Frederic’s beginning premise is that the advertising model is not able to support media content and he begins with an examination of the trends and a few ways to fix them. A lucid and excellent perspective.
How Advertising is broken:
1) CPM are lower than ever
2) click-thru rate never took off
3) endless inventories are pushing prices further down with ad networks acting as bottom feeders. (an example, A good car site couldn’t sell 9 euro CPM to renault because an ad network will give him 2.5 euro CPM)
4) Google is sucking up revenues
5) design flaw: content creators v.s advertisors
One of his 3 causes:
1) non-credible audience measurement (Nielson, ComScore, Quantcast) large differences. Advertisers take the best figures. Revenue from
2) the facebook-google sucking effect. Australia leading the world in time spend on facebook. 7h/mth.
Adspend is changing: -2% for online ads, +133% on social networking sites
3) Information Breakdown
3 factors in information breakdown.
- Commodity news (e.g the US plane that went down on the hudson river. twitpic on a nokia phone in 40 minutes. the technology is working better for consumers than newsoutlets. ubiquitous, instantaeous, hard to monetive cos its free.)
- Participatory mashup. (e.g social network sites like facebook, somewhat monetized)
- Quality niche (the tiny niche for quality journalism, which is quickly stolen to commodity news)
THUS: Collapse of ARPU (average revenue per user)
over the last 5 years, each gain of $1 on digital is a loss of $55 on print.
Revenue per web user is usually 16-20 times less than print (washington post as reference case)
ARPUs
NYtimes – $7-10
Drudge report – $3
The Huffington Post – $1.5
TechCrunch 0.85
Facebook 1.5
Skype (paid users) $15 (2-3 times less than mobile carriers)
hybrid approach
–> free/paid
how to reverse the free trend: Target the heaviest users. (segment your audience well)
focus on time spent/user engagement
offer a better user experience (a good search engine, recommendations system [make it sticky!], topic system )
friction free payment system (triple play in the french meaning: web, mobile, ebook)
how much and how many will pay (the notion of average is meaningless, find the willinness to pay, test, learn and adjust.)
Creativity and Adaptivity are the basics.
choose the audience:
Platform perspercive:
Different device for each content
