Unlocking Your Market Potential

Report on Digital Media Thought Leadership Seminar,
Palo Alto April 2009

Hosted by SDForum and Sierra Ventures.

Write-up by Keith Rayner

The impressive turnout for the seminar on Digital Media underlines the ascendance of the internet as an entertainment and marketing platform, and the inclusion of “Thought Leadership” in the title had the audience eagerly anticipating revelations on the future of media and trends in convergence of broadcast TV and the internet.

Recent landmark events in the newspaper industry certainly support the impression that everything is moving online. the Seattle Post-Intelligencer, founded in 1863, just closed its print operation and is now a purely online news source. Cost savings are huge, but ad revenues are lower and most online papers don’t charge a subscription fee.

So how is TV holding up in face of this stampede to online? The challenges, benefits and revenue models for TV merging with the internet were discussed from an array of different viewpoints. Setting the baseline in the opening remarks, we learned that the current balance of media consumption stands at around 41% for both TV and online, with radio, newspapers and magazines taking the rest. Recent trends however point to a shift towards online video with viewing increased 13 % from February to March in 2009, and away from the four major networks which saw a loss of 2.5 million viewers over last year, but with some local stations maintaining viewers.

Still, according to Nielsen, TV is still the dominant advertising medium, with 60% of total ad spend, whereas the internet only draws 9% of spend. The large screen 30-second TV spot that tells a brand story remains a very effective advertising vehicle, and the challenge going forward for TV companies and movie studios is to maintain that value over different video delivery formats and monetize with effective advertising, or charge for content. Panelists addressed this fragmentation and disaggregation into different type of viewing “windows” as the main issue facing media. Movie studies have dealt with similar shifts before, with movies first being shown in theatres, then DVD and finally cable to provide incremental revenue. Now the balancing act will include online video sites such as Hulu, high-def movies via cable, video on demand, set-top boxes such as Roku that stream high-def videos from Netflix and Amazon, and time-shifting services such as Tivo that make it easier to view a show, but also easier to skip the ads.

Panelists were in agreement that consumer choice and personalization were essential ingredients in any success story. Services such as Zillion TV offer a broad range of content over broadband to the TV set, and also allow the user to choose the types of ad they see if they want free viewing. This was a good example of how cooperation and partnerships between content providers and distributors, and ease-of-use for the consumer might work for all.

One major winner enjoying a positive consensus amongst the panelists, and particular support from  AT&T interactive, was the focus on a consumer’s geographic location and local community. This is an interesting twist on the common perception of the internet as a global phenomenon, without boundaries, with virtual communities that exist based on common interests rather than a physical location. But local interest is high amongst internet users. 38% of all search traffic is local on sites such as with Google Maps, Mapquest and Yellow Pages, local search climbing to 50% on mobile. Local business can easily serve ads to searchers who have already shown their interest, and live nearby, so this is a valuable channel for them.

Ad-serving technologies make geo-targeting affordable for small businesses, as well as for the numerous large national businesses that also sell locally. Another example of adaptation came from a panelist company, Spotzer, which makes local video advertising possible on a small budget with off-the-shelf customizable 30-second ads. Local publishers then need to bring all this together and provide a portal with an engaging experience for their community with great consumer media, news and local interest. Creating depth of community around this with viewer feedback on issues and reviews of local services adds to that value, and aggregating syndicated content from a publisher network can solve the issue of broader news content.

Perhaps the online version on the Seattle Post-Intelligencer will finally thrive on this model and provide value for its community for years to come.

Keith Rayner, Kemarra Inc: April 2009


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