Media companies are struggling with decreasing ad revenues and slow or declining paid subscriptions — the lifeblood of their businesses. They’ve been focused on the wrong metrics, like page views, to drive growth rather than engagement and cultivating a unique audience. But there is a path to success for these organizations in the form of measuring customer (or audience) experience, which historically has been overlooked.
Take for instance this all-too common experience: While viewing content online, you are subjugated to the same annoying ad that plays over and over, or an intrusive ad that keeps popping up while reading multiple articles. By the seventh or eighth time you sit through the same advertisement, you make a promise to yourself to never buy whatever product is being sold. You may actually develop an aversion to it.
Sound familiar? It should. Allow me to explain how this gets frustratingly more complicated for media companies on the other side of this issue…
As much as you disliked the aforementioned experience, the website just gained a number of ad impressions. By that measure, they’re running a good business and producing content people want to consume. But in a best case scenario, this has alienated a potential subscriber or regular content consumer. In the worst case scenario, that negative experience may have just created a powerful detractor who may vent their frustrations on social media and actively tarnish the reputation of either the brand being advertised, the website that deployed the obnoxious ad experience, or both!
Herein lies the problem with not understanding the audience experience. This result is ultimately the clash between the different definitions of success that consumers and content providers have. The metric-driven ad experience favored by the website impedes the intrinsic enjoyment of the content that a consumer seeks. Reconciling these two opposing definitions of success is a huge opportunity for media companies, not an existential threat.
The cost of doing nothing
Unfortunately, media and entertainment companies fall into this trap constantly. As a result, they are seeing advertising revenues plummet, and in some cases an exodus of subscribers.
According to Nielsen, ESPN, one of the most well-known sports entertainment brands, hemorrhaged 621,000 subscribers in October of 2016, and an additional 555,000 subscribers the following month — the worst and second worst losses in their history, respectively. While there are outside factors contributing to these loses, ESPN itself is largely in the dark about why it’s once very generous audience doesn’t find it as valuable.
This trend is playing out across numerous media and entertainment companies, but since ESPN is one of the largest, their losses are consequentially magnified. From the perspective of advertisers, continuing to address a rapidly contracting (but still sizable at 87 million subscribers) audience does not look appealing. Improving the audience experience at this point in time would be a strong counterpunch to this trend, and one that isn’t unique to the cable television industry. Almost every part of the media industry is being disrupted these days.
Take for example the newspaper business. According to the Pew Research Center, in 2015, 25% of newspaper advertising revenue came from digital, up from 16.9% in 2011. And last fall, digital ad spending surpassed TV spending for the first time in U.S. history, Forbes reported. We have reached a profound milestone here: for the first time in history, digital is now the most pervasive advertising medium. Instead of batting down the hatches and resisting, media companies should capture this hurricane force gale and ride it.
Unfortunately, the rate of digital ad growth isn’t enough to make up for the massive losses newspapers are seeing from declining print advertising spend. Clearly, the print and digital audiences are different — as are their experiences. This is a problem the retail industry has only in the last several years begun to understand and take action on.
According to the Journal of Interactive Marketing, media and entertainment companies are looking for metrics for the purpose of common-currency comparisons regarding their audience engagement. The assertion that a more engaged visitor will be exposed to more ads and more likely to interact with said ads is true. As a result, companies with more engaged audiences will command a premium as an advertising vehicle. Therefore, a savvy manager should not be competing solely on retaining and gaining subscribers, as the entire industry is struggling, but instead consider the alternative approach of improving the engagement of their existing audience.
What’s needed is a technology partner, with a set of tools for measuring audience engagement as well as audience satisfaction — and the ability to show strategic prioritizations for any improvements that have been identified. Our research, as shown in the graphic above, shows that prioritizing improvements to the audience experience can have a positive impact on engagement, leading to serious implications to important metrics like ad recall rates.
Taking action on measuring the audience experience
In their March 2017 issue, Wired detailed how the New York Times has been leading the charge to transition to a digital-first entity, their biggest strategic shift in the 165 year history of the paper. With the end goal of strengthening the profitability of the business, improving the value of its content, and propelling itself into the uncertain future, the NYT is a model of how media companies should approach the digital experience.
For example: in 2005, their digital advertising revenues accounted for less than 1% of their overall revenue; in 2015, a whopping 24% of their revenue came from digital advertising and digital subscriptions combined! They have taken a very close look at their customers and embraced an alternative metric to page views that they describe internally as “the measure of an article’s value to attracting and retaining subscribers.” Audience engagement is synonymous for this measurement, and the NYT has used it to derive actionable insights to drive their digital strategy into a future where the newspaper is not only profitable, but critical to the health of our democracy — no matter the medium.
Connecting the dots
In summary, media and entertainment companies of the future will be forced to embrace the digital paradigm shift or perish. Neglecting the necessity to measure audience experience is no longer an option, and companies that rapidly adapt to this new audience-centric landscape will thrive.
Interested in learning more about how audience engagement measurement can help your media company improve its bottom line? Visit our website or contact a ForeSee representative today.