Pre­dic­tions

The Insider - - INSIGHTS -

Am­pli­fied Au­to­ma­tion

Au­to­ma­tion is a dou­ble-edged sword that will con­tinue to be wielded by pub­lish­ers this com­ing year as they look to har­ness its huge po­ten­tial in terms of en­hanc­ing op­er­a­tional ef­fi­cien­cies. But with ev­ery sil­ver lin­ing there is al­ways a cloud.

Au­to­mated buy­ing and sell­ing of ad­ver­tis­ing is still in its in­fancy (es­pe­cially on mo­bile) and like many new so­lu­tions, it has al­ready cre­ated as many prob­lems as it at­tempted to solve – ban­ner blind­ness, ad fraud, malver­tis­ing and per­haps the scari­est of all – ad block­ing. Ma­tu­rity may even­tu­ally lead to ad fraud and mal­ware pre­ven­tion, but when it comes to ad block­ing, tech­nol­ogy won’t be able to put the tooth­paste back into the tube. The only so­lu­tion will be to fo­cus on the needs of the per­son over pub­lish­ers’ purses and de­liver the type of ad­ver­tis­ing that would be missed if it was gone. To try to pro­tect their dwin­dling ne­go­ti­at­ing power in the ad ex­change value chain, larger pub­lish­ers will con­tinue to ex­per­i­ment with ad-block­ing so­lu­tions and form new al­liances as they did in 2015 (e.g. Pan­gaea Al­liance, La Place Mé­dia) in an at­tempt to scale their in­ven­tory and wres­tle ad dol­lars away from smaller play­ers. But this won’t solve the fun­da­men­tal prob­lem with au­to­ma­tion – the alien­ation of au­di­ences.

Some­day ad­ver­tis­ers will be able to de­ter­mine the wants and needs of users with­out creep­ing them out and de­grad­ing their dig­i­tal ex­pe­ri­ence, but we’re not there yet and I doubt we’ll be there in 2016.

Which brings us to…

Smarter Data

Big Data was a BIG deal in 2015 and it will con­tinue to get big­ger as the fine line be­tween Big Data and AI blurs into Smart Data.

Go­ing be­yond data min­ing and sta­tis­ti­cal anal­y­sis, Smart Data ex­ploits be­hav­ioral an­a­lyt­ics to pre­dict how peo­ple will dis­cover, con­sume and en­gage with con­tent based on am­biances, what’s hap­pen­ing around them and what they’re do­ing at any point in time.

Those pre­dic­tions will lead to more and more gran­u­lar lev­els of tar­get­ing, al­low­ing pub­lish­ing sys­tems to choose the op­ti­mal con­tent (in­clud­ing ads) to de­liver to the per­son, when, where and how they want to re­ceive it. What’s even more ex­cit­ing, is that Smart Data can help em­power peo­ple with in­for­ma­tion that they didn’t know they wanted or needed.

Sounds a bit far­fetched to­day, but it’s not that far from re­al­ity. To­day Big Data and AI are mak­ing in­roads into fi­nan­cial mar­kets, health­care and even crime pre­ven­tion. Over 60% of the view­ings from Net­flix are the re­sult of AI-driven rec­om­men­da­tion al­go­rithms that go way be­yond user star rat­ings.

It’s just the be­gin­ning, but the evo­lu­tion of this tech­nol­ogy is mov­ing very, very fast. And if Google’s new quan­tum com­puter is any in­di­ca­tion of how fast, we might be in store for the next quan­tum leap in pre­dic­tive an­a­lyt­ics sooner than we think.

Con­tent Seg­men­ta­tion

Driven mostly by mil­len­ni­als who were ex­pected to con­trol US$2.45 tril­lion of pur­chas­ing power glob­ally in 2015, the world is mov­ing from a knowl­edge-based econ­omy to a pas­sion-based one.

To bet­ter serve these con­sumers, some pub­lish­ers are start­ing to seg­ment their con­tent based on peo­ple’s pas­sions, pro­duc­ing bun­dles that could be pack­aged sep­a­rately and in­clude not only writ­ten con­tent, but au­dio, video and even syn­di­cated con­tent from other sources such as broad­cast me­dia.

The Globe and Mail started down this path with its Globe In­vestor bun­dle. Of­fer­ing the lat­est in­vest­ing news and anal­y­sis, this pop­u­lar site and app is the Globe’s cash cow. The in­vest­ment-driven con­tent is also the main trig­ger that con­verts trial users to paid sub­scribers of Globe Un­lim­ited.

Tan­gi­ble Me­dia in New Zealand is also fo­cused on build­ing and mon­e­tiz­ing one-to-one re­la­tion­ships with con­sumers based around some­thing that they are re­ally pas­sion­ate about. They put a large amount of em­pha­sis on re­la­tion­ships with sub­scribers and the data that sur­rounds them. They link ed­i­to­rial prop- os­i­tions within a prod­uct or mar­ket cat­e­gory where there is com­merce tak­ing place and where there is a def­i­nite re­la­tion­ship be­tween some­thing that peo­ple are pas­sion­ate about and how they spend their money.

Face­book is also ex­per­i­ment­ing with seg­men­ta­tion, of­fer­ing some users cat­e­gory-spe­cific ver­sions of the news­feed. It’s all part of its plan to be­come the best per­son­al­ized news­pa­per.

Seg­ment­ing and per­son­al­iz­ing con­tent fits within the per­son­first men­tal­ity, which is why we should ex­pect to see more pro­gres­sive pub­lish­ers look­ing to test it with their au­di­ences.

In­creased Di­ver­si­fi­ca­tion

Di­ver­si­fi­ca­tion has been the mantra of fi­nan­cial ad­vi­sors since the dawn of the stock ex­change, and for good rea­son. Putting all of one’s eggs in one bas­ket is a high-risk game in fi­nances; the same is true for pub­lish­ing. Which is why more and more pub­lish­ers (e.g. Fu­ture Plc and Condé Nast) are di­ver­si­fy­ing their port­fo­lios with com­ple­men­tary prod­ucts and ser­vices (e.g. events, broadcasting, com­mu­ni­ties, schools, mar­ket­ing agen­cies, stores, cafes, etc.) de­signed to at­tract and en­gage with read­ers be­tween page flips. These new busi­ness lines are not only strength­en­ing the ties with au­di­ences, they are form­ing new rev­enue streams for the brand.

Ex­pect to see more pub­lish­ers en­ter into new part­ner­ships and non-tra­di­tional ac­qui­si­tions to fur­ther di­ver­sify their of­fer­ings so they can bun­dle as­sets for peo­ple based on their pas­sions, in­ter­ests, needs and de­sire for new…

En­ter­tain­ing Ex­pe­ri­ences

Al­bert Ein­stein said, “The only source of knowl­edge is ex­pe­ri­ence.” If that’s true, then why aren’t more pub­lish­ers look­ing to bun­dle “ex­pe­ri­ences” with their con­tent?

In 2015, New­zoo pro­jected screen-based global gaming rev­enues would hit US$91.5 bil­lion by yearend and US$107 bil­lion in 2017. In­fil­trat­ing these games with news con­tent al­ways seemed like a no-brainer to me, but few have tak­ing the leap into this highly lu­cra­tive form of en­ter­tain­ment. Yes, a few large pub­lish­ers have dab­bled in gam­i­fy­ing the news, but gaming is mostly be­ing seen as just another tool in the jour­nal­ism tool­box. It could be so much more!

Another grow­ing trend is the rise in “im­mer­sive en­ter-

tain­ment”, in­clud­ing Vir­tual Re­al­ity (VR) and Es­cape Games which gained pop­u­lar­ity in 2015. Im­mer­sive en­ter­tain­ment is cap­i­tal­iz­ing on the mil­len­nial gen­er­a­tion’s will­ing­ness to pay for mem­o­ries and new ex­pe­ri­ences to en­rich their lives. You don’t need Smart Data to fig­ure out that mil­len­nial money is call­ing you to fol­low it. The num­ber of ac­tive VR users is pre­dicted to reach 171 mil­lion in two years.

It’s no sur­prise that The New York Times and The Econ­o­mist are al­ready ex­per­i­ment­ing in this space, but ex­pect more pub­lish­ers to jump on this po­ten­tial gravy train as Face­book’s Ocu­lus Rift, Mi­crosoft HoloLens, HTC Vive, Sony Project Mor­pheus and the next Sam­sung Gear VR hit the shelves this year.

VR hard­ware is ex­pected to cre­ate a US$2.8 bil­lion mar­ket by 2020, up from only a US$37 mil­lion mar­ket in 2015. No real money will likely line the pock­ets of pub­lish­ers in 2016 or even 2017, but there is lit­tle doubt that once the big global guns have ironed out the kinks in the new tech­nol­ogy, smaller pub­lish­ers will be stand­ing by to tai­lor VR and other im­mer­sive ex­pe­ri­ences for their lo­cal au­di­ences.

End­less Ex­per­i­men­ta­tion

When the Ap­ple Watch hit the mar­ket in 2015, pub­lish­ers with deeper pock­ets spent the big bucks to ex­per­i­ment with what worked and what didn’t on these shiny new toys. No one re­ally got it right, but it taught pub­lish­ers a les­son – when build­ing apps for smart­watches, stop fo­cus­ing on the wear­able and what you can do with it; fo­cus on the wearer and what they want to do with it.

2016 is poised to be a big year of ex­per­i­men­ta­tion to de­liver on the prom­ise of seg­men­ta­tion, wear­ables, di­ver­si­fi­ca­tion, new ad­ver­tis­ing so­lu­tions and im­mer­sive ex­pe­ri­ences, but I think what we’ll see is a much wider gap be­tween those who are will­ing to ex­per­i­ment and those who are ba­si­cally rid­ing the wave. A num­ber of fac­tors are likely driv­ing this re­luc­tance in­clud­ing a lack of knowl­edge, fears of high costs and fail­ure, or worse - can­ni­bal­iza­tion. Or it may just be blind ig­no­rance, which is very much alive and well in the in­dus­try.

The lack of em­pir­i­cal ev­i­dence that comes with new ideas will lead pan­icky pub­lish­ers down the road most trav­elled – a be­hav­ior that has cre­ated a col­lec­tive cul­tural paral­y­sis we see to­day. When plan­ning for a new to­mor­row, tra­di­tional pub­lish­ers will likely rely on their gut feel­ings - feel­ings that are mis­placed be­cause that gut was formed in the print era.

But for those will­ing to risk a lit­tle to gain a lot, I think their ex­per­i­men­ta­tion will pay off, not just in dis­cov­er­ing op­por­tu­ni­ties in emerg­ing trends, but in im­prov­ing op­er­a­tional ef­fi­cien­cies in legacy prod­ucts as ex­per­i­men­ta­tion be­comes in­creas­ingly cheaper.

Whether pub­lish­ers see the op­por­tu­ni­ties in ex­per­i­men­ta­tion or view it as a money pit re­mains to be seen, but I’m wor­ried risk aver­sion will win over re­wards if past be­hav­ior is any in­di­ca­tion of the fu­ture.

Strange Bed­fel­lows

In 2015 we saw some in­ter­est­ing con­sol­i­da­tions in the trade, con­tin­u­ing the trend started by War­ren Buf­fett in 2013 with his pur­chase of dozens of news­pa­pers in the south-east­ern U.S., Jeff Be­zos’ sur­prise ac­qui­si­tion of The

Wash­ing­ton Post and John W. Henry’s buy­ing of The Bos­ton

Globe later that same year.

Transna­tional trans­ac­tions con­tin­ued through­out 2015 with Nikkei buy­ing Fi­nan­cial

Times, Alex Springer in­vest­ing in Blen­dle and then procur­ing Busi­ness In­telli-

gence, casino mogul, Shel­don Adel­son, ac­quir­ing Las Ve­gas Re­view-Jour­nal and Alibaba Hold­ings tak­ing own­er­ship of South China Morn­ing Post (SCMP).

There is no ques­tion, the own­er­ship game is chang­ing. These new own­ers have lit­tle or no back­ground in jour­nal­ism and may or may not have the al­tru­is­tic ideas about the spread of democ­racy through jour­nal­ism. They are busi­ness peo­ple who are pas­sion­ate about their busi­nesses, not jour­nal­ism per se. But they be­lieve in the value of qual­ity con­tent, and while some may use it to pro­mote per­sonal/po­lit­i­cal agen­das, more will look to em­power jour­nal­ists to “cre­ate” real value for their cus­tomers, giv­ing peo­ple more of what they want in a con­ve­nient way at the right price. For ex­am­ple, when Alibaba Hold­ings pur­chased South

China Morn­ing Post (SCMP), one of the first things it did was take down the pay­wall, see­ing it as an in­hibitor to the spread of con­tent to a larger au­di­ence of new prospects.

Jour­nal­ism is not go­ing to die as more and more merg­ers and ac­qui­si­tions emerge through­out 2016. In fact, the op­po­site is more likely true in that jour­nal­ists can ac­tu­ally flour­ish with more free­dom to be cre­ative, build their own brands, de­velop closer re­la­tion­ships with au­di­ences and con­nect peo­ple through their con­tent. Mean­while these less pro­tec­tion­is­tic own­ers will open up new chan­nels of com­mu­ni­ca­tions and en­gage­ment op­por­tu­ni­ties with prospects they need to reach with their other prod­uct lines and ser­vices.

MARK TWAIN ONCE SAID…

“The se­cret of get­ting ahead is get­ting started.” Although it took early hu­mans 650,000 years af­ter the first use of fire to mas­ter it, that one dis­rup­tion trig­gered many in­no­va­tions that fast-tracked hu­mans in their evo­lu­tion­ary jour­ney. The jour­ney seems to be get­ting bumpier as more and more dis­rup­tions emerge in an al­ready shaky land­scape.

The last decade has been chal­leng­ing, but 2016 is a new year with new op­por­tu­ni­ties af­forded to us by new dis­rup­tive tech­nolo­gies and so­cial change. May you look upon them with hope rather than fear and be in­spired to do some­thing amaz­ing this year. Let’s get started!

Happy New Year ev­ery­one!

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