TWENTY-FIRST-CENTURY media companies are well-positioned to take advantage of a changing global economy and are inventing new ways of monetizing previously unused audience assets, according to the chairman and CEO of Yahoo!, one of the largest Internet companies.
At least 500 million of the one billion people connected to the Internet use one of Yahoo!’s services at least once a month, according to company chair and CEO Terry Semel. This represents a twelfth of the global population, a community of audiences cultivated since Yahoo! was born in 1994. Having amassed such an audience base, Yahoo! took advantage of its being a 21st-century media company to monetize such an asset.
Time was when dotcoms were struggling and fighting over "eyeballs" or the number of unique users who actually view their online content. After that, they did not know what to do to monetize that asset. The traditional rationale offered was -- for both online and print media -- more viewers or readers would entice more clients to advertise in the publication or website.
However, 21st-century media companies can now monetize eyeballs or viewership with pinpoint accuracy, as opposed to the old model of having the audience pay simply for subscription.
"The roles of the consumer, advertiser, ad agency and publisher are changing," Semel said. "The definition of content is dramatically different in 21st-century media companies. At the same time the distribution of the content has reached an unparalleled scale and offers pinpoint precision. Coupled with technology, new media companies now have direct relationships with users."
Semel said that a 21st-century media firm can be likened to a pyramid with three tiers, with technology at the base of the pyramid, the distribution component on top of that and content sitting at the top. The technology base, he said, offers direct relationships with the audience in the sense that communities are formed, direct interactions are initiated and personalization of content is allowed. This represents an opportunity for the audience to manipulate their content agenda based on their own preferences, as opposed to old media companies which dictate to the audience what the news and content agenda will be.
Next you have the distribution system at the middle of the pyramidical tier, where content is no longer just available at the newsstands or would take hours to deliver to remote areas. Content can be sent via e-mail or downloaded from any amply configured an connected device.
Finally on top of the pyramid is content, which Semel said has dramatically morphed into one which includes video, audio and all sorts of data formats as opposed to just the printed word.
"Video has become an everyday thing much like the written word," Semel said. "The content now can be proprietary information from a community. Combine that with a personalized experience and deliver that to any device and you can monetize that audience base."
What Semel is referring to is a new phenomenon now called "social media," wherein the audience themselves create content in various forms such as personal pictures or personal questions you can’t find in traditional media companies. This was an offshoot of cultivating a community of audiences and letting them stick to and socially develop in your website.
Yahoo! is doing this with the Flickr photo-sharing service, the del.icio.us tagging technology and Yahoo! Answers where users ask and answer each other’s questions.
"New media companies have a deeper engagement with the users," Semel said. "The art and science of Internet search has become more sophisticated and specific. Search innovation continues to evolve with vertical search personalization and social search. Search has become a key driver of traffic -- the means and the end."
Semel said the social media phenomenon is driving such search refinements since users are now looking for specific content they want to view, not just the content arbitrarily being offered by old media companies.
This offered Yahoo! an opportunity to roll out later this year a new search-advertising ranking algorithm based on user behavioral patterns. The community of audiences the company has amassed since 1994 is being used as an indicator of what the audience and the advertisers want.
"As people go deeper into the website and get more engaged, monetization becomes easier," said Semel. "You can optimize advertising campaigns, you have new measurement tools and you can port your content to new devices."
Semel said audience targeting has also become easier. Whereas before geo-targeting (targeting content and advertising to specific users based on their location) was the only method used, new media companies can go for demographic targeting, contextual advertising and behavioral targeting. Of these, Yahoo! sees more promise in behavioral targeting, where content and advertising can be targeted based on their behavioral patterns on the website or how they use a particular service.
So social media and pinpoint audience targeting are helping Yahoo! monetize its audience assets. The company estimates that the Internet ecosystem is worth 80 billion dollars, out of which about 31 billion dollars will be spent on advertising this year. This is what Yahoo! and other new media companies could go after as they continue to ponder how to monetize the community they have built over the years since the dotcom boom-bust period.
