Tag Archives: media

Why it is time to kill Digital Marketing

ad-pages-sold-by-news-magazines
You will find more statistics at Statista

Digital Marketing and Digital Communications have been so far the little arms of the Marketing and Communications departments.

It is now time to kill Digital marketing and Digital Communications. Because now everyone in Marketing and Communications should understand Digital. Digital is no longer the rare species. Digital is emerging as the future in Marketing and Communications.

The world has changed. Growing kids ignore the once powerful world of print and traditional media. You too can ignore the chart above at your own risk, but Digital is taking over offline media, very quickly.

Many top executives in Marketing and Communications still come from traditional media. Some of them treat their digital teams as those guys that manage this thing they don’t actually understand well and they don’t actually care much.

Some of them still love press clipping from print papers and magazines as their lens to see the world. They need to change or they will be changed.

As the well-respected spanish newspaper director Pedro J. Ramirez put it: “For news, the future will be digital or won’t be.

 

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Media is Changing

Internet and the Digital Revolution has transformed Media… and this is just starting. If not convinced, see the clip above.

Online Video Gets the Headlines, IPTV the Revenue

An interesting analysis from Telco 2.0 compares the business of YouTube versus Hulu in 2008. The table summarizes the key data used in the analysis:

YouTube Hulu
No of videos/day 1000+ million 3-4 million
Average duration 2.75 min 27.5 min
% clips with ads 3-4% 80%
Average CPM $10 $15-20
2008 Revenues $118 m $52 m
2008 Loss $91 m $9 m

According to Telco 2.0, YouTube would be generating revenues of $118 million, versus $52 million for Hulu, while the low percentage of videos carrying ads in YouTube would make them lose $91m versus only $9m for Hulu.

Hulu business model is closer to that of broadcasters and it shows in a better margin. To make their disruptive model fly in the next years, YouTube will count on:

  • decreasing costs of infrastructure: storage, processing, bandwidth and efficient data centers
  • ability to place ads in clips from amateurs and semiprofessional creators
  • agreements with media companies to become their online video platform in return of a share of ads

Meantime more players are coming to the party, like CBS betting on tv.com to compete with Hulu (NBC Universal and News Corporation’s online video joint venture).  But, in a crowded market, also others are getting weaker, like Joost giving up their P2P model and with few options to survive only as one more flash video site. Despite Joost’s announcement, do not discount P2P TV, that is far from dead in China.

As for IPTV, according to a report from Gartner in September:

“Worldwide subscriptions to internet Protocol television (IPTV) services are on pace to reach 19.6 million subscribers in 2008, a 64.1 per cent increase from 12 million subscribers in 2007, according to Gartner, Inc. Worldwide IPTV revenue is projected to total $4.5 billion in 2008, a 93.5 per cent increase from 2007 revenue of $2.3 billion.”

In 2008, no doubt Online Video got the headlines, but the IPTV Telcos still got the bucks.

The Future of Telecom: Clouds and Pipes

Internet is the paradigm of next generation communications. One of the wonders of Internet is that it allows to de-couple Services/Applications from the access network. e.g. Anyone still uses the email or hosting services from your broadband access supplier? Most people prefer these Services independent from the broadband provider. One may need to move to a new house or a new city, and it is better to change only your ISP if needed, than migrating your web page and your email account.

Most communication applications in the Internet world are global and independent of the access network. Social networks such as Facebook, photo sharing as Flickr, video sharing as YouTube, blogging as WordPress, and VoIP, such as Skype are global services we use to communicate with others, regardless their network access. Most of these applications reside in clouds accessible by any Internet Service Provider. The ISP just provides the pipes.

And services such as Skype or Fling post a threat to the voice business that telcos have (so far) managed to bundle with the pipe access. As Wireless Broadband becomes more and more available with EVDO, HSDPA and WiMAX, Mobile telcos will need to keep being imaginative to bundle voice minutes, as well as SMS before it is cannibalized by Instant Messaging over their own pipes.

The broadband pipes are also used today by iTunes, Amazon Unbox or Hulu to distribute music, movies and TV shows. 

Tier 1 telcos, such as Telefonica, AT&T, Orange or SingTel have built an IPTV infrastructure allowing them to bundle Pay-TV, Voice and Broadband in a single offer. These telcos are capitalizing on current constraints such as content rights negotiated by country, high bandwidth required by TV and HDTV, and a complex Home Network environment, to provide a complete Service entirely managed by the telco.

As global players (such as iTunes or Google) start to negotiate contents for worldwide distribution, as pipes become more powerful, and as open devices get easier to manage by users, Telcos will need to re-think themselves to stop global players in clouds to relegate them to pure Pipes suppliers.

In a Telecom world of Clouds, Pipes and Toys (user devices), telcos will need to be smart and learn to play the Cloud game as well as allying with Toy makers to make their services more valuable than just Pipes.

Converging Telecom, Internet and Media

Convergence is a term widely used in technology with different meanings:

– Device Convergence: mobile phone, digital camera, PDA, GPS, media player, email, data modem, e-wallet, etc. all into a single device

– Fixed / Mobile Convergence. Fixed and Mobile operators offering similar services across networks.

– Prepaid/Postpaid Convergent rating. Mobile operators looking for a single rating engine, so that they do not have to replicate it for Prepaid and Postpaid systems, and so that Postpaid users are also controlled in real-time, as Prepaid users are.

– IT / Telecom Convergence. Many network systems are already based on IT technologies, using same databases (MySQL, Oracle) and OS (Linux, Solaris), only reinforcing the defense mechanisms to make them “Carrier-grade”. Vendors as Alcatel-Lucent, Nokia-Siemens and Ericsson are already transforming into Telecom-specialized IT/Systems Integrators.

But no Convergence  has a bigger impact and transforming power as the Convergence of Telecom, Internet and Media.

As Scott McNealy, Sun Chairman, reportedly said : “I have explained to every telco that either you become a destination site, or the destination site will become a telco.”

Telcos are investing not to get marginalized to only bit pipes, but rather use content as part of their value proposition, and capture the Advertisement revenues, that otherwise will flow directly to Internet and Media companies. Below, some examples of Tier 1 telcos running for Convergence: