Tag Archives: digital media

Tolls

As you might have guessed from the name of my company (Keith Ritter Media), I’ve spent a great deal of time in the media business, both as a marketer and as a publisher. The business model used to be pretty simple. Create something about which people care, make them aware that you’re offering it, get them to read, listen, or watch it, and aggregate those people into a saleable audience. You hired salespeople to meet with the representatives of your real customer – the advertiser. Usually, these representatives were media buyers from an ad agency. You with me so far?

In TV, we’d offer a unit of time at a “gross” price and asked the agency to remit a “net” price, which was usually the gross minus 15%. That commission was the toll we paid to get the revenue. Obviously, how much of that the agency kept was between them and their client but it wasn’t really our concern. We did our budgeting on the expected net revenues we’d get which was pretty much a straight line derivative of the gross monies sold. Other media had similar models but in every case, the dollars received by the publisher were directly and clearly tied to the size and desirability (to marketers) of their audience.

That statement in no longer true for digital publishing and the fact that it isn’t has serious negative implications for other media as they shift to a more programmatic sales model. I have no idea how digital publishers are able to do financial plans since they can’t project revenue from audience size. That’s because they’ve allowed themselves to generate billions of dollars in ad revenue while only capturing somewhere around a third of what is spent. The 15% that used to be paid in tolls is now more like 67% although some estimates are even higher. More importantly, it’s usually impossible to predict the net revenues received from the gross revenues sold. Digital audiences are growing while publisher revenue is declining.

Where is the money going? A sponsor pays $1 for an ad impression. The agency still takes their commission, but added to the toll-takers are trading desks, DSP providers, data providers, supply side platforms, ad serving platforms, verification services (viewability, etc.) and who knows who else. In some cases, it’s the agency double-dipping, but most of the time these are third parties. Most of these ad services have no interest in either the publisher’s or the marketing client’s success. They aren’t about a quality ad environment. They facilitate a transaction. In some cases, a platform that connects both buyers and sellers charges each side a separate fee without disclosing that they’re doing so. In short, publishers, agencies, and marketers have created a system that works for no one but the VC’s that fund these ad tech companies. What happens when programmatic spreads to other media such as TV?

Publishers have many other challenges. Facebook, for example, makes more money off of some publishers’ content than do the publishers themselves without paying the publishers a dime. But the real threat to a healthy media environment is the toll-takers. When you create great content and grow your audiences, you should be the entity that benefits and not some opaque service provider. More eyeballs used to mean more money to the bottom line. Can we make that equation true again?

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Filed under digital media, Huh?

Death By 1,000 Cuts

When I was in the TV business, the most sought-after demographic was always young adults. While they often weren’t the key to the heaviest volume of product sales, it’s when we’re young that we build consumption habits and establish brand loyalty. Let’s keep that in mind as we look at some recent trends in media.

You’re probably not surprised to hear that cord-cutting – consumers ditching their cable or satellite TV subscription in favor of streaming and.or over the air services – has continued to accelerate. As the Techdirt blog reported:

MoffettNathanson analyst Craig Moffett has noted that 2016’s 1.7% decline in traditional cable TV viewers was the biggest cord cutting acceleration on record. SNL Kagan agrees, noting that traditional pay-TV providers lost around 1.9 million traditional cable subscribers. That was notably worse than the 1.1 million net subscriber loss seen last year.

They also noted that those numbers don’t tell the entire – and much worse – story. Those numbers report those who canceled an existing subscription. When you take into account the youngsters moving out of their parents’ houses or graduating from college and forming their own household for the first time, there are around another million “cord nevers” who are missed sales by the traditional cable and satellite providers. It really doesn’t matter what business you’re in. When you stop attracting younger consumers, you have a problem.

Why is this happening and how can we learn from it in any business? Techcrunch, reporting on a TiVo study, said that:

The majority of consumers in the U.S. and Canada are no longer interested in hefty pay TV packages filled with channels they don’t watch. According to a new study from TiVo out this morning, 77.3 percent now want “a la carte” TV service – meaning, they want to only pay for the channels they actually watch. And they’re not willing to pay too much for this so-called “skinny bundle,” TiVo found. The average price a U.S. consumer will pay for access to the top 20 channels is $28.31 – a figure that’s dropped by 14 percent over the past two quarters.

There is also the matter of convenience and personalization. Netflix, Amazon, and other streaming services do a great job in making recommendations and offering you programming based on your viewing habits. Has your cable operator done that for you lately?

We can learn from this. Cable operators who focus on broadband and “throw in” the TV offerings aren’t doing much better than those who don’t, since the overall out of pocket is sullied by broadband caps and other, often hidden, price increases that help the bottom line but only prolong the inevitable. It also just makes it easier for a lower-priced competitor to enter the market. I know enough about how the TV business works to recognize the issues with skinny bundles (it’s hard to offer channels on an ala carte basis due to contractual restrictions). We’re seeing more and more offerings that bundle channels outside of the traditional providers and that’s going to exacerbate the aforementioned trends as well.

What’s needed is a rethinking of the business model. Getting local governments to preclude more broadband competition isn’t a long-term solution (look at the wireless business!) nor it is the “free and open market” to which most businesspeople pay homage. Listen to your consumers and give them what they want, especially the young ones. Cord cutting isn’t some far off fantasy that naysayers have dreamt up. It’s here, and it’s killing you by 1,000 cuts. The rest of us can learn from this and, hopefully, not make some of the same mistakes. You agree?

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Filed under Reality checks, digital media

Legalized Discrimination

I work with a number of startup companies, as I’ve mentioned before. There are a whole host of issues that these newbies face but one they don’t, if they’re digital, is the same sort of access to their potential audiences as is enjoyed by their much larger, entrenched competition. The reason for this is an underlying principle of the Internet which is that all traffic – those little packets of information that carry data, pictures, sound, etc. – is handled equally, both by the “backbone” companies responsible for transport and by your Internet Service Provider. You know – the folks (or folks, if you have a cable provider that provides internet access and a wireless company) to whom you send a check each month in return for the ability to send cat videos to your friends.

The reason for this post is to call your attention to the increasingly loud noises out of DC about giving those ISPs the ability to discriminate. Three years ago, John Oliver did a fantastic job of explaining why this issue is important and last Friday night, he did so again. Why did he need to? Because rules that were put in place to protect everyone are being changed.

Suppose you watch those cat videos on three different video platforms: YouTube, Vimeo, and a startup called CatVideosRule. You notice that the first two are crystal clear and in full high-def, while the last takes forever to load, buffers a lot, and isn’t very clear. It’s likely that the reason for that isn’t that the startup is using bad technology but that your ISP is prioritizing traffic. Maybe they are getting fees from YouTube and Vimeo. Maybe they don’t like cat videos and are slowing down the startup. The reason doesn’t matter. What does is that it’s discrimination and it’s going to be legal. In my mind, once ISPs get to pick and choose, it’s not a big step for them to begin censoring the content as well. You know: if you want to be on our network at full speed you will not criticize us, etc.

The new head of the FCC is suggesting that we just ask the ISPs to promise they’ll play nice. These are the same ISPs that promised you 50MB speed and deliver 30MB with no fee adjustment or apology. We are already seeing some services become “zero-rated”, which means that using them doesn’t count against any data plan you may have. It’s bad enough that the ISPs are boosting their own services at the expense of others. Legalizing another form of discrimination could be the death knell of one of the things that have fostered the dynamic, disruptive growth of our digital world. Do you agree? Are you following this story?

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Filed under digital media, Huh?

You Calling Me A Liar?

The screed is a little late today because I’ve been tied up on the phone trying to get the central air conditioning fixed. This saga started a week ago when I noticed that the house seemed rather warm. While the vents were blowing air, it was not cold air. I called the American Home Shield folks with whom we have a warranty and they set me up with a local repair firm. This is where the fun – and today’s business point – begin.

Last Wednesday, I set up an appointment for yesterday. They were supposed to arrive between 3 pm and 5 pm. I was not happy that it would take them almost a week to get to me, but I was told that’s the first appointment. On my calendar it went (not knowing that AHS has a 48-hour service policy, by the way, and that I could have asked them to set me up elsewhere. Doh!).

At 4:30 yesterday when no one had arrived or called to say they’d be arriving, I called the repair folks. The customer service rep had my info from AHS but didn’t have my appointment. In fact, she said they’d tried to call me, failed to reach me, and never set anything up.Obviously, someone screwed up and didn’t write down the initial appointment. I was told that after 8 minutes on hold, a hang-up, and calling them back. Needless to say, I wasn’t happy, but I became far less happy when I was told that the next available appointment was next week sometime, two weeks after I initially set up a repair with them. The manager got on the phone to inform me that I was making the whole appointment up. I offered to email him screenshots of my phone’s call log, showing that I spoke with them twice last week but he didn’t care. I asked him if he was in the habit of making up appointments and adding them to his calendar because I certainly wasn’t. He wasn’t either. I asked him if he was calling me a liar and he said he didn’t know what I was but I certainly never had an appointment. Finally, I mentioned that I wrote a business blog and that he was providing me with great material for what a business shouldn’t do and he laughed and said: “as long as you tell the truth.”

So I’m here to tell you the truth. None of us can ever call our customers liars or make them feel that way. None of us can ignore evidence that someone on our end screwed up and blame the customer instead. None of us can shrug our shoulders and tell a customer who has been harmed to get to the back of the line. Finally, none of us can ignore the potential social media backlash. Not that the screed is read by millions, but it only takes a few readers to start a backlash against your business. Hey – don’t you know who I think I am? The odds are you don’t know anything about the megaphone any of your customers hold but you should know that it doesn’t take more than a few minutes of writing to do a great deal of damage to your reputation.

AHS reached out to these bozos this morning. They again denied I ever spoke to them. We set up an appointment with another repair company, who called me 10 minutes after I spoke with AHS. By the way – when the new guys couldn’t see me until next week, AHS escalated my issue to a unit they have that will call all the area vendors to find someone who can cool me off (in both the physical and psychological sense at this point) in 48 hours or less.

So to the folks at Modern Mechanical HVAC, hopefully this will help you see why you can’t call your customers liars, along with the bad Yelp review, the link to this screed I’ll be posting on Nextdoor (a local bulletin board), and a bunch of other local information and review sites that will advise people to stay away from you. I’m just doing as you asked: telling the truth.

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Digging Into The Cart

One thing our digital age has given us is the ability to measure and understand what is going on in our businesses. We can learn even more by layering research on top of the data so that we understand not just the “what” but also the “why.”

A piece of research from Episerver has done that with respect to consumer shopping behaviors and their expectations for brands. While the study is focused on online commerce, I think many of the data points it surfaces apply into other business segments as well. Let’s see what you think.

The primary finding is that 92% of consumers will visit a brand’s website for the first time for reasons other than making a purchase. Of shoppers visiting a website for the first time, 45% are searching for a product or service, 25% are comparing prices or other variables, and more than one in 10 are looking for details about a physical location. A third of consumers who visit a brand’s website or mobile app with the explicit intent of making a purchase rarely or never complete checkout. Further, 98% of shoppers have been dissuaded from completing a purchase because of incomplete or incorrect content on a brand’s website, underscoring the need for descriptive, accurate content.

When consumers are prepared to make a purchase on a website or mobile app, the report found 60% go directly to the product page for the item they’re looking for. Another 18% look at sale items first, and 7% seek out customer testimonials before anything else.

What does all of that mean? In a word, engagement. Your ability to engage the consumer is key because the odds are that unless they feel engaged they’re not coming back. The fact that the overwhelming majority of first-time visitors are NOT there to buy points to an opportunity. How can you serve the real reasons why they’re there? How can you provide them with the information they need (accurate content, easily visible sale items, obvious, verified customer comments, etc.)

Hopefully, this is yet another piece of research that falls into the “duh” category. Most of the findings point to actions we should take that are just common sense. They’re the way we’d all like to be treated when we put on our consuming hats, aren’t they?

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Filed under Consulting, Helpful Hints

A Law Against Being Dumb

We all hate it when people say negative things about us. Obviously, if you’re a business and this happens, the odds are that the mean things are posted in some very public places, which can be damaging to your business. I’ve written a few times about various tactics a business can use to respond to negative reviews or comments: ignoring them, denying them, addressing them in a positive manner, or suing the person who posted them. This last tactic, which is, in my mind, the least effective and most dangerous, is no longer an option.
One of the last things the outgoing Congress did was to pass H.R. 5111 – The Consumer Review Fairness Act of 2016. This law, in its own words:

makes a provision of a form contract void from the inception if it: (1) prohibits or restricts an individual who is a party to such a contract from engaging in written, oral, or pictorial reviews, or other similar performance assessments or analyses of, including by electronic means, the goods, services, or conduct of a person that is also a party to the contract; (2) imposes penalties or fees against individuals who engage in such communications; or (3) transfers or requires the individual to transfer intellectual property rights in review or feedback content (with the exception of a nonexclusive license to use the content) in any otherwise lawful communications about such person or the goods or services provided by such person.

In other words, businesses can’t sue someone because they impose a form contract that prohibits the customer from making negative comments and it forbids businesses from slapping fees on customers who do so. We’ve seen this done by several businesses over negative Yelp reviews. Then there is the case of the company that bricked a users software after he posted a negative review (and I’m unclear if the Act actually prohibits this!). As you’re reading this, I’m hoping your response is “why do we need a law to stop businesses from being stupid?”

Good point. That said, some consumers have spent many hours and thousands of dollars defending themselves against voicing their honest opinions which are based in fact (the law doesn’t by the way, negate existing libel or slander laws). But let’s not stray from the important point: how to handle negative reviews.

  1. Apologize. Do so loudly and in the same forum where the consumer voiced their opinion. It doesn’t matter if they’re dead wrong.
  2. Take a deep breath and ask yourself if there are grounds for the complaint. Be honest. Is this a one-off or have others complained about similar issues?
  3. Ask to take the discussion offline into a private forum – email, phone, direct messages, etc.
  4. Make it right – no “buts” and don’t “try.” That doesn’t mean you should accept a ridiculous offer from them (lifetime free meals because they found a hair in their salad) but you should compromise on something that is reasonable and lets the customer know they’ve been taken seriously and not ignored.

We shouldn’t need a law to help businesses from being dumb but until many of us wise up and quit suing our customers for voicing their opinions, this one is on the books. Thoughts?

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Filed under Consulting, digital media, Huh?

Why Can’t You Yell Fire?

I think we all know that you can’t yell “fire” in a crowded movie theater. It will cause a panic and someone will get hurt. At a minimum, the odds are that someone will also call in a false alarm that distracts the fire department. That is a common-sense limit to free speech. Almost 100 years ago the Supreme Court said that the First Amendment, though it protects freedom of expression, does not protect dangerous speech.

I thought of that the other day when Google and Facebook announced that they would take what I think is a great first step in purging themselves of fake news by cutting off the access those sites have to revenue-generating or promotional ads. As Reuters reported:

Google said it is working on a policy change to prevent websites that misrepresent content from using its AdSense advertising network, while Facebook updated its advertising policies to spell out that its ban on deceptive and misleading content applies to fake news.

As someone who is devoted to the First Amendment, you might wonder why I’m OK with what seem to be limits on free speech. Fake news – or outright lies – are a big source of the divisive atmosphere most of us recognize exists in our country. They’re not hate speech, which I’m actually OK with because it’s so obviously slanted. They’re worse because they wrap themselves in a cloak of truth. As we’ve discussed here many times before, many people – both in business and out – don’t bother to do the research to find out if what’s being presented to them in factual. The presence of these sites and their fabricated BS makes a very difficult search even more so. No, the Pope didn’t endorse Donald Trump and yet 100,000 people shared that story as if His Holiness did.

By removing the financial incentive to create and promulgate this crap, Facebook and Google are taking a positive step in helping those of us who want to make decisions based on factual material. It’s not censorship; it’s arresting the idiot who’s yelling “fire” for a profit. Hopefully, the next step is some method to annotate and fact check the sites that remain. I also see that Twitter is suspending the accounts of some alt-right leaders.:

In a statement, Twitter said: “The Twitter Rules prohibit targeted abuse and harassment, and we will suspend accounts that violate this policy.”

There is no question that Twitter has become a bit of a cesspool and they certainly need to take some actions that clean up the rampant trolling and harassment that goes on. This, however, doesn’t sit as well with me since it starts down the slippery slope of censorship. The difference is my mind is that the fake news folks are making stuff up for profit while the hate groups are expressing (in theory) their own beliefs, however misguided.

Interesting times, aren’t they?

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Filed under Huh?, Reality checks