really, really concerned about social being a spoiler, but it actually worked as an accelerant, and when we sold advertising packages, we made sure that for all the windows, all the platforms" -- most notably the NBC Olympics Live Extra app, which offered live streams of more than 3,500 hours of content -- "we associated marketers with those platforms."

Executives at CBS note that social buzz can drive traffic to its online sites.

"As we push stuff onto Twitter and Facebook -- a clip or a photo or a comment made by talent from one of our shows -- we can see that large portions of the traffic to our sites are being driven by leads generated that way," said Marc DeBevoise, senior VP-general manager at CBS Interactive. "And, of course, more traffic to our sites drives more revenue."

As social buzz reflects audience engagement, it supports the ability to develop highly targeted social TV initiatives, such as Lexus building on the social buzz surrounding USA Network's Suits, and its affluent viewers, to combine Lexus sponsorship of the program with its social-gamification program "Suits Recruits." American Express partnered with Glee, a show with strong social buzz and viewer involvement to promote their Members Project campaign - "a feel-good charitable initiative with the tagline 'Everyone can help change the world for the better, one step at a time.'"  The potential of using social buzz to support highly targeting marketing and advertising efforts can be particularly beneficial for smaller niche networks - one example is the partnership of Hyundai with AMC's The Walking Dead.

With most TV viewing research showing continuing increases in social TV viewing (where the second online activity relates to the program being watched) and two-screen viewing (where the online activity is focused elsewhere), its clear that a significant portion of the TV viewing audience will be active online and during viewing.  Comments about TV programs on social media services can provide insights into these more active viewers' attitudes about, and engagement with, programs (but not reliable quantitative measures; not yet anyway).  Still, those insights can be valuable for some network executives, program producers, and marketers and advertising - helping to evaluate how programs and viewer engagement can match up at meet specific desired goals.  We're seeing the beginning of that, with the likelihood that much more will be coming.

Sources -  When Twitter Fans Steer TV,  Wall Street Journal
Networks Track Social Buzz for Fall Shows,  AdWeek
Wait, Who's Actually Making Money Off Social TV?,  AdAge

Tech Trends in Marketing for Media to Consider

Darren Herman has an interesting post on the promaxbda daily brief blog giving his thoughts on five developing trends in technology that will impact marketing.  Since many embrace tech trends in media, those outlets relying on advertising or marketing dollars in their business model should pay attention.
  Herman identifies and discusses five "big top-level" trends that will impact digital marketing in the next year or so.

• Seamless social media management - The social media world is booming and shows little sign of slowing down.  One problematic outcome has been sharing content across different social media platforms.  We're seeing more cooperation among platforms in this area, particularly among platforms with a common corporate owner.  But there looks to be a need for a social media management system that can cross corporate boundaries - and Herman notes that there are some new start-ups with promising services.
    While such systems can simplify users' ability to manage multiple sites, they can also be very helpful in terms of launching media-driven campaigns, and in simplifying media efforts to make content available across multiple platforms and systems.
• Location, location, location -  The growth of GPS-equipped mobile devices has opened up a new targeting dimension - location.  The ability to target content to specific locations can be quite helpful - assuring that localized marketing dollars aren't wasted on out-of-location audiences. It can also open up marketing opportunities for smaller local businesses.
     The ability of digital outlets to locally target can also be quite helpful for traditional media.  Historically, their rise as mass media pushed an emphasis on content of broader, more general, interest.  While some media could develop regional editions, there was little opportunity to really pursue truly local content.  In addition, a lot of online data is now searchable by location, and media outlets can automate content delivery (nearby home sales, restaurants, crime, etc.).
• Data will drive cross-platform marketing - As Herman explains, "One of our clients told us to stop building cruise ships and focus on speedboats. What he meant was to stop focusing on big ideas that take months to plan and are hard to course correct if they turn out wrong. He pushed us towards planning speedboats, essentially microplans for different platforms that could then be optimized in market based on whether or not it was resonating."  As platforms create more choices and fragment audiences, you can take advantage of that opportunity to reach the audience you want - if the data is there to identify where they are and what they're looking for.
    There are two take-aways for media here - the first is the value of quality metrics; the second is that there is value in distributing your content and brand across digital platforms and services to take advantage of the various targeted niches.
• Content is marketing - With stand-alone ads losing some of their glamour, and the industry shifting towards a more organic approach towards monetization, remember that content is what drives audiences.  The good news is that new technologies facilitate the integration of marketing and content - whether creating content to draw attention and audiences to your marketing campaign, or embedding marketing messages within outside content.  Integrating marketing and content creation, if done well and in the right situation, can be quite successful (and doing it wrong can be almost as disastrous).
    Content is the primary focus for media outlets, and historically there's been a wall between advertising and content.  Starting to tear down that wall and considering how content and campaigns might create positive synergies for both is likely to be beneficial in the long run.
• Experiences and devices will be increasingly linked - The newest mobile devices are not only aware of where they are, but what other devices are nearby.  And they can link with some, allowing users to share experiences, content, and thoughts.  New technology is opening new opportunities for integrated cross-media marketing.  (For example, as the Pizza Hut ad plays on your TV, your tablet brings up the website for the nearest one, along with a coupon that's highly targeted for that context - for example shifting from a deal on a medium to a deal for 4 larges when the system notes there are 15 other smartphones or tablets in the room).
    Traditional media were truly mass media, because of the nature of their delivery system.  One of the hard lessons of the last decade is that media don't have to only be that - going digital can open up opportunities for targeting, individualizing, linking, and soliciting and integrating user feedback.  Media that can open themselves to consider, and take advantage of, those opportunities are the ones that are most likely to be successful in the emerging digital network economy.

  One of the failings of traditional media business plans is that they had gotten into a rut - focusing on a few revenue streams.  When the expanding digital network shifted costs and capabilities that allowed systems and services to be not only competitive with, but superior to, components of those revenue streams, it was inevitable that those targeted revenues would shift.  The decline of the big city daily newspaper can be described as "death from a thousand cuts" - with niche advertisers and users shifting to new outlets that better met their needs and interests.  Traditional media are now mostly awake - and aware that they can't remain successful doing the same things they did 20, 30, 50 years ago.  That's led to a surge in experiments with digital content - seeking the new Holy Grail of revenue. 
  It seems unlikely that there's a new, largely untapped, source of revenue to replace the growing losses in traditional media operations - or that traditional media will be successful in grabbing that new source for themselves.  It's an increasingly competitive market out there, and success is more likely to come from exploiting the myriad new opportunities and niches - in looking for the many different ways to package and add value to content, in pushing content across multiple venues and platforms.  I get the feeling that the industry is recognizing this - the question is whether they'll be able to embrace the opportunities for innovation that rapid technological advance creates.

Sources -  Meet the Five Big Tech Trends Changing Marketing,  promaxbda daily brief
Slideshow and full presentation on the topic (to be made at the upcoming Ad Age Digital Conference)

Luxury Brands See Online Ad Advantages

A new survey of marketers and ad agency personnel finds that almost half feel that their luxury clients are quickly moving into online advertising - particularly in the use of mobile and social media, online video and rich media.  The report, from Martini Media, suggests that

the sight, sound and motion of online media is beginning to wean luxury advertisers away from the presumption that only glossy print magazines or television can adequately portray their goods in the right light.

  More than two-thirds expect that their luxury clients' expenditures on video and mobile will grow this year, and almost half indicate that spending on social media and rich media will increase.  Almost all respondents indicated that luxury clients will have at least some use of online video advertising (35% felt their clients would be experimenting with online ads, 43% anticipate that "some" luxury ad dollars will shift to online video ads from TV advertising, and 14% thought the amount shifted would be "material."
  Perhaps more important for the long run is that digital media advertising was seen as more effective than traditional media ads in terms of driving brand favorability and in-store purchases.  Specifically, 85% of the ad and marketing reps felt that online video advertising was more effective that TV ads in terms of driving online sales; 44% felt online video was more effective than TV in driving traffic to Brick &Morter stores (while 26% felt TV was more effective); and 35% felt online video was more effective (vs. 26% who felt TV was more effective) in building brand favorability.  The only area where the reps felt TV was more effective was in terms of building awareness (41%s felt TV more effective vs. 18% who felt online video ads were more effective.).

From an agency perspective, luxury client demands include paying more attention to the editorial environment where their ads appear. The sensibilities of the target consumer require that advertisers “make sure digital is more highly focused and less intrusive.” The business of agencies with luxury clients is all about “finding the outlets that truly target the audience.”

For luxury brands, context and targeting are the most important factors in selecting where to place their advertising and marketing dollars.  Moreover, 80% of the surveyed reps felt that it's worth paying higher CPMs for media that can effectively target luxury consumers.  That's good news for online advertising generally, and sites and channels that target high-end audiences in particular.

Sources  -  Luxury Marketers Moving To Digital Advertising,  Research Brief blog
Engaging the Affluent Online, Martini Media report

TV Everywhere - Is It Going Anywhere?

Roughly one-third of all broadband households in the U.S. watch online video content on a TV set, and one in four watch online video content on mobile devices.  That makes it one of the fastest roll-outs in TV services history, according to Brent Sappington in a column on the Fierce Online Video blog.  Pay-TV penetration exceeds 80% of US homes, with broadband penetration rapidly closing the penetration gap.  This makes for a highly competitive TV market (cable has 58%, satellites 33%, and telco providers approaching 10%), even before considering the growing amount of online video services and content.  
  When you consider the rapid diffusion and impact of mobile devices on TV viewing habits, and the fact that about one in five Pay-TV subscribers have expressed an interest in dropping some or all of their pay-TV subscriptions, it seems like all TV market players will face a shifting market structure in the future.  Many are trying to address change by exploring how they can maximize audiences by maximizing the opportunity for audiences to find and consume their content - the basic idea of TV Everywhere.
  However, Sappington reports, provision and utilization of full TV Everywhere is being hampered by copyright and licensing issues, and limited consumer awareness.  It's not likely that consumer awareness and evaluation of TV Everywhere options can start to grow until the licensing and access issues are resolved and the full range of content and channels become fully available.

Source -  TV Everywhere: Technology and business trends,  Fierce Online Video

Spotify teams with Coke for Promo

Post contributed by Cori Mullaney -

The digital music service, Spotify, has taken the music media industry by the horns. The service, which provides customer access to millions of songs, is already at the top of the media chain. But how does it plan on staying there?
    With the rise in competition amongst media firms, services such as this must look toward the future. As the competition increases at a rapid rate, revenues begin to decline. Therefore, services such as Spotify must find and develop new sources of revenue in order to stay afloat.
   In addition to developing new and improved features, the digital music service must look toward marketing campaigns. The service has done just that. Spotify announced on Wednesday that it will be teaming up with Coca-Cola Co. to help expose and recruit the service. Spotify will gain access to Coca-Cola’s formidable global marketing engine, making it easier for the service to expand internationally.
   So what’s in it for Coca-Cola? According to Alex Pham, writer for the Los Angeles Times, “Coca-Cola can now use Spotify’s service to instantly add music to its online marketing repertoire.”

With a solid marketing partnership such as this one, the future for Spotify will surely be bright.

Source- Spotify and Coca-Cola for marketing partnership Los Angeles Times

BJB- some editing for style

Social Media for Marketing

Budgets for social media efforts continue to rise, as more firms recognize the potential of social media to contribute to promotional activities, and to help build relationships with consumers.  But bottom-line managers wonder if those efforts are paying off.  Which leads to the question of how does one measure the impact or effectiveness of social media efforts.

In a post for the OnlineSpin blog, Jason Heller takes a look at this "Return on Investment" issue.
He starts with stating that there are four basic objectives for social media efforts - building relationships with customers, creating awareness and acquiring new customers, providing customer service, and monitoring customer input for better insights and research they can act on.  In the absence of industry-adopted specific metrics designed for social media arrive, Heller suggests that a combination of more generally accepted measures of impact and effectiveness can provide indications of effectiveness of at least those broad goals and objectives.  Specifically, he suggests looking at Reach & Growth, Engagement, and Traffic & Commerce.  Tracking Reach, particularly over time, reflects the ability to generate at least minimal interest and growth in reach reflects a growing potential customer base.  Engagement, or looking at repeat or regular use, or interactions with social media audiences, reflect the development of stronger relationships.  Traffic & Commerce metrics can be used to look at the impact of specific campaigns or efforts. You can track the insights and research efforts generated. While these aren't likely to confirm that social media efforts paid for themselves (what traditional business ROI looks for), they can provide at least some objective indicator of the effectiveness and impact of both general social media efforts, and the impacts of specific strategies and campaigns.  As Heller concludes -

Focus on modeling the economic impact of engagement, scale and insights over time. Continue to demonstrate an increase in actively engaged consumers over time, and you will continue to gain executive support, which is a vital component of social media success. Just remember that eventually you will need to be able to support the economic argument.

Source -  A Push Toward Social Media ROI,  OnlineSpin, a MediaPost blog

Media with Digital-only Sales Staff Do Better

Recently, a number of traditional media companies have consolidated offline and online ad sales forces.  A new report from Borrell Associates suggests that might be another poor decision on their part.  Their survey of local sales managers suggests that media companies with dedicated digital ad sales staffs outperform those with a combined staff by a factor of 2.5 to 1 in terms of gross revenues per rep ($185,000 vs. $73,300).  For TV stations, the difference was even greater, almost a three to one difference ($208,200 vs. $70,300).

“It’s clear that having a staff dedicated to selling online advertising -- and combining it with the efforts of the legacy media sales force -- drives more digital revenues. But what’s not clear is how many online-only AEs might be needed,” states the “Assessing Local Digital Sales Forces” report. Some legacy media companies with five digital-only reps generated the same amount of online revenue as those with 20.

 The survey found that newspapers were the only media segment where more than half of outlets reported having sales staff dedicated to digital sales (40% of TV stations did, but only 11% of radio stations).
  The report found that digital reps were paid better (averaging $44K vs $35.5 for converged reps), and were more likely to be characterized as having "Excellent' or "Outstanding" motivation (72% of digital reps vs. 18% of regular sales staff), and of having a better understanding of customer needs (81% good or better for digital reps, vs. 49% for other sales reps).  This may be related, in part, to the report's finding that many media companies are paying higher commissions to digital than traditional reps as a result of their push to increase digital advertising revenues.
  The Borrell study also noted that having completely separate sales divisions was not as helpful as having reps who specialized in digital sales within a combined sales force.

“It’s clear that those with completely separate divisions have fumbled badly, leaving large amounts of money on the table by failing to leverage their existing sales forces.” At the same time, those with fully converged operations with no digital-only sellers mixed in “have shown pallid revenue growth.”

 Sources -  Media Companies with Digital-Only Sales Staff Perform Better,  OnlineMediaDaily

Music Services Bringing More Fun to Shopping

Post contributed by Brittany Hood -

For those of you who become agitated with the music playing across the store as you peruse racks of clothing while listening to your kind of music on your smartphone, technology has a solution for you!  The Gap has teamed up with streaming music start-up Roqbot to allow Gap customers/Roqbot users to choose the playlist to play over the store’s loudspeakers.  “Shoppers who check in with the Roqbot app may actively parse the store’s featured pre-approved music selections, pick favorite tracks and vote on others’ acoustic choices, thereby impacting currently queued selections” (Steinburg).

  The Gap is only in the testing stage of this at its Chestnut Street location in San Francisco, California; however, this testing “…will run through the holidays and includes integrated support for Facebook, Twitter and Foursquare, the service could expand to future locations and retailers in 2012 if it proves successful on Chestnut Street” (Steinburg).

Source: Scott Steinburg. “The Gap and Roqbot Let Shoppers Decide StoreSoundtrack.”  Rolling Stone.com

How to brand like Apple

Post contributed by Lauren Loy -

It only takes walking into an Apple store to realize that the successful company has created a loyal community around their products that sometimes seems a little overwhelming and possibly even creepy. The obsession that Apple-lovers have with their Apple products appears to be a simple addiciton to a brand, but does that mean that said brand can get away with more blunders?
  A 2011 Forbes magazine article seems to think this is the case. The article mentions the recent problem that was draining the life of the new Apple IPhone 4S, which was not acknowledged by Apple for several weeks. This was accompanied by many other problems with the new iOS 5 operating system. All these problems are now fixed, but that is not the point. The point is the apparent totally understanding and forgiving nature of Apple customers when it comes to their favorite brand. No matter how many mistakes Apple makes, customers are still willing and eager to buy the company's newest products and publicize their love of the brand.
  The reason for this almost ridiculous branding obsession is mostly thanks to the late Steve Jobs. Customers feel a personal connection to Jobs through the products he spent his life constructing, promoting, and updating. Jobs used a rather unique marketing technique by creating an emotional connection with his customers, such that has never really been done in the realm of technology, which is usually an impersonal business. The Forbes article gives some helpful tips for other companies that want to create loyal followings:

1. Build relationships with customers. Be transparent and embrace social media and networking like Twitter, Facebook, and blogs.
2. Carry out some movement marketing. You must stop focusing on what you make, and instead, tell people what you believe in. In Jobs's case, he told the world he believed in "innovative, high-quality products." Think of a mission statement that touches a nerve with your audience and run with it.
3. Make sure your mission statement resonates throughout every part of your operation. Do not say you believe in going green if you waste a lot of paper in the making of your products.
4. Start a movement you believe in and the rest will follow!

Source - Is Brand Loyalty the Core to Apple's Success?  Forbes.com

Glamour goes Social

Post contributed by Krystyna Barnard -


In a November Folio article,  TJ Raphael writes how “interactive mobile tactics drove social engagement for content and advertisers.” The magazine did this by implementing Social SnapTag technology into both print and digital editions of their magazine, which enabled readers to access packaging or promotional deals they see in the magazine. It also enabled the magazine to target various consumers and increase consumer communication via social networking sites through a sense of mass marketing. Raphael writes that the Social SnapTag is similar to the QR code, however, users don’t need a QR scanner or smartphone to interact with the program.
  As a result of Social SnapTag, approximately 67 percent of consumers who used the program also “liked” the magazine, Raphael commented that "It just goes to show how prevalent social media has become in today’s technologically advanced society, not only for consumers, but for producers as well."

Source - “Glamour Gets 50,000 ‘Likes’ From Social Media Campaign,” Folio

Growth of Hispanic Markets

Post contributed by Richard Graves  (some expansion by Ben Bates) -

Companies currently marketing toward Hispanics are seeing revenues increase more than companies who are not.  A study by the Association of Hispanic Advertising Agencies suggests that those who include Hispanic-targeted marketing proportionally see significant benefits.  This information can be a boon to people who decide to start marketing to Hispanics:
  However, the study also showed that only 5% of total print, radio and TV marketing budgets are directed to Hispanic media outlets, while Hispanics account for 14% of adults in the U.S.  What's worse is that more than half of the top 500 agencies currently spend less than 1% of their budget on marketing to Hispanics.
  This suggests that there is a huge upside to the potential of Hispanic marketing in the U.S. It's an underutilized market that media with declining revenues could take advantage of.  And it's a market that is not likely to subside soon.

Source -  Increased Spending on Hispanic Ads Boosts Marketers' Revenue, AJAA Survey Says,  AdAge.com

Cox Develops Targeted Promos with Conductor

Post submitted by Caitlin Rogers -

Cable provider Cox Communications has agreed to begin using Visible World’s Conductor product, which will allow for a more customized and targeted marketing strategy. So far, Cox has created several promos with Conductor and may eventually sell the idea to advertisers. In the beginning, Cox will only be tailoring its promos to cable zone levels, but in the future the hope is that they can be customized for individual households.

 With audiences often feeling bombarded by the amount of advertising they see on a daily basis, Mark Greatrex, senior VP and CMO of Cox, thinks that products like Conductor might help ease some of the ill-will. “Consumers want to see relevant and timely advertising that speaks to their lifestyle and needs,” he said.

 Products like Conductor are emerging at just the right time. With the growing popularity of services such as DVR, On-Demand, and online streaming, most people tend to fast-forward through commercials or avoid them entirely. This is bad news for both the advertising industry and the media that rely on advertising revenue. However, if ads start becoming more customized, there’s a good chance that consumers will be able to connect with them on a more personal level and will thus pay more attention.

Source: “Cox to Use Visible World Product to Target Promos,” Broadcasting & Cable

Steve Jobs - Digital Maverick, Marketing Traditionalist

Post submitted by Richard Graves (slightly edited) -

  Steve Jobs' passing has occasioned various looks back at the man and his impact. One in Advertising Age looked at the late Steve Job's strategy for marketing and advertising.
  While Jobs pioneered the possibilities of digital technology, he never wavered from reliance on advertising in traditional media such as television, newspapers and magazines. The successes of his advertising campaigns and products show that even the man who most embodies the digital age did not believe that digital technology makes traditional media obsolete for reaching people. Given the man's accomplishments with his strategies, his views toward advertising should help people vested in traditional media sleep better at night.

Source -  Steve Jobs Was Digital Maverick but Marketing Traditionalist, Advertising Age Digital