Registered relationships and revenue per name should be the key metrics of a Web site’s performance — rather than the number of unique visitors, who may come and go virtually anonymously. Media companies should funnel consumers from general content on a topic to more task-oriented content for evaluating purchase decisions, to product reviews, and to targeted promotional offers that create a win-win-win opportunity for media companies, their audiences, and marketers. Progressive registration can be used to gather some up-front information (such as names, e-mail addresses, and permission to send additional content or offers), with a broader consumer profile built over time through observed behavior (without having to rely on detailed questions that could put people off). Some observed indicators might include the types of content people visit, the ads or e-newsletters they open, and the types of offers on which they act. And as media companies learn more about consumers, they can serve them better by proactively pushing relevant content to them.
The challenge for media companies is how to scale up new, targeted content offerings without having the added costs of content creation and executional complexity exceed the incremental revenues they can capture. Some media companies have tried to enhance the value of brand advertising online by aiming it at more targeted audiences. After all, targeted content that is tagged and contextually relevant can capture a 20 to 30 percent premium over run-of-site advertising for a media company’s Web site, based on Booz & Company’s experience with digital advertising sales effectiveness efforts. But few media companies can deliver enough targeted impressions and therefore must resort to more expensive and complex-to-execute “value added” programs to better compete with Google, portals, social media sites, or ad networks that deliver much larger audiences at a lower cost.
The key to overcoming these challenges lies in pursuing the other three success strategies.
2. Tap New Revenue Streams
The bulk of digital revenues for media companies will continue to come from advertising and sponsorship during the next few years. But maximizing revenue per name will play an increasingly vital role in building revenue streams and faster total income growth. Just as today in print, where media companies strike a balance between readers paying for content directly and marketers subsidizing access to it, media companies can continue to pursue both sources of revenue in the digital arena, recognizing that there are limits to the size of the audience they can generate if they charge consumers for content. They do not face all-or-nothing choices between ad-supported and paid content models, provided they slice up their content in ways that entice consumers to pay for some of it.
These trade-offs were highlighted in a study Booz & Company conducted in the fall of 2008 with American Business Media (ABM), the trade association for business-to-business (B2B) media and information companies. The study, titled “A Roadmap for Profitable Revenue Growth,” discovered that ABM members are pursuing two equally viable transformation paths. The first path goes beyond expanding advertising, to reinvent the publishing model around a broader set of marketing solutions and services. These include custom content development, database marketing (building a set of names for marketers and developing targeted communications programs on their behalf), customer insights, and lead generation. These new revenue streams become separate, fee-based businesses in their own right.
The second transformation path focuses on delivering premium B2B content and applications that tap more deeply into professionals’ workflow needs, and providing highly specialized news and information. This includes offering premium newsletters that deliver deeper insights and must-have analysis, and assembling data, such as pricing information or supply chain details, that can serve as the “glue” in businesses’ workflow.