Almost one year contracting at Fairfax Metro. Best experience to understand the morphing of a traditional business to a digital one.
Fairfax has recently accelerated the evolution of its print heritage to digital & mobile platforms. Not easy but necessary when we know that newspaper advertising revenue is experiencing double-digit decline. Thinking that the success of the transition is totally relying on advertising dollars would be a mistake: Overall the advertising market in Australia is only predicted to grow by 2.8% over the next 3 years, of course the main growth driver is digital (+11%) capture revenue from other platforms, but overall the pie is not growing that much.
So what will it take for media companies to be successful in the digital age?
Defining (or creating) and owning a role within the value chains means: and engaged audience that is attractive to advertisers but also the opportunity to serve an area of the chain, therefore create transaction revenues, and grow out of the advertising pie into the e commerce pie.
I was recently at a PwC presentation and Megan Brownlow (Editor, Australian Entertainment and Media Outlook at PwC) summarized very well the challenges and opportunities that media companies face and identified new emerging roles within the value chain:
– Venue: The portals. They are the gateway to online content & services. e.g: Ninemsn, Yahoo!7
– Community Curator: Expert and established authority on a specific filed. e.g.: Business Spectator (recently acquired by News Limited for apprx $30 Mill). Conversant media with the Roar is also a brilliant example
– Content monopoliser: Creates or distributes highly desirable content that users are willing to pay for. Rights management is critical e.g.: HBO, Foxtel
– Device developer: Apple is the definition of this segment… setting the rules for its technology and defining the 30% of anything that goes in the app store
– Service champion: Fairfax has done very well in that space by bringing large audiences from its Mastheads to the online services it has acquired over the years e.g: Stayz, RSVP… we could add PayPal, Amazon, ASOS… to this list.
– Ideas generator: Nimble third parties, good at execution, good at collaborating. They will help traditional business to get more value out of their digital assets. I’d like to include digital cuisine in this bucket but also companies such as Innovid, Pixolut,…
Where are you positionned within the value chain? Are you feeling confident about your business at the end of the digital beginning?