BIA Perspectives

Recommendations, Strategies and How to Implement New Plans to Grow Your Business

Posted by:
Richard V. Ducey, Chief Strategy Officer, BIA Advisory Services
Mark R. Fratrik, Vice President, BIA Advisory Services
Peter Krasilovsky, Vice President and Program Director, The Kelsey Group

BIA Advisory Services along with its The Kelsey Group division featured over 30 speakers at the “Winning Media Strategies 2009” conference held, May 20-22 2009 in Washington D.C.

For those of you who missed the event, it is available on-demand. Speakers covered a range of topics all on the theme of how traditional media should transform their business models to address cyclical and secular changes in the media ecosystem. To be competitive, traditional media companies must become very focused on seeing and understanding the implications of fast evolving audience and advertiser attitudes and behaviors. Companies must redefine themselves as multiplatform media services.

While we cannot do justice to the richness of three days of speakers, we can offer ten take-aways that we feel have profound implications on how traditional media will operate and which ones will succeed. Of course, not all attempts to enter and expand in this new media marketplace will be successful. The time to move into these areas is immediate, or as one football coach coined it, “The future is now!”

1. Consumers are drastically changing their media consumption habits. Consumers have “platform promiscuity,” and now control when-and-where they consume media. Where there was only one screen providing information and entertainment (TV), there are now four screens (TV, PC, Mobile, and additional devices such as iPhone and Personal Navigation Devices). Be aware, it is not just the younger demographic groups that are making these dramatic changes, it is a broad spectrum audience shift. The pattern showing itself in the market is technology leads, audiences eventually aggregate, later still advertisers begin to follow. Last in line are the traditional media companies. It is past time to transform your business models to encompass the new media where your audiences and advertisers already are!
2. In this new media ecosystem, outlets will learn a lot about their users, and that information is very valuable. Analytics, metrics, return on investment, and fast response time are driving advertising decisions. These data-driven services are becoming must-haves from the perspective of advertisers. Knowing who you’re serving and what their behaviors are can be tied directly to economic outcomes for the advertiser and the programmer. Audience databases can be augmented by linking with other databases to extend profiles and create even more value in targeting and tracking behaviors. Maintenance of those databases and capitalizing on that information will be a very important key to success.
3. The recent economic downturn has exacerbated shifts in local media. Local small and medium businesses (SMBs) are forced to reevaluate every dollar of their spending, including the advertising dollars they have been investing in local media for many years. Once the economy comes out of this present downturn, local businesses WILL NOT return to their advertising spending levels and choices of previous years. Instead, they will shift their dollars away from traditional media. This is not a business cycle issue, this is a secular change in the local media ecosystem.
4. All traditional media will see revenue decreases in the next few years. To stay even or grow, they’ll need to transform their operations into viable digital businesses. Overall spending on local media will decrease from $155 billion in 2008 to $144 billion in 2013. Digital media advertising is where the growth will be occurring. Traditional media companies need to think like start-ups, working closely with their technical staffs and businesses strategists so they can sort out what can actually be done and what makes business sense. Fast growing Web 2.0 companies like YouTube attract huge followings but do not generate profits. When planning your transformative strategies, remember: a social phenomenon is not necessarily a business success. Unless you can monetize your audience successfully, it is not a business model.
5. Traditional media are well positioned to transform their operations and move strongly into the digital arena. In many case, the opportunities in the local market are theirs to lose. It is a huge uphill barrier for new entrants. But that is not stopping them and lack of market leadership or effective competitive response from traditional media companies just makes it easier for the start-ups. Traditional media companies have brand names, community ties and a sales force in these local markets. They also have local content that is highly desirable by local consumers, whether it is news, weather, and other local information. While the consequences of failing are huge in today’s economy, the consequences of not experimenting, innovating, and adapting to the new media ecosystem are even worse. To minimize the risks of failing, it is important to partner with other companies that want to work with these traditional media outlets.
6. Traditional media must transform quickly. It is increasingly easy to mount competing video outlets by other players in the local marketplace. Local television stations may only have a few years before they face real competition for reach and advertising revenues from these new local video alternatives. Increasing penetration of broadband data services; streaming audio and video; mobile data plans; easier to use home and now automobile local area networking; and content services “over the top” using Internet rather than satellite, cable or broadcast delivery is becoming the norm. Don’t count on your traditional distribution channel as a barrier to entry in your market. Everyone is going to get “bypassed” by the Internet.
7. Digital sales efforts require focus, whether handled by traditional sales forces, or specialists. If they are sold as part of a package with traditional services, these sales staffs can reposition themselves as “consultative” by their customers, rather than opportunistic. Make your sales offers in the marketplace unique and fight commodity pricing. By having your local sales force sell traditional and new media along with promotions, events and other marketing support, you can be unique. Focus on your clients’ business problems and come to them with solutions for what they need rather than what you have.
8. Traditional media sales forces must develop expertise in all media platforms, understand their clients’ businesses and develop effective solutions. Sales managers must be given bandwidth to focus on the wide array of products or they will lose. Media planning and buying is becoming a complex, multidimensional equation to solve. Training is necessary to make these sales forces successful.
9. The transformation to digital must be embraced by the entire organization, from the Boards of Directors to the salespeople on the street. There has to be a commitment in terms of devoting staff, money, sustained management focus and TIME!!! As one panelist mentioned, and many times later referred to it, it has to be “a business, not a hobby.” Develop your strategies, commit to a business plan and execute in the marketplace.
10. Successful digital operations are launched by those with strong commitments and a PASSION TO SUCCEED. We heard several examples of local media successfully introducing new programs to reach their local communities in many different ways. Some are emphasizing their online products/services first and working backwards with their traditional media platforms. Others are entering this arena with several niche strategies, and when combined are quite successful

Posted by: Michael Boland
Program Director, Mobile Local Media
e-mail: mboland@kelseygroup.com

Last week at the Winning Media Strategies conference, AOL’s Platform-A called out the imbalance of supply and demand that currently exists in online display advertising.

With respect to ad impressions, the supply side has exploded in the past few years with the changing ways that people are interacting with online media. The increase in page views from things like social networking, for example, has created a glut of inventory.

The lowered barriers to online interactive services that are at the heart of Web 2.0 have likewise flooded, and fragmented, the market. We no longer see consolidation of traffic on major sites to the degree that we used to. The question then becomes, how do you maximize revenues during all these transitions?

Lynda Clarizio, former president and Eric Bosco, senior VP of operations of Platform-A gave a series of guidelines for Web publishers trying to answer this question:

– Be very choosy: With respect to where you put ad units, create scarcity to lift prices.

– Utility impressions: When possible, bring in social tools or widgets that can have higher engagement levels and can increase ad performance.

– Don’t be shy about testing: This includes A/B testing over ad placement, size, color, copy, etc. This is the business of yield optimization and companies like YieldBuild (which sat on our Digital Hollywood panel earlier this month).

– Bigger isn’t better: Don’t use ad units that take over too much screen real estate.

– The future of online advertising will involve multiple platforms (mobile, social, search, video). Partner to gain access to platforms where you don’t “live.”

– Consumer experience is paramount: When doing all of the above, you can experiment with different revenue streams but consumer experience will ultimately drive longer-term revenues.

– Advertisers are demanding accountability: This will drive the growth of mobile and search. For other formats, find ways to communicate ROI.

– Most display advertising happens at the top of the tail: the top 300 advertisers that make up for 90 percent of display ad spending. The goal is to move down the tail to attract more SMBs. There is an underserved SMB market, which is adept at using tools like AdWords but needs to be given better tools to create and manage display (a la AdReady).

Posted by: David Oxenford
Partner at Davis Wright Tremaine LLP
E-mail: DavidOxenford@dwt.com
Original Blog Post: Broadcast Law Blog

This past week, I attended the BIAfn Winning Media Strategies Conference in Washington, DC. During the course of the conference, there was much talk about how broadcasters and publishers need to provide unique service to their communities in order to survive in the competitive media marketplace. The point was made over and over again that, in each market there are unique attributes and personalities that a station should be covering in its programming, and should be exploiting even more broadly through their digital assets, to tie it to its community. Only by doing so will the station be able to survive in the new media environment - and by doing so, the station may be able to thrive. In fact, I was stuck by a statement by USC’s Adam Clayton Powell III that domination of the local online and digital media marketplace was “the broadcasters to lose.” In other words, the broadcaster has such unque promotional abilities with its current audience that it can establish its brand in the online and in the mobile world far easier than other media players. But there were also the repeated warning that there is more and more competition for this local digital market from new entrants and other media entities and that, if the broadcasters did not take advantage of their current advantage, the local service would come from someone else. What most stuck me was that there was no question that the superservice to local needs would be coming from someone - broadcaster or not - as a result of marketplace developments, not because of any government mandate. The broadcaster has to adapt to and compete in this new media marketplace or become culturally and economically irrelevant. The broadcaster needs to serve the local market to meet these challenges, not because some Washington agency has ordered him to do so. And the broadcaster needs to serve his community in a way that the public will find compelling, not in a way that the government thinks is best.

At BIAfn, the presentation that made the greatest impact was probably that of Greenspun Media from Las Vegas, which has reinvented a secondary newspaper and a Low Power TV station as an on-line powerhouse, uncovering the aspects of the community that would draw the largest audience and covering that information in great detail. The Las Vegas Sun site not only covers hard news, but also the gaming industry, University of Las Vegas sports and even state government issues in a way that its audience seems to find interesting. Even a history of Las Vegas, in great detail, is included. And video plays a big part of the site, with the company in development of a hip news and events program, 702.tv, that will soon be a daily program on the television station and online (featuring local “celebrities” doing the weather, including strippers and Neil Diamond sound-alikes). While some attendees at the conference thought that Las Vegas presented unique opportunities that might not be available in all communities, many were immediately speculating on the opportunities in their own communities to find unique personalities and events that could be developed on-air and on-line in ways to maximize their connection with their audience.

After the conference on Friday, I found two emails waiting in my inbox from broadcast industry pundits, both echoing the same sentiment that was reflected at the conference - that broadcasters need to take advantage of their current connection with their markets to grow their digital platforms, or someone else will come along and preempt the opportunity. See the comments from Hear 2.0 and Inside Music Media - both making the case that broadcasters must change to serve their communities to meet the new competitive threats. The message seems clear - broadcasters need to serve their communities or someone else will (see this blog post by USC Professor David Westphal, cited by Powell in his remarks, about how these other new media entrants can micro-target audiences and survive economically) .

All of these commentators seem to agree that there will be more and more service to local communities - either provided by broadcasters or by someone else. And this service will be provided without the need for any FCC mandates. The service will come if there is a market for that service - a need that can’t be artificially manufactured by government fiat. The FCC in the mid-1980s recognized that a broadcaster would either provide local service or be replaced by someone else who would, justifying the abolition of detailed public interest requirements. This was a full decade before the service that is now provided by the Internet was even a possibility. To now talk about reviving those detailed localism mandates, when the competition is far greater than anything imagined in the 1980s, seems almost impossible to justify. We’ll see what happens as the FCC deals with its localism proceeding in the near future.

Click here to read the original post and other blog entries on the Broadcast Law Blog

Posted by: Michael Boland
Program Director, Mobile Local Media

Mediaweek’s Katy Bachman was front and center at this week’s Winning Media Strategies conference in Washington D.C. (thanks for all the questions from the front row Katy).

She wrote yesterday about BIA/Kelsey mobile forecast data and some themes that emerged throughout the show — Many broadcast media companies showed a clear interest in mobile and in the “three screen” strategy. See her writeup here.

Posted by: Peter Krasilovsky
Vice President, Program Director of Marketplaces

As more and more digital products and partnerships are introduced, a real debate is emerging whether they can be sold by a traditional media sales type who may be more focused on core product, have limited time to make his or her case (and apparently, a “C student” as well).

WMS ’09 participants in Washington D.C. this week got their fill of the debate. Gordon Borrell of Borrell Associates is clearly of the school that Internet specialists have to be hired. “If you are developing interactive, you can’t do it without sales people,” he says, encouraging the broadcasters in the audience to budget for more feet in the street, even in these tough times. But, he adds, “I have not seen a single case where people are selling two products,” although “a lot of people are trying to do that.”

Kelsey Group CEO Neal Polachek, however, says the issue is really how we define the idea of a “salesperson.” In this day and age, “a salesperson is not just a salesperson; he is a solution solver,” says Polachek.

“He has to go in and figure out the best way to generate (the client’s) objectives. It might be one place on the wheel, or it might be two places. To go in and say: ‘I am going to sell Gross Ratings Points to you,’ or ‘I am going to sell Internet Yellow Pages to you’ is not going to fly.”

Rob Weisbord, director, digital interactive, Sinclair Broadcasting Group, said that much of the issue is simply whether the salesperson has the mental bandwidth to handle multiple products. “There are too many ‘c students,” he says. The current environment requires “A students” because “knowledge is the paradigm,” especially as Sinclair tries to “close the loop” of the array of ad products for three screens: TV, PC and mobile.

“They are 360 degree customer solution sellers,” says Weisbord. Consequently, “the best rep comes from a marketing background. We’re looking for athletes. They’re the most competitive.”

Posted by: Peter Krasilovsky
Vice President, Program Director of Marketplaces

Radio and TV station executives and industry groups are seeking to get chips inserted into mobile handsets to extend the reach of their respective programming. And they may do it with federal help as a public safety issue.

Emmis Communications President and CEO Jeff Smulyan, speaking at WMS ’09 in Washington D.C. said radio chips beat cell towers in cases of emergency communications, and can be put into every mobile phone for 50 cents or less – a message he had just been pushing in a day of lobbying on Capitol Hill. The entire installation would be just $1-2 per phone.

“Cell systems jam,” said Smulyan. “They’re only geared to take calls from 32 percent of the population, or something like that. But in an emergency, that goes up to 90 percent.”

The radio chip would have natural business extensions for the radio industry, in addition to providing emergency communications, added Smulyan. “It would change the perception of the (radio) industry as a dinosaur.” And it would be in the public interest because it would defend radio’s localism. “If you hear a song on the radio (over your phone), you could download it,” he said. “That’s just one application we’re talking about.

Radio over a mobile phone would also be more appealing than streaming over the Internet because “streaming is very expensive. You have to serve the whole world. But with a chip, you would only serve your local marketplace.”

Meanwhile, the TV folks are also itching to get a chipset onto mobile devices. Anne Schelle, Executive Director of The Open Mobile Video Coalition, said that Digital TV viewing is measurable, has unlimited capacity, and costs less than a penny an hour for each viewer. It stands in start contrast to dedicated Mobile video channels, which can only handle 25 streams at a time, and have network costs of $4.00 an hour.

Jerry Fritz Senior Vice President, Allbritton Communications,said broadcasters have the right plan, but the logistics will be a challenge. “You have to have five things go together,” he said. “You have to develop the measurement of mobile use. You have to have the manufacturer install the chip. And the broadcaster has to acquire the bandwidth.”

Posted by: Peter Krasilovsky
Vice President, Program Director, Marketplaces

Local advertisers speaking at WMS ’09 in Washington, D.C., this morning had plenty to say about how they perceive their choices in advertising, online and off.

Dianne Bonanno, senior manager, marketing communications, The Graduate School, said that her adult education company is doing good business. “In a downturn, people invest in themselves and institutions,” she noted.

Advertising-wise, things are changing quickly, as the company seeks to attract decision makers at companies who pay for their employees’ tuition, as well as open enrollment students who are paying for themselves. “We were a lot in print, but as a national institution, we have moved to a lot of online. We’ve added social media, too. It doesn’t cost hardly anything. There are so many free tools. We are taking full advantage of that.”

Bonanno also noted that social media takes the place of a lot of e-mail and other correspondence, which is too cumbersome to manage. The company also advertises in the Washington metro, news channels, news radio and other broadcast networks. Whenever possible, however, Bonanno said it works to put codes in its advertising to measure it.

Jerome Fowlkes, managing member, Broadlands, LLC, a discount haircut company, said it is spending 10 percent of its gross on advertising, in part via co-op campaigns with other haircut stores. It zeroes in on people looking for a deal or a discount, so direct mail efforts like RedPlum work especially well. Newspapers aren’t in the works, however.

“When a newspaper rep calls me, they don’t understand how I think. Basically, I ran a couple of ads with you, and got no response. Now I have moved on.” Fowlkes has also done some Internet marketing, and has aspirations to do more. “I want a more robust-type Web site to bring people in,” he said.

Valerie Passwaiter, assistant marketing manager for Northwest Federal Credit Union (and wife of BIA sales exec Steve Passwaiter) said her company has “benefited from recession in ways we never could have imagined” because credit unions are perceived as safe places to store money and provide good customer service. Her company has recently boosted its marketing budget by 10 percent to leverage the new interest in credit unions.

Some of the money is being spent on a co-op campaign developed by WRC-TV, which lets the credit union use a template ad that has 10 seconds customized for it at the end. Broadcasters aren’t necessarily going to win a larger share of the ad budget, however, “because they don’t listen. They talk at me.”

Newspapers are guilty of some of that as well, but they at least benefit from being a well-known commodity. “I know what they are, where they serve,” she said.

Some of the broadcast advertising has come with a Web site complement. The Web element is well worth the money, she said. “It has the best tracking mechanism. When we ran a campaign for auto loans on WTOP-FM, the Web site part of it on WTOP.com had clickthroughs from banners on top of the page. That $15,000 campaign ultimately was found to bring in $200,000 in car loans during a two-week period — a major success.

Passwaiter would like to use social media more as well. She has seen the success of Verity Credit Union in Washington state, which is paying young bloggers to comment on the good, bad and the ugly as they like. But company executives don’t see the value of it as a marketing tool. “They see daily visits to the fridge; what their kids are doing,” she said. “It is also tough for us to investigate as a tool, except on employees’ own time, because many office locations have restrictive Web site policies.”

Posted by: Peter Krasilovsky

New digital technologies using ATSC-DTV standards are redefining the TV experience and enabling new business models, says Glenn Reitmeier, VP of Tech Standards and Policy for NBC-Universal, who was speaking at BIA’s Winning Media Strategies conference in Washington D.C. “We are at a really exciting phase” akin to General Sarnoff’s use of radio receivers to redefine the radio industry.

Reitmeier says that what we’re seeing is a new software-based environment that acts as “an application framework” allowing such features as conditional access, subscription pay per view, digital rights management content downloads. When that is combined with interactive channels, a whole new world opens up, including voting, social networks, ecommerce and targeted ads.

The advances will enable broadcasters to reclaim their fundamental advantage by 2015, says Reitmeier. But it isn’t about the home TV. Fundamentally, consumers just want content on any screen. Devices such as video enabled phones are exploding, helping achieve growth from this “very mature business.”Non- real time services are also an important part of the equation, including on demand and cllipcasting, targeted ad insertion, and location based preference codes.

Mike Bloxham, Director of Insight and Research at the Center for Media Design at Ball State University, speaking on the same panel, continued on the same theme. Indeed, a recent study by The Center quantified 65 different categories of media consumption using four types of screens: TV, computers, mobile and “other,” including GPS, in-screen navigation etc.

While digital has added diversity at every demographic, Bloxham is quick to note that live TV still dominates and is used 318 minutes per day on average. That includes more than an hour of commercials – more time than is spent viewing news.

Pundits who have written off live TV in favor of the Internet, game consoles and Digital Video Recorders are getting ahead of themselves, he notes. It hasn’t happened yet. Those media are used far less. “Television is a very solid business for many years to come,” says Bloxham.

At the same time, “television” now consists of a mish mash of each platform. There are no ‘TV companies’ anymore, he says. “There is ‘platform promiscuity.’ Consumers don’t care in the slightest if programs coming in via telcos, mobile whatever. “

Posted by: Peter Krasilovsky

The use of online video, social networking and mobile services have “exploded”in the past year, and Internet radio is a big contender to join this group in 2009, according to Arbitron Executive VP of Sales Pierre Bouvard, who was speaking at BIA’s Winning Media Strategies conference in Washington D.C.

Online video popped like the Internet popped in 1999,” says Bouvard, noting that it went from 18 percent usage to 27 percent, or 69 million. A second pop is the devotion that consumers have for their cellphone. And a third pop will be with Internet radio this year.

The latter will see usage by 17 percent of Americans, or 42 million. “They aren’t kids. They are 25-54 (years old) and 45-54 is the biggest age sell. “It looks like the big radio demographic,” says Bouvard. “These folks are more likely to be full-time employed, have upper income salaries, and college degrees. The sweet spot is people at work,” which has become an extension of morning drive time. Bouvard adds that people listen to Internet radio for variety and control; few commercials; and its clear signal.

Social networking is also taking off. “Kids were there last year, with over half of 12-24 year olds using one of the services. But look (this year) at 55-64 (year olds).It comes on like a freight train.” Still, Bouvard says it is important to keep in mind the high percentage of people who are not using social services. While Facebook has gone from eight percent to eighteen percent, “that means that 82 percent don’t use it,” he says.

One service that has had more mixed results is video on demand, which has only “moderate” use. Thirty nine percent tried it once, 18 percent used it “last month, and one percent last week,” says Bouvard. It compares poorly compared to the dynamic interest and passion that consumers have for cell phone services, such as getting music on cell phones, maps and video. These results lead Bouvard to conclude that major distributors such as Comcast, Verizon, AT&T and Cox should focus more on mobile applications and less on interactive television services.

Posted by: Mike Boland

Today the Winning Media Strategies conference kicked off in Washington D.C.. One of the fruits of the BIA/Kelsey marriage, it’s bringing the Kelsey conference format to BIA’s longstanding audience and constituent base in local broadcast media.

One thing that stood out as a theme throughout today’s sessions was mentions of the mobile opportunity. This was mostly discussed in terms of how the mobile device can extend the viewing or listening audience in an incremental fashion

“Building on a mature media platform, mobile has the ability to extend home-based viewing,” said NBC Universal VP of Technology Standards and Policy Glen Reitmeier.

This comment reminded me of data I saw recently from MobiTV, indicating that 85 percent of mobile video viewers report watching more TV. In principle, its also similar to comments made later by Arbitron Exec VP Pierre Bouvard that online radio listeners aren’t reporting any detraction from the amount of terrestrial radio they’re listening to.

Back to mobile, its opportunities with broadcast media are further supported by looking at the fact that both are delivered over the air. Regulatory and technology barriers stand in the way of mobile devices receiving broadcast signals, but we are starting to see some companies such as MobiTV (carrier delivered subscription service) and uStream (iPhone app) move in that direction.

“When we talk about mobile, for once, here is an industry that is a plus for [broadcast],” said Dick Wiley, Partner at D.C. Law Firm Wiley Rein. “We’re going to continue to see improvements in storage capacity for immediate viewing and playback. Getting content wherever and whenever will be something that is well tailored to younger viewers.”

We’ll pick up the discussion tomorrow in a session devoted to many of these topics:

How Broadcasters Can Get the Local Edge in Mobile

What are the opportunities for broadcasters in local mobile media? Well start with the BIA/Kelsey forecast of the advertising revenue growth in local mobile media to 2013. Well identify specific opportunities for broadcasters in new parts of the advertising pie. This includes local content, mobile video, messaging and even interactive applications for mobile devices. In addition to advertising revenue models, subscription revenue models are also explored. Broadcasters can leverage local content, local sales forces and develop cross platform media campaigns to add unique value to their sales and marketing solutions.

Speakers:

Sam Matheny, General Manager, News Over Wireless
Ivan Braiker, CEO, HipCricket
Michael Boland, Program Director, Mobile Local Media, The Kelsey Group