S+B: Do you think this growth will have a major impact on the rest of the economy?
CARRIGAN: Yes, I think it will. That 2009 study [conducted for the IAB by Hamilton Consultants and John Deighton and John Quelch of Harvard Business School] estimated that the advertising-supported Internet creates economic value of $444 billion per year. And then there’s the echo effect. Facebook signed up its 800 millionth user in mid-2011; Coca-Cola has 35 million “likes” right now on its fan page, and Starbucks has 25 million. Statistics show that people who “like” a company or interact with it are more likely to purchase from it. How much economic activity does that generate? I think it’s hard to quantify, but there’s no question that it’s huge and growing.
And this industry is not an island. The tools and solutions being developed — real-time bidding, automated exchanges, reputation systems, and so on — could be used more throughout the economy: to drive more commerce, connect more directly with consumers, reduce supply chain friction, and connect with international customers.
S+B: How much of a difference does it make that the cost of online investment is going down?
CARRIGAN: There are much lower barriers to entry for online media than there were even a year ago. The cost of technology is not a barrier; the hardest part is finding good developers for original ideas. With the cloud — not just storage in the cloud, but all the publishing apps, templates, formats, and software solutions available there — you can provision media in a much more efficient way, and I think that’s going to change the industry further.
S+B: But when barriers to entry come down, doesn’t that lead to a rush of competitors coming up?
CARRIGAN: Well, it’s head-spinning how many competitors are emerging. In IDG’s segment, for example — technology, media, events, and research — the field is more competitive than it ever was. But it’s also bigger than it ever was, particularly as people come to our offerings globally. It’s one thing to enter the business with a digital platform; it’s another to execute, get the right audience, develop a good relationship with that audience, and build the content and the trust needed to keep them coming back. I would like to think that in every segment related to digital media, some companies will have top-quality offerings, content, and solutions, and they’re going to win.
When I’m with IAB members — who are IDG’s competitors as well as its collaborators and customers, and sometimes the same companies are all three — I see them as entrepreneurs in the best sense of the word. They’re investing, taking risks, creating a global marketplace; they’re developing alternative sources of power generation and energy efficiency. They’re focused on creating value. And that’s why they’re optimists.
The Lifetime Value of a Name
S+B: How did IDG begin its own moves in online innovation?
CARRIGAN: Our magazine category, technology, was like a canary in a coal mine: Our audience moved rapidly to interactive and digital platforms. There weren’t a lot of other media categories in front of us. We had to experiment wildly and create an innovation culture just to keep up.
Fortunately, our readers and visitors are digitally savvy and our advertisers are experimental. We’d propose a new idea about lead generation or create some new program, and we could generally find an advertiser who was willing to try it. We built a lot of digital businesses that way. Some of our ventures have been pure play; the old IDG had little to do with them. With other ventures, like lead generation, we repurposed our traditional assets. For example, we used to use magazines to drive databases of customer names; now we use those databases to generate sales leads for vendors and all sorts of electronic commerce that has nothing to do with magazines. We were just figuring out what lead generation was nine years ago. The capabilities we’ve added in “lead gen” have been tremendous.