I missed this huge media acquisition news while I was on vacation:

BCE Inc. has in one fell swoop remade Canada’s media landscape and set the stage for a fierce battle between the phone and cable companies over watching TV shows on something other than a television.

The telecommunications giant on Friday struck a $1.3-billion deal to take full ownership of CTV Inc., a move that breaks apart CTVglobemedia, gives control of The Globe and Mail back to the Thomson family and marks the exit of Torstar Corp. from the group, further shaking up an industry that is constantly being reshaped.

via Bell ushers in new era with CTV deal – The Globe and Mail.

What it means: I love this quote (in another Globe & Mail article) from Kevin Crull, Bell Canada’s President – Residential Services: “Mr. Crull said that he considers Bell more of an entertainment company than a straight communications company, reiterating Bell’s stated goal to be the largest TV provider in Canada by 2015. “You can’t separate entertainment and communications any more, because of broadband [high-speed Internet],” he said.” It’s definitely back to the future for Bell Canada as the company (under Jean Monty’s direction) had bought CTV in 2000. It had resold it under Michael Sabia’s rule. I personally thought Monty’s move was brilliant and I think this vindicates him.

I also think it clearly confirms that content is, once again, king. And it also makes me think about the Yellow Pages industry. Many industry CEOs state that their main asset is the sales force. I think senior management should not forget about content. Local search is all about breadth and depth of content, not just sales.

As some of you, I’m coming back from a great vacation in the south of France. I was mostly offline for the duration of the vacation but still regularly picked-up French newspapers while I was there, most notably Le Monde (for national and international news) and La Provence (for local news). I kept a few articles that I think were blog-worthy and I’m going to share those with you in the coming days.

The first article titled “Rebond du marché publicitaire français en 2010″ (Advertising spending in France bounces back in 2010) was published on October 1st in Le Monde (paid link). The article discusses ad spending in France in the first semester of 2010 by various media vehicles. Data comes from Institut de recherches et études publicitaires (IREP) and data can be found here (.pdf).

I found the following interesting data points:

  • Television is the number one media in terms of ad spending (by far) with 1.7 billion euros and a growth of 12.8% over the same period last year
  • “Internet”, it seems, only takes into account display advertising (i.e. banners)
  • “Internet” gets 264 million euros in spending, a growth of only 9% vs. same period last year. Outdoor advertising growth is almost as much with 7.3%.

What it means: a couple of observations. First, television still rules in terms of ad spending. That media hasn’t (yet!) been hit hard by the Web and still benefits from huge ad budgets. The atomization of TV programs (think on-demand online streaming) is still in its infancy and will not impact TV’s numbers drastically for at least 3-5 more years. Second, I’m not surprised display ads are not growing as fast as we would expect the Web to grow. Even though it is still the preferred method for online advertising, I’m not a big believer in its future. Third, I’m surprised IREP doesn’t do a better job at tracking online advertising in general. PagesJaunes Groupe, the French Yellow Pages, saw their online revenues grow by 6.7% just in the second quarter of 2010 (see press release in .pdf) for a total of 263.9 million euros. That’s an equal amount to what’s recorded by IREP for “display ads”!

One of the challenges in social media is building a robust community with many human activities and interactions. Something that’s alive and thriving. If you build it, they will NOT come. A lot of efforts are needed to get to the social tipping point. I’m always inspired by the story of Yelp.com. They had to regroup around their home base of San Francisco after a so-so first year of operations. They built momentum from there and were able to re-start successfully. From a recent Inc. article:

Without the cash for a national rollout, Stoppelman decided to focus on making Yelp famous locally. With the help of a buzz-marketing guru he hired on a whim, Stoppelman decided to select a few dozen people — the most active reviewers on the site — and throw them an open-bar party. As a joke, he called the group the Yelp Elite Squad.

To build a community, you need humans, you need personality. This is not only about hardware and software. In my many conversations with traditional local media companies (and those include directory publishers, newspapers, radio and television companies), I’ve discovered that not all local media are born equal when discussing social media. Some already have community in their DNA. Newspaper publishers for example have always been local opinion leaders, stirring conversations, trying to change things, and engaging their readers to contribute and provide feedback. Their journalists and editors are in effect community managers. Radio stations are used to doing contests (“the 12th caller will win a pair of tickets to so and so’s show”), urging listeners to call in to discuss various topics in talk radio, obtaining traffic information from drivers or getting friends to send messages to each other via the DJ. In smaller cities, radio hosts are superstars with their own nicknames and are invited to openings and movie premieres. Radio hosts are also powerful community managers.

I think that local TV stations used to be very strong local opinion leaders but as local programming disappears and is replaced by national content, it becomes more difficult to engage viewers locally. Still, local news anchors continue to have a great aura in a community. Through major television events (think Superbowl, Oscars, Olympics, etc.), national TV networks are creating social events of a bigger nature than any other media. TV industry pundits are saying social media is actually helping with ratings but all the activity is happening in the back channel, on Facebook and Twitter. It should happen on the network’s website or on the television set itself to create real value for those media companies. Directory publishers are in my mind the furthest from having social media in their DNA. A traditional directory look-up is very mechanical, utility-driven, even when it’s attached to an emotional life event. Users of directories do not engage with other users (yet) or with the publishers. We could probably make a case that there’s some sort of social/community relationship with advertisers but it would tenuous at best.

But with all these assets, social media still feels awkward or forced in traditional local media companies and it means the game isn’t won (or lost depending how you see the world). In the newspaper industry for example, journalists often badmouth bloggers and publishers struggle with user comments fearing trolls and lawsuits. The relationship is very unidirectional, I’m caricaturing but it often sounds like”we write, you read”. Success will come when newspaper groups understand the bidirectional nature of the relationship. In the radio industry, the atomization of their core content model (i.e. you can listen to any songs anytime you want online) threw them a curve ball but they can hook up their offline broadcasts with the Web to create a very loyal listener environment. In the TV industry, local content creation (online and possibly offline) should be embraced again and social engagement tools should be made available at the point of viewer contact (think online but also with TV set manufacturers, set top box, etc.). In the directory industry, the almost 100% focus on advertisers up until a few years ago has made the shift very difficult, but giving complete power to consumers will enable them to regain their reputation as the most trusted source for merchant recommendations.

Media companies, because of their “social assets” and strong offline components, should have a leg up versus their online media competitors but they often don’t realize social media and community building are part of who they are. I’m not sure newspapers and radios are fully realizing they already have strong assets to win in local/social. This is also the opportunity for local television to regain what it might have lost and for directory publishers to learn to swim the social media waters. They all need to take the plunge, sooner than later.

I was watching the US Open Federer-Djokovic match on TV yesterday when, towards the end, Federer made an amazing, between-the-leg, return to score a point. I immediately tweetedWhat a hit by Federer!!!”. I then stopped everything I was doing to watch a couple of instant replay on CBS, the network that broadcasting the game in North America. I was floored, what a shot. Federer went on to win the game.

Turns out I wasn’t satisfied with the two instant replays the network had provided me. I wanted to see more of it! Five minutes after the game, I searched for the word “Federer” on Twitter. Somebody had already uploaded the whole scene to YouTube in HD quality! I could watch it, pause it, analyze the shot the way I wanted to. I then tweeted back
the YouTube URL for all my friends to see.

What it means: a critical mass of people were watching the game. Someone took the time to “atomize” a portion of the broadcast (the amazing shot) and uploaded it on YouTube (the support). The “news” was then “announced” on Twitter (the discovery tool). Why isn’t this happening on CBS.com?

Excerpts from “How Much Ads Cost” – eMarketer.

(…) broadcast TV had the highest cost-per-thousand (CPM) rate of $10.25, with syndicated TV at $8.77. Magazines, cable TV, newspapers, radio and outdoor advertising round out the space. (…)

US Advertising CPM by Media 2008 eMarketer

As for spending in the online sector… it’s a little more complicated. (…)

For display advertising, Credit Suisse estimated that in 2009 the average CPM will be $2.39, down from $2.46 in 2008. (…)

As for paid search, JPMorgan projected that for every 1,000 searches, $75.33 would be generated from ads in 2009. (…)

What it means: always interesting to compare the CPM of various media. It gives you a good benchmark to calculate revenues needed to counter offline to online revenue migration. Again, no Yellow Pages CPM to compare though. I wonder if someone has made the calculation before for the directory publishing industry.

“ESPNChicago.com Launches Monday” via Mediabistro.com.

The Chicago-focused online sports destination will feature original content from some of the most familiar names in Chicago sports including former Bears wide receiver Tom Waddle and former Bulls announcer Chuck Swirsky.

ESPN Digital Media is also launching new technology that allows for geo-targeted content and ad insertion in both live audio streaming and downloadable audio. ESPNChicago.com will also make use of existing ABC/ESPN properties in the city including ESPN Radio 1000 and WLS-TV and abc7chicago.com.

Mini what it means: I’m seeing more and more “national” media brands (television, magazines, newspapers) deploying local strategies online. Makes sense. They leverage a powerful and trusted national brand online but they make it locally relevant. It’s something that’s usually very expensive to do offline but is cheaper to do online.

The Innovator's Dilemma

March 31, 2009

Yesterday, Sophie Cousineau, a business journalist from Montreal’s La Presse, offered her explanation as to why Barack Obama had to fire Rick Wagoner, the CEO of [praized subtype=”small” pid=”597ce70258167de10a3ead0ceea0179355″ type=”badge” dynamic=”true”] (GM). She talked about some of Wagoner’s past successes but also the fact that he hung on too long to his strategy that centered on SUVs and trucks.

It struck me that with the GM situation, we are facing a perfect example of the innovator’s dilemma. Coined by Clayton M. Christensen in the book of the same name, the innovator’s dilemma is “a theory about how large, outstanding firms can fail “by doing everything right.” The Innovator’s Dilemma, according to Christensen, describes companies whose successes and capabilities can actually become obstacles in the face of changing markets and technologies. ” (source: mit.edu) Christensen also talked about “disruptive technologies”.

In GM’s case, they were so focused on their high-profit margin products (SUVs, trucks, minivans) that they ended up being blindsided when the easy credit required to buy these expensive vehicles evaporated and the price of gas went through the roof.  It also reminded me that sometimes you need to kill your cash cow before someone else does it for you (or said otherwise, it’s better to cannibalize yourself than have someone else do if to you).

Which brings me to traditional media (you knew I was going there, were you?).

Newspapers traditionally have been huge cash-generating vehicles but they now have clearly met disruptive technologies both on the reader and on the advertiser side. Basic news is a commodity and aggregators (like Google News) serve as destination site. On the advertiser front, classifieds revenue has been completely disrupted via the free model (pioneered by [praized subtype=”small” pid=”c51b8fbbdf9041e28ba547a1644985a2c4″ type=”badge” dynamic=”true”]) and online eyeballs do not monetize as well as print readers. That leaves an industry that’s questioning itself with many people wondering what will happen to it in the future.

Directory publishers have very good profit margins but, for most of them, 80%+ of their revenues still come from the print platform. The good news is there hasn’t been too many disruptive technologies yet but you always have to wonder what will blindside the industry. Social media and mobile should be top of mind IMHO.

TV networks and cable providers are still enjoying a successful ride with broadcast/cable television and are slowly starting to think of a post-broadcast world. Disruption there will clearly come from the ability for viewers to go à-la-carte on the Web (either through legit or pirated channels) and link back to their television set. A startup like Boxee is trying to crack that nut.

What it means: the GM and the newspaper industry examples definitely show us that smart people, doing what feels like the right thing, can lead whole industries to catastrophe. What should media companies do? As Clay Shirky said recently “If the old model is broken, what will work in its place?” The answer is: Nothing will work, but everything might. Now is the time for experiments, lots and lots of experiments, each of which will seem as minor at launch as craigslist did, as Wikipedia did…”

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