February 08, 2007

Video Surges While Search Lags - 5 Trends to Watch in the Online Content Industry

SUMMARY: Want to know what's working -- and not working -- for online media companies and content providers?

We polled more than a dozen marketers, circulation managers and online strategy directors to learn which tactics are on top of their to-do lists this year (video) and which challenges they’re finding most significant (rising costs of paid search).

Plus, they tell us how to make money from online communities.

With the first month of 2007 already in the books, media companies and content providers have mapped out their strategies for the year, if not launched the initiatives they hope will sell more subscriptions or paid content online.

After talking to more than a dozen marketers, circulation managers and online strategy directors from a host of companies, we found that there’s continued focus on the nuts and bolts of selling content -- from testing new email offers to deciding which content to place behind the barrier. But we also heard a great deal of talk about the current Internet buzzwords: the long tail, user-generated content, social networking and viral video, to mention a few.

It’s clear these are intriguing notions for content providers, but how can you make them work? And how much can you focus on those areas while dealing with market forces that are prodding many marketers to adopt other new tactics?

Potential approaches are plentiful, but here are five trends that stand out:

-> Trend #1. Declining effectiveness of paid search marketing

We heard a chorus of complaints about the rising cost of paid search marketing, often coupled with a troubling lack of results. “We’re getting better at [search marketing], but we’re not getting more customers,” says Sanjay Singhal, CMO Simply Audiobooks. “Other companies are getting better at it, too, and driving up the price.”

The situation has some online publishers returning to traditional means of marketing subscriptions and paid content:

o Simply Audiobooks tested radio and billboard advertising to entice customers to join its subscription audio book rental service. One intriguing result: A limited billboard test in Toronto featuring a cheeky joke about President Bush’s reading ability generated a nearly 300% increase in Web traffic from the region. But Singhal notes that the increase was generated from a very small base and in a market where Bush is extremely unpopular.

o The Nation magazine found success with direct response TV and radio ads that sent viewers to their Web site to sign up for subscriptions. But Circulation VP Arthur Stupar says the magazine is lucky: Its political focus means it has several cable news channels and programs to target, making running a TV campaign cost effective.

o Online recruitment site TheLadders.com is jazzed about direct mail. It launched a 1 million-piece campaign last month after testing smaller campaigns in 2006. By choosing highly targeted lists, such as those from CIO and CFO magazine, TheLadders.com has seen response rates as high as 7%, says co-founder and Marketing VP Alex Douzet.

While no marketer said they were giving up paid search marketing altogether, the key message for publishers who lean heavily on the technique was to develop a portfolio of complementary marketing channels to pick up the slack when certain keywords become too expensive or less effective.

-> Trend #2. Turn online video into revenue

The hype around video is intense, which means marketers and online managers need to take a careful look at how to make money from the medium. Ad supported? Pay-per-view? Subscription-based? One size may not fit all.

o Turner Broadcasting recently launched three online video services with different revenue models: CNN.com offers CNN Pipeline, an on-demand news feed, for a monthly rate of $2.95 or for an annual rate of $24.95.

VeryFunnyAds.com, a consumer-focused Web site, provides free downloads of humorous TV commercials from around the world. Turner is selling advertising around the content, which, interestingly, also happens to be advertising.

Finally, Tuner created niche sports service ACCSelect.com, which streams live or recorded games -- such as lacrosse, rowing, field hockey or fencing -- from Atlantic Coast Conference colleges. Betting that such sports have a small but rabid fan base, ACCSelect charges a $3.95 pay-per-view rate or a monthly rate of $5.95. The company is still monitoring results to see which approach gains the most traction.

o Other Web sites are using video as feature to drive more traffic which, in turn, could translate into incremental online or print subscription sales. But Arthur Stupar of The Nation warns that the relationship between site's traffic and subscription sales is not direct. Translation: Test.

o Video’s appeal isn’t limited to content providers: Advertisers are also requesting the video option for their online ads.

-> Trend #3. The appeal of advertising sales

Online advertising is booming again. After a record-setting 2005, when online ad revenues totaled $12.5 billion, according to the Internet Advertising Bureau, 2006 was on track to set yet another record. For the first six months, online ad revenues totaled $8 billion, putting the market on an annual run-rate of $16 billion to $18 billion.

Content sites aren’t waiting around to see the year-end report to convince themselves, though. Several publishers view online ad sales as their biggest growth area and are willing to trade gated content for lots of free content as a lure to sell subscriptions to draw a crowd -- and, in turn, advertisers.

One example: Time.com relaunched its Web site in January with ad sales at the center of its strategy. For the past six months, Time.com has beefed up its sales and marketing staff. And the relaunched site frees up previously gated content, but features new advertising options, such as a 336 x 850 ad. The old site’s biggest ad was only 336 x 250.

-> Trend #4. Build (and make money) from online communities

Like video, social networking and online communities are buzzwords among content sites. But several people we spoke with wondered where the payoff is. One approach: tie the benefits of community -- a more engaged audience, more frequent visits to your Web site -- to an advertising sales strategy.

Sporting News has made an online community and user-generated content a key feature of its free online content. But instead of a MySpace-style free-for-all, Sporting News created a ranking system for its 1 million registered, active users. Fellow members rate each other’s comments, and those ratings, combined with the user’s activity level, earn them a ranking of one to five stars and the chance to compete for online awards and recognition.

Besides the appeal to members who want to prove their sports knowledge, a system that encourages frequent activity and useful comments helps calm advertisers who are squeamish about placing ads next to user-generated content, says Jason Kint, VP General Manager Online. “Media buyers are finally shifting from a broad-based, mass-reach buy to a more engaged, higher quality audience.”

-> Trend #5. Make the most of audience segmentation

While audience segmentation isn’t a new concept, online subscription sites are looking for new ways to deliver their content or marketing pitches to smaller, tightly defined niches.

o Books24x7, a subscription-based library of technical manuals and other B-to-B content, is making a push toward further customization of its database into smaller, themed libraries that it can license to third-party sites that want to offer resources to their own customers.

For example, the company may package a portion of its existing health and wellness book titles into a consumer-focused library, which could then be marketed to insurance companies looking to educate their own customers and create a reason for them to hang around the company’s Web site.

o TheLadders.com's Douzet is intrigued by the idea of persuasion architecture for his subscription site, as outlined in the 2006 book ‘Waiting for your Cat to Bark?’ by Bryan and Jeffrey Eisenberg. That could mean not just tailoring different marketing messages for prospective subscribers, but creating different paths on the Web site once they arrive to help convince them to subscribe.

“We all market to the average, but there’s no average customer,” he says.

Useful links related to this article

Creative samples from online site trends:




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