SimsBlog

Two Ways News Execs Will Have to Radically Change Their Thinking in 2012

Forgive me, I’ve been a shamefully negligent blogger these past few months.  

Between COO’ing at my own company and advising three others, I almost forgot how much I enjoy telling newspaper executives what to do! (Well, except for my role as a PostMedia Network digital advisor, but they actually want me to tell them what to do, which kind of takes the fun out of it).

So, here you go newspaper executives, the two things I think you will have to start thinking about in radically different ways in 2012:

1.  I’ve said it before and I’ll say it again: It’s not about ads, it’s about ROI.

As Newsosaur Alan Mutter pointed out on his blog last week, the big guys (and some littler guys too) are coming after your local advertisers.  

Google is expanding its GYBO.com (Get Your Business Online) program, Facebook is offering do-it-yourself extreme targeting and a CPC payment model.  Then there’s Groupon, Living Social et al, Foursquare and a zillion different mobile products.

What do all these solutions have in common?  They provide direct, measurable ROI to local advertisers.  And believe me,  that’s all local advertisers care about.

It used to be that an ad in the weekend newspaper would make the cash register ring.  That’s because newspapers used to be as much about shopping as they were about news.  Think about it - a news hole of only 50% meant that the rest of the newspaper was all about display ads, classifieds, special sections and flyers.  And because of that shopping environment, they delivered excellent results to their advertisers.

But now, shopping is a thing that is done digitally.  Even if we don’t always buy online, we’re most certainly doing our product research, feature comparing and deal hunting there.

And over time, newspapers have become less effective at making the cash register ring.  The old days of slapping up a display ad and not proving that its working are well behind us.  Just ask the folks at Patch.  Or ask your advertisers.  You'll quickly find that the more they know about which advertising vehicles are driving their sales, the less likely they are to buy display ads.

Asking print reps to sell digital display packages is a short-term solution that takes advantage of the knowledge gap of many retailers who have yet to learn the many advantages of digital advertising. This is not a long-term strategy.  Far from it.

News organizations are going to have to spend a lot more time studying what works and what doesn’t for their advertisers.  

Gannet, Tribune and the Tennessean are taking advantage of the knowledge gap in a different way. Through products such as Gannett Local, 435 Digital and 1100 Broadway they’re helping local advertisers navigate the digital advertising world.  They’re saving them time and providing proof of ROI.

The contextual environments of content verticals drive a much higher click through rate than running the same ads in an environment of unrelated content.  In my experience, behavioural advertising and re-messaging ads can out-perform even so-called “high-impact” display ads by a factor of 10:1.  Who in your organization is thinking about these and other ROI focused products?

It’s time to get serious about understanding the online advertising world.  Competing in this space is not a part-time job.  Nor is it for the faint of heart.  

Meeting the local advertising challenge can’t be done without great digital talent.  And that’s where radically different thinking challenge number two comes in...

2.  It’s time to get greedy about talent.

I don’t mean to be alarmist, but no one wants to work for you.

Let’s face it.  It’s all about supply and demand.  Great digital talent, especially at the executive level is very difficult to find and even more difficult to keep.

It’s not personal, it’s just that you’re not as exciting as other digital companies, nor do you offer the (even remote) possibility for your employees to become multi-millionaires as a result of an IPO.  On top of that, you’re old media, with old processes and old...well, you’re just old.

Actually, it’s not just newspaper companies that are challenged in the talent department.  AOL has had a 50% turnover at the executive level in the past 6 months and even the mighty Twitter is having trouble keeping engineers and executives.

Sites such as LinkedIn and PleasePoachMe make it easier than ever for your competitors to find and to start a nice chit-chat with your talent.  If you’re going to keep them, you’re going to have to start thinking very differently.

Give them control over their products and strategies.  You’ve hired them to do a job.  Trust them.  Don’t force them to keep explaining why the sky is blue - they hate that.  (I once had the CEO of a large media company ask me why digital people working for mainstream media companies are all so very bitter.  Constantly having to explain basic digital concepts is one of the reasons).  Get lots of great digital people, not just one or two.  That way they can collaborate, as well as push and energize each other.  And for Godssake, don’t have them report to non-digital people (and most definitely not the CFO).

And here’s the big one....Give them a piece of equity in the new products they create for you.  You heard me.  Equity.

Not willing to go there?  Well, feel free to sit back and watch as start-up after start-up start eating away at the local revenue you have left.

 

Start-Up Visit: Claystone Inc.

Recently, I had the pleasure of visiting the offices of a Canadian rarity – a digital start-up aimed at the consumer market, rather than the B2B market.

Claystone Inc. is a dynamic home screen launcher and media player application for Android that replaces an Android device’s entire interface. 

What’s cool about Claystone is that it gives users the ability to create “content stacks” where you can queue up content such as news feeds, social media feeds, videos, photos, games, etc for a fast and seamless viewing experience.

CEO Christian Lassonde says that Claystone helps you get more done on the home screen and spend less time switching between apps. 

I’ll say. 

The first thing you notice is how lightening fast it is.  I could barely keep up during a demo as Lassonde zipped from news story to video to Twitter feed all on the home screen, all without opening a single app. 

You can even organize your stacks into categories of your choosing.  For example, you could have a stack for business news, one for sports, one for TV shows, another for games even contacts can be stacked up on your home screen for easy access.  The content in the stacks can be saved for later viewing, even offline.

Very cool.

Android’s multi-tasking ability is one of the big feature wins over iOS.  It’s easy to see that as our digital lives become increasingly mobile, a fast, flexible time saving interface will become important. 

Though Android does offer more flexibility, it's a double edged sword as the phones can seem overly complex, particularly to newcomers.  This could be reflected in Claystone’s 3.7 out of 5 rating in the Android market and is why Claystone’s mantra has become simplify, simplify, simplify.  One innovative way that they are achieving this is by adding game-like elements to the user experience.  New functionality will be enabled only as users master the initial features.

At 37, Lassonde is already a veteran entrepreneur.  A Toronto native, he spent 10 years in San Francisco where following a stint at Second Life, he launched digital ad agency Millions of Us and continues to serve as a co-founder and board member at virtual eCommerce business Virtual Greats.

After returning to Toronto in April 2010 (so that he and his wife could raise their two children closer to family), it didn’t take Lassonde long to meet up with two of Claystone’s founders Dale Darling and Prasad Maruvada.  After some initial consulting work, they soon asked him to become the company’s CEO.

The business model remains somewhat vague.  The app itself is free, so the Claystone team needs to be creative in determining alternate revenue sources.   What has been clearly established is that users do not want to see ads on the home screen of their phone.  It’s more likely that revenue will come from paid content in the form of affiliate deals with video and other content providers.  In the meantime, Claystone design themes are available for purchase in the Android app store.

Perhaps the most surprising thing about Claystone is its very international user base.  A full 25% of users are Chinese, 25% are American and the app is also popular in India, Italy, Germany, France, the UK and many other countries. 

Claystone is proving that Canadians can produce great B2C digital products.  So why is there still a relative dearth of Canadian B2C start-ups?

It all comes down to funding.  To get a good feel for the state of the Canadian VC scene, one only needs visit the website of the Canadian Venture Capital and Private Equity Association.  So boring…so unhelpful…snore.

The truth is Canadian VC’s tend to be conservative and are fond of smaller bets (in the $100K to $500K range) in support of early stage start-ups, and lots of them.  And it seems this trend is picking up steam: 134 Canadian companies were financed in Q2 of this year, an increase of 11% over the same period last year, but the total value of those investments dropped from $355 million to $328 million.

This focus on early-stage ventures while avoiding larger investments aimed at making big, global scale plays aimed at the consumer market could hurt Canada’s tech scene in the long run.  As Mark Evans recently blogged on StartUpNorth, it doesn’t lead to the creation of a vibrant tech culture with hundreds of new tech-related jobs.  Instead, most often, Canadian start-ups are purchased by US companies and the business and its founders move south, further draining the small entrepreneur culture we do have.

I think it’s worth keeping an eye on Claystone.  I hope they’re a big Canadian success story.