By Russell Perkins, President, Infocommerce Group
The 2005 SIIA Information Industry Summit was held in New York City's Gotham Hall, an old, converted bank building that made for an interesting venue, and theatrical lighting added a bit of drama to what was overall a very upbeat event.
Two common themes emerged from almost every panel conversation:
Theme #1. A new emphasis on the importance of brand
Theme #2. A complete and total shift of power from the publisher to both the information user and advertiser (along with the corollary theme: Stay closer than ever to your customers to understand what they really want)Everyone's bullish on online ad sales
Part of the reason for the optimistic mood is that advertising is back, and online advertising is back with a vengeance. On average, most publishers are indicating that about 14% of advertising revenue is now from online, and most expect it to be over 20% within two years.
When a question was asked of one panel about a new study predicting 20% growth in online advertising revenues this year, a panelist said if he achieved 20% growth this year, he would be extremely disappointed. The others seconded this view, and advertising growth rates in the 40% to 60% range were being bandied about throughout the conference.
Noteable quotes on selling online ads:
o “Internet advertising is severely undervalued, perhaps by as much as 50%, and it’s largely our fault for the way we’ve been selling it.”
o “Advertiser and agency sophistication about online advertising is growing, but we’re still in the beginning stages.”
o “Interest in personalization and targeted online advertising is very, very big.”
As the online advertising picture becomes clearer, so too are the business rules for the online medium. The surprise that really isn’t a surprise: online publishing is turning out to work pretty much like print publishing. One creates a base of content then monetizes it by selling it or using it to attract an audience to whom advertising can be delivered. Despite all the talk about new business models, with the notable exception of pay-for-performance, there’s not much new under the sun.How publishers are reacting to search engines' dominance
On the always controversial topic of search engines, what I heard was very little controversy. Speaker after speaker indicated that they had made their peace with the search engines, deciding apparently that the traffic they bring, and in some cases advertising dollars, more than offset their less attractive qualities.
Some speakers acknowledged that the broad agendas of the search engines would likely pose ongoing future threats, but these were passing references. Are search engines going to eat the lunch of publishers? Ask that question to this group and the likely response would have been, “Yes, they’ve filched a few condiments off my plate, but I’m okay with that because I’ve still got my sandwich.”
What was concerning to many publishers, however, is the troubling number of Internet users who are seemingly content to settle for “good enough” information they can obtain for free via search engines. If so many users are so willing to trade quality to reduce or eliminate cost, the very notion of publishing is dealt a body blow.
Notable quotes on search engines:
o “Search engines don’t aggregate content, they aggregate consumers.”
o “Paid search results are clearly advertising, and organic search results can be thought of as free publicity.”
o “We are only a small part of the user’s day –- and we’re kidding ourselves to think otherwise.”Stronger brands equal more content delivery options
This leads right into the renewed emphasis on brand. The term “brand” means a variety of things, but for most of the speakers, I believe it was meant as the emblematic embodiment of their content products, integral to which is the quality of these products.
What I heard was that quality has moved from a competitive differentiator to a basic business requirement.
Quality is easy to claim, hard to prove and virtually impossible to show. For these reasons, it’s tough to hang your hat on quality, no matter how good your product, and that’s why most publishers are making a rapid move to bundle high quality content with tools that let their customers work with their data in high-value ways. Those not heavily involved in tools seem to be moving to higher-value formats, such as delivery in XML format or delivery to PDA devices. Whatever the specifics, there seemed to be no publisher not engaged in some combination of improving data quality, improving data usefulness, or improving content formats and delivery options.
These changes, these value-added differentiators, are expressed through the product brand. Brands have always been about trust, but in this new competitive environment, they are increasingly an expression of value.
However, most speakers seemed to dismiss blogs, regarding them as neither threatening nor particularly useful to their businesses; yet that didn’t stop the subject of blogs percolating through every aspect of the conference. They are impossible to ignore, yet so far impossible for publishers to monetize in any truly significant way.
Publishers have traditionally kept their customers, both advertisers and subscribers, at arm's length. In this new environment of rapid change and endlessly higher expectations, the smart publishers are discovering the competitive edge that comes from re-engaging with their customers to really understand what they want and how they want it.
Key quotes on branding and customers:
o “It’s dangerous to lose your brand through content aggregators.”
o “We can’t allow search engines to become de facto information brands.”
o “We need to think of our editors as brand managers.”
o “Customers are the disruptive force in our business.”
Example: Don Hawk of TechTarget described his company’s collection of Web sites, conferences, and print magazines as offering a “360 degree marketing environment” to his advertisers, from which they can customize programs to meet specific needs. Three more insights from Hawk:
o In discussing how important the Web has become for prepurchase research: “Advertisers don’t win deals online, but they absolutely lose deals online.”
o In discussing the relative roles of print and online advertising: “Print builds brand awareness before online research starts.”
o On evaluating ROI: “It’s critical to define customer success metrics on your own terms.”Feels like 1998 again (sort of)
Finally, it was notable the number of times the phrase “it feels like 1998 again” was heard both from speakers and attendees. But as one sage speaker noted, “If it’s 1998 again, that means we’ve only got two years until it’s 2000 again. While it’s only February, hopes were high for an extremely good year.Useful links related to this article
Infocommerce Group - Russell Perkins' company, a consultancy and analysis firm serving directory, database and specialized information publishers: http://www.InfocommerceGroup.com
Infocommerce Report -- A great monthly report from Infocommerce Group on the business of database publishing. We subscribe to it ourselves! http://www.infocommercereport.com
SIIA's site for the Summit: http://www.siia.net/iis/2005/default.html