When charting the strategy for news media companies, INMA has long advised to invest heavily in foundations that won’t change. In the recently released “News Media Outlook 2018: The New Economics of Content,” those foundations are audiences, brands, culture, and data.
Wednesday morning, INMA executive director Earl Wilkinson led a live, in-depth Webinar, outlining the new strategic report and his key findings on a 40-day world tour of media companies.
“The reason to create value is changing,” Wilkinson said. “Today I’m asking you, what business are you really in?”
That may not be as obvious as one might think at first glance. With all of the rapid change that news media have seen in recent years, Wilkinson urged INMA members to focus on the things that won’t change — this year or next year. That is where they will create real, lasting value.
Value creation for news media happens in four major areas, Wilkinson said:
- Macro-trends in society, from scarcity to abundance.
- Media foundations: audience, brand, culture, and data.
- Tactics and priorities.
- Strategy principles.
We are in the shareholder value business, Wilkinson said, which stems from at least one of the following: journalism, ad sales, audience, technology, influence, or probability. “Your business is what your shareholders think it is, and value — not what you think it is or want it to be.”
He shared the following strategy principles:
- Invest heavily in things that won’t change — the foundations.
- Love the brands that pay the bills (print).
- Identify and embrace the big bets (typically one or two per year).
- Constantly get better — everything will change.
In spite of the constant transformation, there are certain media foundations that will not change: Audiences, brands, culture, and data. Let’s look at each of the four value creation areas in more detail.
Why macro-trends are important to you:
- Technology-fueled abundance is happening at a societal level.
- Media is caught up in this trend. The information abundance overwhelms us, and there is an oversupply of information and a low barrier to entry.
Technology is creating massive change, with great breakthroughs in humanitarian problems. It’s more and more about information, yet we are drowning in the information. What is the context for media?
Consumers are faced with over-abundance of choices, and we are in danger of writing for ecosystems instead of individuals.
What does this over-abundance mean for media? To put it in perspective, there are 4.4 trillion gigabytes of information today — with 90% of that created in the past two years alone. By 2020, there is expected to be 44 trillion gigabytes of information available to us.
Emerging context for news media amid abundance
Technology-empowering change will accelerate, and consumers are faced with information over-choice. Gatekeepers are the equivalent of 10 Facebooks, and markets will tilt toward extremes with over-choice.
In the end, our brand is everything. “Differentiation” lives, while “better” dies.
“Our brands must stand out more against the noise to have distinct personalities,” Wilkinson said.
Sometimes we are too focused on the mechanics of data versus what it can do to solve business problems. We are getting smarter with audience and product segmentation. We’re getting better on understanding the role of platforms and attaining young digital talent.
Room for improvement
“My read of our membership is that we are sometimes turning the whole show over to optimising for SEO and social; but we can’t forget the human elements of shaping our brands, instead of click-throughs,” Wilkinson said.
Reader relationships are becoming click-transactional.
- Too many companies are failing to on-ramp to the data highway.
- Print cultures and print workforces like an anchor to change.
- CEOs are frozen to make the digital switch; it becomes about money and time, versus short-term financial needs.
- Failing to position H.R. as a proactive arm of the company.
“CEOs can”t be frozen,” Wilkinson said. “We can’t have print people who are suddenly running the BuzzFeed part of our business, or vice versa.”
He admitted to being a little leery of “truth” as a news brand attribute. “It means different things for different people, so it doesn’t really work as a value proposition. The things that are selling are things like trust and differentiation.”
News brand attributes that stand on shaky ground are concepts such as truth, journalism, quality, fake news, and content that reflects our views. Attributes that universally work include trust, authenticity, facts, differentiating, and crusading versus empathy.
Big Data, AI, and beyond
There are three lanes in Big Data, ranging from tasks to ubiquity:
- In the slow lane are tasks: A/B testing of marketing messages; serving up digital advertising; working to improve subscription retention; and dashboard communication tools.
- In the middle lane is role expansion: moving beyond tasks to ubiquity; data becoming central to decision-makng; experimenting with low-end AI; and creative use of data.
- In the fast lane is ubiquity: looking at how data is ubiquitous throughout the company; how AI can replace human-centered data.
“This is really a cultural transformation,” Wilkinson added of the move from the slow to fast lane.
Why data is necessary now
It’s evergreen, and it gives us the ability to translate the data to improved business outcomes. Big Data is a fire hose of information and growing; we are in danger of drowning.
There is an urgency today in data:
- Use today’s capital base to create data foundation for the future.
- Lower cost of operations in the long-term; companies will be smaller in the future.
- Personalisation and relevance trends are becoming the new normal for consumers.
- The shift from blind marketing to metrics marketing.
The consuming public is expecting personalisation more and more. If you don’t have the data backbone, you’re not really getting into those spaces.
Value creation: Inside or outside P&L?
“Ninety percent of the media inudstry today is trying to figure out how to create a digital media company that preserves the scale of their organisation,” Wilkinson said. “They’re trying to make digital work inside the P&L. I would challenge you to think along those lines. What can you incubate along those levels?”
The strategy choice for media is profitability via a multi-media model, versus accepting low-margin media business as an incubator of bigger initiatives.
As the presentation came to a close, Wilkinson reiterated the key takeaways from his “News Media Outlook 2018” report.
- Brand perception matters.
- More is rarely better — relevant is better.
- Being in the middle is the most dangerous place today.
- Consumer needs can sometimes be a buffet, but sometimes they are a menu.
- We need to move from a goal of satisfaction to one of passion.
“We are moving from the ‘reach’ to the ‘each’ business model. Your challenge is how to make that work,” Wilkinson said.
One size does not fit all; the paywall and subscription model you select really depends on your consumers, their needs, and their behaviours.
Over-arching themes of 2018
What’s the context and value of what you do? Brands are not “nice” to have — they’re vital.
- Intense focus on consumer behaviour (versus tech).
- The rapid rise of reader revenue in the business model.
- Necessity of brands amid too much information.
- Re-thinking value propositions.
INMA: Is there a danger we could drown in the data? Can we simplify it?
Wilkinson: That’s the Big Data revolution right now for us — how to you harness that information and apply it in a way that solves problems. On a bigger scale, it points to the massive amount of information that will be at people’s fingertips in the next two years. Outside of journalism, there is a second huge role we play, and that is distilling all of that information for our readers at a local level.
INMA: What do you mean when you say HR has to be more proactive?
Wilkinson: Maybe I should rephrase that to say the CEO needs to reposition HR. I’m gently observing that the advance of moving HR to the front of the house has stalled a little bit. Encouraging young digital talent to come work for us is mission critical. Generally, I think HR can be at a higher position in media companies.
INMA: Regarding the “fake news” phenomenon, what about building trust with readers?
Wilkinson: In the U.S. for example, there are some big companies like CNN who are slightly repositioning their place in the media ecosystem as a neutral party, the opposition to this “anti-truth” policy in Washington D.C. Their definition of trust is neutrality, and they go deeper into what their version of the truth is.
INMA: What do you see as the role in multicultural media going forward?
Wilkinson: You can view that from two vantage points. For example, Spanish-language media in the U.S. is doing OK, but not great. Yet companies targeting the Indian diaspora in the U.S. are doing better; there are those targeting German, Costa Rican, etc. That’s almost a bigger market. It’s a complicated answer, depending on who we’re talking about.
INMA: Shareholder value: Do we ask them or assume that we know?
Wilkinson: What made this report so different for me is that it was 100% authentic. There was no deep analysis, just my own experience inside dozens and dozens of media companies. One thing I ask them all is, what business do they really think they’re in. They all have a different answer — ad sales, journalism, etc. — depending on what their role is.
They aren’t having a candid conversation together often. I would make the argument that the business we are in the most is the audience business. You could not say that 10 years ago. The minute you say to a newsroom that your worth is going to be based on the 10% of content that drives 90% of your sales, suddenly it’s a whole different thing.
INMA: What would be the challenges to media companies in emerging markets. What should we focus on in Latin America, for example?
Wilkinson: They have unique opportunities that do not really exist in the rest of the world. Most Latin American markets (and some European markets), there can be several. Secondly, there is upside in targeting the C/D market, not just the A/B market. You already have some inherent advantages in that you’re already serving a market with two brands.
INMA: How do you balance the brands that are making you money (print) while focusing on technology change?
Wilkinson: I don’t have the answer to that, but I have an answer to that. Remember the days when we put that “Internet thing” over in the corner? It’s now almost reversed, and we’re putting print in the corner. I think we should be looking at it more as a whole media company and not sacrifice print for digital. We need to have specialised people running all of these different verticals.