Category Archives: Media

Investing in Media? Junk Traditional Models

The business of media, especially news media, is a curious one. You wield a lot of power, but often the economics of running the business is tricky. It is a business that delivers above-normal returns to the top 2-3 players, and practically nothing to the rest.

The reason is that success is dependent on the quality/quantity of content and the TG reached – each feeding off the other to form a positive feedback loop – something that lesser players will not be able to replicate. But, on both ends, you need to pump in a lot of money and keep at it.

Unlike a content aggregation and curation business, which may be more of a play on content marketing and tech, core content creation is extremely human-skill-intensive.  Therefore, typical success parameters like revenue, efficiency ratios, margins, active users, returns, exit opportunities, etc. will all come to naught if one doesn’t add Editorial Talent & Patience to the mixture – These two require investment and conviction.

A content-heavy media business is not amenable to the regular cookie cutter method of investing/business modelling. There are three essential components – content creation (input), content discovery & engagement (output).

Creation

Let’s face it quality news/informative content is inherently not exponentially scalable, regardless of the technology that you might deploy. This is because one requires human skills that can identify trends, smell out stories, contextualize them and produce compelling content (text, videos, pictures, infographics, etc.). This means you need to seriously invest in good talent and then give them time. Every time you wish to ramp up quantity of content, you need invest in more talent, and so on and so forth.

Yes, there’s user generated content & citizen journalism, but if you are a serious player you would mandate serious fact-checking and editing. That implies equally dedicated editorial process/teams. Curation is an option but there’s no long term benefit, as you would want to own the content and the associated value chain.

Discovery/Distribution

The next leg, discovery of content, is perhaps where one could apply a traditional business prism of marketing and audience building. Discovery is dominated by platforms like Facebook, WhatsApp, YouTube, Twitter, Snapchat, etc. and stories are being discovered by contextual shares.

Therefore, you need to be (1) creative; (2) iterative; (3) able to crunch data; (4) repurpose content; and (5) most importantly, prepared to spend money. Given constant algorithmic tweaks by discovery platforms like Facebook, pumping up organic reach is not easy and paid reach is getting expensive. Hence, one needs adequate funding and a healthy disregard for instant gratification.

Moreover, you need to focus on where the trend is, where your TG hangs out, how the content fits in that spectrum, and what is it that will drive discovery into engagement. Once again, it boils down to investing in talent that can straddle content creation and community building, and empowering that talent to do so every day.

Engagement

Home pages are no longer the entry point, which means that you need to figure out more meaningful UI/UX across your entire product. It also means being able to create an affinity with your content in the time it takes to scroll from one time to the other on the feed of any of the discovery platforms.

Need I mention it again that it boils down to the right talent? Content businesses need leaders & teams that can integrate tech and content in a way that they are able to tell a story and distribute it across several channels for maximum impact. And the talent that can do that is scarce.

Ultimately, it all boils down to a founder’s/investor’s commitment to the cause and her stamina to run the course every day of her life. The shelf life of news/informative content is low and one cannot afford to take their eyes off the meter even for a day.

The question is how does one sustain such a business? Constant fund raising is not the solution. It calls for looking for revenue sources outside of regular advertising & branded content. Can we put the bad genie of free content back in the bottle? Can our wish for patient capital be fulfilled?

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Pay For Content Or Watch Ads

AdvertorialAdvertorials – not everyone likes them. No. Not even if you call it branded content. But then are these “evil” and “misleading”? I don’t think so. As long as the intent is clearly mentioned in the header (the image alongside prominently shows that this is an “advertorial”) and the publication does not pass it off as journalism.

Yes it is an eye sore and maybe it treads on the thin line between editorial sanctity and commercialism, and one could argue that since the publication mentioned has a separate supplement for advertorials, why not place it there?

The reason is the tussle between revenue yield (that’s much, much higher on page 1), cost of publication and brand visibility.

But why do brands and publications do it? One is that mainstream newspapers are still growing in India and therefore the reach is unparalleled. Second, just like internet and radio you can target campaigns either for national dissemination or limit them to a geography Vs. television where there is a lot of leakage. Third, advertorials – the well-executed & well-written ones – work better than mere ads. This is because they are more informative and co-opt the readers mind rather than push a message. Fourth, if the space can be monetized, why not? After all, somebody’s got to pay the bills.

Let’s also take a look at some other factors. India is a very price sensitive market. Even now, most people would rather not pay for content (it’s been an uphill battle for TV & internet). So, if newspapers X or Y were to suddenly charge a realistic Rs 15 for the daily paper (leave alone the Sunday glossies), the elasticity would ensure that demand plummets overnight. In that scenario, the paper that prices lower would capture significant market share.

Hence, every publication is deeply discounted on subscription, and looks at selling ads all over to subsidise that cost. The same goes for TV news. When you are being armed with information that can help you execute trades worth millions, why should your TV news channel fees be a paltry Rs 11 or 12 per month? (check this TRAI pay channel a-la-carte rates)

So why shouldn’t a publication or channel not seek to monetize their inventory innovatively? After all, they are all for profit businesses – their business being to bring you information.

heatmapIn the online world, this transforms itself into what is called native ads, which nest in your regular feed, but are marked distinctively as being “advertorials” or “sponsored”. This is because however fantastic your banner ads or flash animations, reader studies have shown that eyeballs rarely register those ads. Look at the heat-map alongside showing banner blindness.

But why do fewer people raise a stink over these native ads? Maybe it is because they are more contextualised and individualised to a person’s taste and hence, one doesn’t deem it to be too much of interference. Also, creating multiple access parameters is easier online. Those who pay are not shown ads, those who don’t pay have to bear the ads.

But the bottomline is those who will not pay a fee for content will have to pay the content creators’ bills by watching ads.

Media Industry and Digital Business Models: HBR

It has been a great 20 years for U.S. media innovators, with hundreds of billions of dollars created by companies that are helping democratize content production and distribution while developing new ways to connect advertisers and customers. Google and its disruptive advertising model leads the pack with a $370 billion market capitalization, but consider also companies like Facebook ($225 billion), LinkedIn ($25 billion), Twitter ($24 billion), TripAdvisor ($11 billion), and Yelp ($3 billion).

Of course, for most traditional publishing incumbents, “great” is not the word that springs to mind.

This article has appeared on Harvard Business Review. Read more HERE

Is Dhoom 3 Indeed A 500 Crore Film?

Just stumbled upon a news article, as per a statement from Yash Raj Films: “Dhoom 3 continues to create history at both the Indian and Overseas Box Office. It is now officially the first Indian film to cross Rs 500 Crores Worldwide, making it the biggest motion picture event of all time!” You can read it here.

I do not refute that claim. But the numbers hide more than just a stellar movie. I would argue that it’s the inflation effect that has boosted the topline numbers for D3. You can read about higher ticket prices here.

Even if one were to assume conservatively that about 1 crore people watch an average blockbuster, priced at an average of Rs 100 per ticket, then that movie would gross about Rs 100 crore at the box office.

However, if we were to assume that movies which create a huge hype and hoopla before their launch, by burning a lot of marketing dollars, manage to raise footfalls by 1.5 times and average ticket price by 2x, then we are home. Of course, this is a simplistic calculation and one can argue pretzels around it, but the following table will illustrate this effect:

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As with any other project, it would be interesting to see the numbers at the operating level.

Facebook & LinkedIn Must Future-Proof Their Audience Demographics

Facebook must address poor traction in the 18-24 age group, else usage rates may drop sharply in a few years. Even if usage rates remain similar, it is simply leaving too much on the table for other audience aggregators to prey on (ie: share of advertising pie).

While optically LinkedIn seems to be suffering from the same issue, the argument is solid that it targets mid-career folks. However, even there LinkedIn could stand to “future-proof” itself by perhaps building upon college networks, thereby extending versatility.

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Tying In HR With Business Development

Human Resources is still finding its strategic bearings – especially in Indian media businesses. And till it does so, all companies will continue to suffer from mismatched skillsets with work profiles and hence, higher attrition rates.

Even as the rest of corporate India is moving ahead on this count, the HR department at most media houses remains more of a support/administrative outpost. It is because of this status that it doesn’t attract leaders who are practicing cutting edge personnel management.

In fact, HR’s role in business development is as critical as the business team’s. Talent management/sourcing along with other traditional functions like remuneration et al are important, but maybe some part of an HR team’s KRA should be tied in to the actionable outcome (ie: has the overall business grown or not).

Moreover, I feel that the HR-round of interview, which is deployed by most organizations as the first checkpoint, ends up being a formality and is sub-optimal use of resources. It may be effective in screening out junior level roles, but not when you are selecting candidates for mid-senior managerial posts. The reason is that the concerned HR person ends up mostly checking off a list of criteria without any macro/strategic outlook. So a candidate with huge strategic potential may get marginalized just because he/she doesn’t fit the boxes of “preferred experience”.

Of course, there are some other areas where there have been significant improvements in the recent past – employee training & re-skilling, addressing grievances & career counselling, among others.

Content Monetization

Monetizing content is more of an art rather than a science. That’s because content appeals to the cognitive senses of a person rather than logical and analytical. I’m sure there is an equally competent counter-view to this. One might say that entertainment content appeals to softer senses and factual content to the harder senses. But my submission is that content – whether fiction of non-fiction – is consumed from the prism of being exposed to new ideas, thoughts, being entertained and being able to absorb a fresh perspective that will enable the person to transact his/her life with peers.

So getting back to the monetization bit – Engagement and making a difference to people’s lives get you quality viewers and the same also encourages sticky content. So even though a channel may log huge GRPs week-in week-out and have a hoard of advertisers knocking on its doors, would it be better to have sharper segmentation and programming that’s amenable to engagement (ATL/BTL/Online/Offline) in order to have a more efficient spend-GRP ratio. Advertisers go back happy having reached audiences in a more meaningful way, audiences go back more enriched having been reached by content & ads in less superficial ways.

The questions to ask while creating such a marketing/positioning strategy are – What can bring about a change in consumption pattern – not only from the point of viewing/interacting with the channel, but also in the viewer’s own life choices. What can expand the advertiser pie beyond the traditional ones? Is it a wise idea to have to the same content across a spectrum of audiences on-air, online and offline?

Each content re-purposing can act as a marketing statement and each content re-purposing can help an advertiser reach a new set of audience. The sum of the parts of really engaged audiences will be larger and the probability of them buying your advertisers’ products will also be higher.

For instance, are your viewers switching channels during ad-breaks? Are they recording the programming and skipping the ads? Are they ignoring the banner ads? Yes? Can you take away the choice from them? Yes! How about digital product placements as per the nature of content re-purposing? So if your soap has a protagonist sipping a glass of water in its original version, a digital edit for on-air purpose can have him sipping a glass of Coke, a re-purposed clip on your Facebook feed can have him drinking Sprite or Red Bull… The choice is limitless and the technology is available.

This is very different from traditional product placements in that editors can drop whatever they like, wherever they like, into programmes or films during post-production.

Digital placement firm MirriAd is cashing in on this trend. To quote Mark Popkiewicz in a recent BBC article (full details here): “These are not just logos, they can be video, signage and products, even cars… When brands are integrated they are placed in such a way so it is clear to the audience that they were always there and are part of the scene. For example beverages are placed as open cans or bottles with glasses containing the beverage alongside – that way they look like they are being consumed… The technology is capable of placing or replacing moving objects and even replacing products being handled by actors like mobile phones… Early trials show almost double the engagements of traditional campaigns… This is because when a consumer watches a show they are not defensive against advertising as they might be with advertising online or commercials on TV – they are in receive mode and are not blocking.”

This is just one of the strategies that one can use. Similarly, there are umpteen things that can be done to increase engagement offline, serve up content at places where your target audience socialize, constantly contextualize content as per changing trends, etc. What are your views? Eager to hear them!

How To Build Businesses Out Of Thin Air?

Can a business be built on bare-bones capital requirement, yet is profitable, scalable and captures emerging trends?

Many companies have been able to do so – at least in the initial stages (think any of the dotcoms that have today become huge valuation games). But once they grow out of the initial stages, the costs start catching up. Conversely, there are equal examples of companies that have incurred high initial costs (even for many years) but have now evolved high margin business units that practically run large annuity businesses with almost all if being free cash flow (think of the Disneys, Virgins and luxury brands).

One such business philosophy that comes to mind is brand licensing. First, you need to have a strong trend to capitalize on; one which will change consumption patterns. Next, you should have the ability to incur an initial period of high costs related to brand creation, brand establishment, product making, distribution, etc. However, once the brand saliency has been established in the market, the capital costs can be cut drastically and the brand could be extended both horizontally and vertically.

This way, the risk of manufacturing, selling and marketing rests with the licensee, and the licensor can earn steady cash flow. But one needs to ensure that the brand is being extended into correct categories & price points, that the licensee’s ethos matches that of the licensor and that the investment in marketing & branding continues unabated.

There are many attendant intricacies, but I shall leave those for another day. For now, I need to go to the drawing board and see if I can rustle up a viable plan.

What Job Does Your Content Do?

We as humans like to optimize the utilization of our time. That could mean catching up on news on your mobile phone while commuting or watching a game on your tablet or buying a book of short stories because you feel you don’t have much time or even taking a nap on your way back from work. It is these “jobs to be done” that cause folks to look for a solution, and when they find one, they buy it or hire its services.

This is relevant for content businesses. How is the consumption pattern of viewers/readers changing with evolving technology? Let’s take the example of television– for a large portion of Indian population this is still the first port of call, but that’s fast changing as smartphones make deeper inroads and feature phones get smarter, or even as the number of available channels swells. In a household where the TV is being shared by at least 4 other members of the family, mastering the nuances of programming is of paramount importance for a television station.

For example, news in India is consumed more by adult male audiences and it therefore might make sense for news channels to target such a viewer at a time when he has higher chances access to the TV. Because let’s face it, prime time news at 9 pm often loses out to the entertainment demands of the rest of the family. Maybe news prime time should be shifted either before or after the entertainment one.

Breakfast programming, which is a well-established genre overseas, is only picking up in India. And to my mind, this could be a good way to address a “job to be done” by helping arm people, stepping out for their workday, with all the information they could need – their choice of information could differ, but that’s why we have so many different channels.

So is the need to address the new age viewer through different delivery platforms and re-purpose the content for that. In simpler words, can a news nugget that’s 2-3 minutes long be delivered via mobile apps and social media links, every few hours?  That addresses the “job to be done” as well as ability to complete that job with as little hassle and commitment as possible. If a channel can reach out to more people more often and help them fulfill their need for a quick doze of information, I bet the effort would be worth it.

Interestingly, the entertainment industry addresses this very seamlessly, where they make short capsules of soap episodes.

So instead of channels fighting fierce battles to gain rating points, there could be a way to garner market share through co-option & co-creation. In short, look at what is the job that your content needs to do in order to enrich the viewer’s life. Because contrary to what market research tries to justify, humans are complex creatures who don’t necessarily watch a particular television channel just because they happen to be a certain age, working in a certain industry and belonging to a certain socio-economic class.

It may not be a “winner take all” scenario, but the increase in the pie size would compensate for that. For more on “jobs to be done”, go here.