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Archive for October, 2011

FREE is becoming more expensive

October 29, 2011 Leave a comment

Internet users expect free services and content. News, email, games and social networks are among the most popular “free” services. Initially, web sites simply wanted your page views to fuel their advertising income. Then they asked you for your email to send you newsletters with ads in them. As advertising became targeted, sites demanded more information such as gender, date of birth, address and credit card number. Then social networks exploded and we willingly handed over our entire lives and relationships. With the current advertising formats being rolled out on Facebook and Twitter, our thoughts and opinions have become the latest data sets for marketeers. Mobile surfing means our locations are now on offer as well.

If we measure the cost of “free” services to a user in terms of the volume of personal data that he or she needs to reveal, it is clear that the cost of Free has a very high inflation rate. “Data is the new oil” is now a conference PowerPoint cliché and consumers are the oil reserves.

Will this change? Is there a time where people will demand compensation for revealing their personal information or for receiving customised marketing messages?

The obvious answer is No. Anyone who thinks the opposite will likely be old enough to remember life before the Internet. Privacy is on a one way trip to extinction.

Don’t waste your time mourning the loss of privacy. Instead, think about how your business can benefit from it to better understand customers, tailor services and exceed expectations.

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When will the web video sales horse catch up with the technology cart?

October 19, 2011 Leave a comment

At the medialive UAE conference yesterday, I listened with interest to a panel discussing how to generate revenues from the “new media ecosystem.” It quickly became apparent that several markets in the MENA region had reached the stage where the technology to generate revenues from web video was ready for prime time but was yet to make a significant impact because the business understanding and processes required were not yet mature. In other words, the “new media ecosystem” exists at a technology level but lacks a clear sales ecosystem to create value. There are now online video on-demand sites like istikana.com and online television channels like elgomhoreya.tv. YouTube reports rapidly growing MENA usage while regional variants like Ikbis have sprung up. Digital creative agencies like flip and nervora can help develop innovative advertising and engagement solutions.

Yet most advertisers who look at shifting marketing dollars to the web are presented with a now familiar list of top five sites with banner and CPM rates. If not that, then the now obligatory Facebook fan page for branding and interaction purposes is the default suggestion. Little effort is made to make use of the superior data that web campaigns can provide, which is surprising given the region’s lack of accurate advertising currencies and performance measurement.

Similarly content owners who make their content available online will find meager sums awaiting them. As a result, most seem to default to using the web as a branding and reach mechanism rather than a revenue generator.

The reasons for the business ecosystem lagging behind the technology are varied. Google’s representative on the new media ecosystem panel admitted they couldn’t generate revenues from YouTube in MENA because they did not yet have the right resources on the ground to do the selling. Clearly a global company will prioritise larger markets at the MENA region’s expense. For media buyers, even those with specialized digital units, the majority of their revenues is still tied to traditional media spend and traditional media economics. This in turn affects the number of staff and effort put into digital sales. For all its touted measurement capability, the MENA web does not have a standard audit body. Advertisers are sometimes more comfortable with the display-based advertising formats that more closely resemble what they are familiar with in print media. Broadband speeds are increasing by the day, but still vary wildly from one market to the other thereby limiting the reach of web video. Finally, even in mature markets, web video sites are struggling to equate the value of a web view of a video commercial with its more expensive television variant. When you consider that a consumer who does not click “skip” and chooses to watch a video advertisement is more engaged than a passive consumer watching television, it would seem the higher value attributed to TV viewing is partly influenced by the legacy of the industry’s development rather than statistics and data.

It is clear that web video advertising will continue to grow rapidly in the MENA region. To reach its full potential though,the sector needs changes in advertiser mindsets, media buyer economics and broadband infrastructure. That may sound like a tall order, but it is only a matter of time before the pieces click into place.