In order to thrive, media companies will have to develop the right monetization strategies, operating models, and technical infrastructures.

The ubiquity of high-speed Internet, the explosion of mobile technology, and the convergence of devices represent evidence that consumers expect more. They expect their online experience to be fast, engaging, and completely on their terms. Did publishers see it coming? Perhaps, but no one could have predicted the confluence of trends that now have publishers scrambling to reinvent their business models.

In order to thrive, media companies will have to develop the right monetization strategies, operating models, and technical infrastructures. And when they think they’re done, they’ll have to evolve even faster because the pace of technological change is only accelerating. Those changes are also ushering in a seemingly endless stream of new formats and devices that are disrupting the traditional content distribution chain, and the resulting confusion will create competitive advantage for those that keep up. The clear winners will be those that can innovate and make decisions based on what makes strategic sense for the future, not based on what they’ve done in the past.

Turns out, content really is king

Shifts in the ways audiences consume content have significantly affected the ways publishers create, distribute, and monetize content. And within this now mobile-first and socially distributed marketplace, publishers have to figure out ways of overcoming the challenges of monetizing customers’ experiences on smaller screens.

There’s a lot at stake as the mobile experience becomes the preferred method of content consumption, and many publishers have simply not become ready for the shift. Consider this: Mobile has now overtaken desktop use. Mobile use has grown 11% year over year. And the average adult spends three hours per day on a mobile device compared with less than one hour just five years ago, according to recent comScore data.

As of last year, mobile advertising spending in the United States across all categories (including news) overtook desktop advertising spending. That growth in mobile pushed total spending on digital advertising to its highest point in the past six years. Mobile now accounts for slightly more than half (53%) of all digital advertising spending, for a total of $31.6 billion.

As media companies gear up, the next big thing is just beyond the horizon: consumers want more-personalized, more-immersive experiences. So, publishers will have to figure out how to deliver those experiences across devices based on data and on deeper understanding of audience needs and preferences—no easy task as they deal with diminishing ad revenues and the realities of market-dominating digital platforms like Google and Facebook.

Content delivery will be enabled through faster connectivity speeds and higher-performance, 5G connections.

And this is just the beginning. The evolution of technology is moving fast, and many in industry are predicting quantum leaps in the ways content will be developed and distributed.  More important, though, will be the ways we capture and use data to predict how people will discover, consume, and engage with content based on how they feel, what’s happening around them, and what they’re doing at any point in time.

Disruption is the new normal

The year 2017 is poised to be a breakout one for delivery of the promises of mobile, virtual reality, video, and immersive experiences. However, the gap will continue to widen between publishers that are willing to experiment, learn, and scale and those that will be left behind.

There’s a lot at stake in the disruptive, new-normal marketplace—namely, the free flow of information that fuels a healthy and informed society. Following are four key challenges to consider in order to both respond to consumer demand, and carefully weigh the options for new models that drive incremental revenue growth.

  1. Diminishing ad revenues are causing diminishing quantity and quality of content. So now what? Needless to say, the content game is changing. Digital platforms like Google and Facebook are claiming a majority of ad budgets, and the impact has a ripple effect: with declining revenue streams, publishers have less money at their disposal to fund credible and effective journalism and content production. So, the pressure is on for media companies to reaffirm their commitment to quality content and pursue untapped business opportunities.
  2. The removal of technological gating factors will create limitless content consumption options. As consumers gain access to faster and more-connected devices, they’ll be able to consume content wherever, whenever, and however they choose. Gartner is predicting that by 2020, there will be more than 20 billion connected devices globally—up from 6 billion today.If digital publishers future-proof their business models by achieving true revenue growth in the mobile category—as opposed to revenue rates that are simply flat or stabilized—their viability in both the short and long terms will be jeopardized.
  3. Kicking the mobile can down the road isn’t an option. Content was originally created for the Internet so as to enable a certain amount of information to pass through a much smaller pipe. As a result, Web pages and the desktop advertising experience appeared largely the same for too long. Once devices emerged that required new, device-specific user experiences, that all changed: consumers expected experiences suited to their devices, advertisers demanded experiences that were more engaging, and media companies and publishers were not prepared to deliver them. As we take the next leap in technological advancements that facilitate immersive experiences, publishers must leapfrog past current capabilities if they are to create sustainable revenue models.
  4. Publishers are unprepared for device convergence. With the convergence of Web, TV, streaming, and pretty much anything through a Wi-Fi protocol, there will no longer be barriers between media channels and devices. And once that convergence is fully realized, advertisers will seek to navigate a seamless media terrain wherein they’re reaching consumers with relevant, targeted, and engaging ads via relevant, targeted, and engaging content and are easily measuring the impact of that advertising so they can inform their strategies going forward. Media companies able to recognize, understand, and deal with this approaching media convergence will benefit from dramatic new revenue streams and business opportunities.

Theorem Insights

Here’s a big question: How confident are you in your ability to grow your average revenue per user across connected devices at a faster and higher rate than you can across desktop? If publishers can’t answer the question, they should have a conversation with their teams now, because it takes time to establish the systems, build the structures, and institute the culture changes that represent a thoughtful and meaningful approach.

The key will be for publishers to build and offer truly differentiated experiences across devices. Such improved, device-specific user experiences will result in more appeal from advertisers, because customized iterations of their content will solidify their audience bases, attract more consumers, and cause scarcity around their advertising inventories.

The opportunities for publishers in the digital arena are exciting, but the window for those opportunities is narrow. Unless the challenges are addressed seriously and methodically, the ramifications will be dire for their companies, their employees, and an informed, vibrant, democratic society.

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Posted by Brad Kitchen

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