In a recent discussion, Philippe and I noticed that Real-time bidding players are disintermediating traditional newspapers players, because they have built a direct relationship with the final client.
I/ Philippe Colliat shares 3 strategies online newspapers may pursue to improve their competitive position : Leveraging Big Data solutions can help online newspaper companies alter the power relationship with RTB players
First of all, online companies can resort to big data services which bring computing power to understand how real-time bidders make purchasing decisions. The fact is that advertising is changing dramatically, moving from human buyer to seller relationships to a technology driven real-time sales model. In this new automated world, Adomik aims at becoming a regional leader in providing advertising intelligence to Publishers for them to sell more and smarter. Adomik is a big data solution which is plugged directly into newspapers database. Adomik helps to understand the algorythms of buyers in order to understand purchasing strategies of RTB players. For example Adomik can estimate :
- Pricing sensitivity of RTB players
- Pricing estimates
- Pricing practices of RTB players
- Best time to sell
- Which RTB players will buy at what price and when ?
Online newspapers can use Adomik to change the power relationship with RTB players.
In doing so, they can offer some advice to online newspapers on how they can improve profit in their transactions.
II/ Leveraging content is another way to alter the power relationship with RTB players
There is also a second way companies can pursue : native advertising. Buzzfeed (maybe one of the most interesting new online media) provides native advertising. They help their clients design intelligent advertisements which will fit seamlessly into content. As consequence, Buzzfeeds helps to rehabilitate the value of content. Online newspapers can therefore derive more value for all the content they have produced.
Let’s assume that the online newspaper’s client is a sports car company, then, the following sequence may occur
- The online newspaper will identify what products their clients want them to promote
- The online newspaper will mine their content database and look for content that is related to their client’s products and business. In this case, they will look for content related to sports cars
- Then the online newspaper will put this content back online and associate it with relevant ads which will promote their client’s products
- When consumers flock to the newspaper to consumer content pertaining to sports cars, ads will be intertwined with original content
The key is create a very fluid consumer experience where newspaper content is intertwined so seamlessly with their client’s ads that the client doesn’t recognize an ad as… an ad. Ads are positionned in such a way that they appear to be a “paid” extension of newspaper content. Even if it’s clearly tagged as an ad, the relevance of the ad is such that advertisers benefit from higher consumer attention. This produces higher transformation rates.
III/ Using innovation to get back to the old tested and tried business model
Finally, there’s a third way media companies and online newspapers can use to regain a larger portion of value in their markets. This involves to reconnect with the tradtional business model, that of paid content. There is a startup that’s called Zuora which is an active proponent of the subscription economy. They offer multiple subscriptions which can be changed very fast by online newspapers. For example, a newspaper could offer :
- a $4 a month description for news pertaining to sports
- a $5 dollar monthly subscription for news related to economy and politics.
- a $10 subscription for news covering finance, diplomacy and sports, for example.
In any case, this service offers companies the opportunity to test different pricing points for different kinds of content and adjust to their customer’s pricing sensitivity.
So there basically three ways companies can regain the value that they have lost:
- Leveraging Big Data solutions can help online newspaper companies alter the power relationship with RTB players
- Leveraging content is another way to alter the power relationship with RTB players
- Using innovation to get to the old tested and tried business model
This summarizes the conversation I had with Philippe Colliat.
Further readings
- For more information on paywalls, please refer, here and here
- For a discussion on two different newspaper strategies, that of the Washington Post and that of the NY Times, please refer here
- For more information on native advertising please refer here
- For more information on how native ads outperform banners, please refer here
- For a presentation on how Adomik can improve performance, please refer to this post, in French
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