The More You Know, The More You Grow
How acquiring and selling insights into audience behavior has become the new business model.
LAST SUMMER, Folio: did a series of q&as with more than 20 industry executives exploring their priorities for the next 12 months. One common thread struck us as illuminating. About half said their major priority was to develop deep knowledge of their audiences’ attributes and behavioral patterns, and use that knowledge to create new value for advertisers.
In fact, some of our respondents said they think this new business will be bigger, and grow faster, than their traditional media businesses. You could call it a data business as shorthand, but it’s really more—it’s a multidisciplinary, cross-functional transformation of a media company’s traditional role.
Put simply, if the legacy role of a media company was to aggregate an audience and sell it to an advertiser, that’s no longer enough. A variety of forces have converged to make that a declining model. If that’s all you’re doing as a media company, you’re going to decline too.
In the new model, media companies aggregate an audience using content, but then they use sophisticated database technology as an engine to learn about audience behavior. And they use that acquired knowledge to improve their content, to tailor their content for marketing purposes, and to sell that knowledge to advertisers—helping them create marketing products, develop qualified leads and produce ROI.
Marketers themselves have their own capable databases now. They use search and social media as independent marketing channels, and they produce their own content. Most of all, they have internal pressure to demonstrate ROI for their marketing initiatives. So their expectations for their media partners have changed. Pure transactional advertising alone is a game marketers increasingly can’t play.
“The data available to our digital advertisers has exponentially changed marketers’ expectation for precise targeting and cost efficiency, and that goes for print as well,” says Jeff Hamill, EVP of Hearst Integrated Media. “By becoming more data-proficient, we’re able help our marketing partners connect with consumers who love and trust our content throughout the brand purchase funnel.”
The good news is that these dynamics have created a new media-company sweet spot. No one else—not Google, not social media, and not marketers themselves—possess all the skills needed to maximize market engagement and marketing ROI.
“Most of our customers have 100,000 companies in their prospect database,” says Greg Strakosch, CEO of TechTarget, the $100 million online-only publisher that specializes in the IT markets. “The challenge is that there’s probably only 1,000 or 2,000 who are actively shopping. With our data marketers can identify those companies and target against who’s most likely to buy right now. We can predict very accurately what product companies are looking to buy and when they’re going to buy them, because there’s a repeatable research process.”
TechTarget is among the industry leaders in building a unified database that enables business analytics and ultimately marketing-services revenue, but it’s increasingly not alone. Media companies large and small, B2B and consumer, are all moving ahead with data-driven business models, and not content-and-advertising models.
The distinction seems marginal, but it’s actually transformational.
However, because it touches on so many parts of the company, there’s uncertainty about who should own data initiatives, which departments and people should have access to data, and who’s responsible for building, analyzing and deploying it. It requires new skills, new disciplines, new organizational structures, and very often, new people.
“We all know media companies need to be able to combine both offline/online data into one central database,” says James Capo, vice president of digital business development at Access Intelligence, a Rockville, Maryland-based B2B publisher. [Access Intelligence is also Folio:’s parent company.] “But the key is creating the operational workflow around the data. The data means nothing if the business units can’t quickly access it and put it into revenue generating opportunities or ideas.”
Capo is right, of course. “Database marketing” is a term that goes back at least 25 years. The meaning has evolved, but the implementation has generally fallen short, lost in the swamps of “back-office” operations and not fully understood by director-level operators or executive management. Until now, perhaps.
“In the last two years, the amount of data we’ve been asked to develop on our readers has increased,” says Alan Imhoff, CEO of Frontline Medical Communications, the Parsippany, New Jersey-based publisher of 35 brands for doctors. “Our advertisers have become so focused on a targeted approach that we’ve had to make this a priority. It’s gotten so that if you offered the broader list for the same price, they wouldn’t take it. It’s been a huge change.”
The faster publishers can manage the data flow and surface new opportunities, the better. “Data has always been critical for major publishers, but it is transformative now because of the growth in digital, omni-channel and native offerings,” says Alysia Borsa, SVP, chief data officer at Meredith Digital. “There is exponentially more data, it’s complex and we need to access it faster. Companies need to build and expand their expertise to tap into this potential.”
CMOs are demanding more from media partners, many of the executives interviewed for this report say. They don’t need media companies merely to buy reach, and they are under much greater pressure to produce results that justify their spending.
This has changed the whole marketing landscape, and is forcing media companies to adapt. A media company with a strong position and the right skillsets can dominate a market with a much broader portfolio of products, all based on data analysis: Lead generation, lead nurturing, branding solutions, strategic insights, thought leadership, marketing services, research.
“These are all the ways that marketers think about deploying their marketing budgets—they don’t just think about advertising,” says Peter Goldstone, CEO of Hanley Wood, the Washington, D.C.-based publisher that focuses on the residential-housing market.
Hanley Wood is an acknowledged leader in the switch to a data-forward approach, and has even sold off its tradeshow division as it transitioned into a data-oriented partner. The company has two major assets that drive market analytics and marketing services: Metrostudy, a research, analysis, and consulting company that owns the nation’s most comprehensive database of housing-industry information; and Hanley Wood Marketing, a full-service advertising and marketing agency.
Even without assets like those, though, media companies can take on game-changing initiatives. At Ziff Davis, which publishes business and consumer-oriented digital-only brands in the tech, gaming and men’s lifestyle categories, media is still the core driver of data, but it’s the data that’s offering a brand new revenue opportunity, says Bennett Zucker, SVP and general manager of data solutions. “The data marketers care about is audience, and audiences only happen because they use our media,” he says.
Even given the focus on content, this represents a key adjustment in approach. As Hanley Wood’s Goldstone says, “We are becoming a CRM management partner. We’re really an information and services company that has a media companion.”
When CEO Vivek Shah bought Ziff in 2010, Zucker was one of his first hires—revealing Shah’s bet that data would be key to Ziff Davis’s revenue diversification strategy. “His concept was that the business model for modern publishers needs to go beyond content because it’s so hard to make money from advertising alone,” Zucker says. Indeed, data has been a main revenue component for the company. In 2011, Ziff Davis was early out of the gate to create a homegrown ad-targeting platform called BuyerBase, which collected and crunched data on product-specific research and shopping activity among ZD’s tech audience of 40 million visitors. The technology drove targeted ad buys, but Shah and Zucker were already looking at ways they could pair data and commerce and sell data directly.
As is common among B2B media, lead generation has been a prominent revenue stream. “Ultimately it’s about creating leads for marketers. That boils down to audience data that only a media company can produce that would be of interest to marketers. Leads are data.”
More recently, Ziff Davis has jumped into the data selling game. The company is mimicking the big data warehouse model—but leveraging the benefits of its own first-party data. “The growth of programmatic has seen a concomitant growth from marketers who want audience data from trusted partners,” says Zucker. “Name a marketer that has enough first-party data to satisfy its growth goals.”
Zucker and others point out that publishers are generally afraid of separating their data from their media—who’s to say a marketer won’t buy the data and then decide not to buy the media?
“I can’t say that’s not 100 percent true,” concedes Zucker. “But it comes back to the idea that if you have relationships with the marketer and they’re moving more of their budgets into programmatic, then you’re probably not getting 100 percent of their budget. Why not participate in what they’re doing?”
Still Building Out Their Data Businesses
If Ziff, Hanley Wood, TechTarget and others are among the leaders, still more companies are paying close attention, but still in the early stages of changing their businesses. Companies as disparate as Moffly Media—a small, Connecticut-based regional publisher—The Enthusiast Network and Active Interest Media are all ramping up efforts.
At Active Interest, CEO Andy Clurman says his approach is driven by three trends, one negative and two positive. The negative is a revenue imperative. Exploring the possible in new media channels like video and broadband is necessary, Clurman says, because “selling advertising—generally speaking—is not a growth business.”
The positives are the market receptiveness to that exploration. “In some ways, we’re revisiting the origins of what we were doing early on,” Clurman says. “In enthusiast media, we were part of the foundation of an industry. Transworld Snowboarding, for example, was right there when snowboarding was invented as a sport. Most of the snowboard entrepreneurs were enthusiasts themselves. They relied on us to be the marketing arm of the industry. Same in the log-home industry. That was marketing services before marketers evolved those capabilities themselves.”
And related to that, he says, is that modern marketing has evolved to a model that stresses content, which media companies excel at.
All these trends converge at the database. “We have the audience, so we can do research to understand where a brand fits,” Clurman says. “Some of that is powered by technology. A lot of companies have advanced unified databases, but the price has come down and the sophistication has grown exponentially.”
So when an advertiser asks, AIM can demonstrate knowledge of who goes to AIM events, what they like on AIM websites, and with that, make recommendations for types of content that will resonate, for marketing campaigns, for finding lapsed customers, and lots more. “We’re going to all this from merely amassing an audience and selling ad products against that audience,” Clurman says. “And you have to do this, because that’s where the money is going with marketing budgets.”
Still, Clurman says, there’s a long way to go. “For us it’s still the early days,” he says. “We expect that within two years a little less than half of all our existing clients will have some sort of marketing-services relationship with us. And by doing that, we expect to grow revenue by about 20 percent over a two-to three-year period. That would have a profound effect on our business.”
Frontline’s Imhoff, meanwhile, says most of the database and marketing-services work at his company—which has 35 medical brands— is from inbound inquiries. “Much of what we do is when agencies come to us and say we want to reach a particular list and a given set of, say, 35,000 physicians,” he says. “Going forward, we will be able to sell based on what we are learning about our audience. The goal of the custom group is to go out and develop business, and not just be receptive to inquiries from the agency side. In terms of the targeted stuff now, about 80 percent of it is inbound.”
And, he says, this is where editorial content and brand identity come back into play because buyers know people will open Frontline newsletters and read them. “Doctors are besieged,” he says. “Our job is to ensure we get through the morass.”
At The Enthusiast Network, CEO Scott Dickey agrees that external drivers are pushing adoption of the new business model—data analytics and marketing services. “The dominance of Google, Facebook and Apple is really contracting the advertising industry,” he says. “So the more you know about the consumer, the more effective you can be in marketing to that consumer—both as a content producer and on behalf of an advertiser. It’s just another core competency now.”
With the social media and search giants pioneering new forms of advertising based on demonstrated behavior and on geography, media companies must evolve as well, Dickey says. “You have to be able to deliver more clear, quantitative, quantifiable insights into the consumer. The landscape has changed, it just has.” At a live event, Dickey says, TEN has systems to capture every bit of information about an attendee that it can. In the digital environment TEN follows consumers on its websites and learns where they go, and then follows them when they leave. In video environments, the objective is to move more and more content behind a paywall and increase subscriber revenue. “We’re very focused, for example, on what content they’re digesting on what car,” Dickey says. “What make and what model—and then sharing that with our OEM partners. We’re looking for consumer datapoints and traits that influence strategies within the channel.”
Northstar Travel Media CEO Tom Kemp says that for his company, marketing services based on data and analytics is a natural—and necessary—extension. “Our whole job has been to facilitate commerce in our served markets,” he says. “Having depth of content, and databases and custom-content solutions in large vertical markets is a great growth strategy. You don’t get rid of your media brands, but clearly the growth is not going to come from that.”
Similarly, being a producer of a standalone tradeshow or expo does not provide enough of an anchor in a marketplace, Kemp adds, but content, data and marketing services can be the basis of ongoing relationships in markets. “We have to continue to justify our own existence and our own value,” he says. “The more we can provide real-time actual actionable sales opportunities, the more value we’re providing.”
How You Do It
The challenge with building a data-centric business is that for many companies, it’s hard to even know where to start. Executives have to first believe in the economic need for the concept and the value that it would potentially create. That’s the easy part. Then they must have a vision of how the data initiative would impact existing processes in each department, across many departments: Sales, audience development, marketing, IT, web development, email services, editorial. And they need to know which software products are essential to support the effort: A CMS, email program, awards and event registration platforms, a reporting and analytic program. Finally, they need to recruit new skills and teams capable of surfacing, analyzing, creating content and selling based on data analytics.
AI’s Capo notes that conversations around “organizing your data” have been going on for years. “But that was always a very back-office view,” he says. “We need to be thinking, ‘How do you make the data operational for your business units?’ Then build your tech stack from that point.”
The key, he says, is to start with the end user of data within the company, the sales or marketing professionals, along with the content creators who adjust what they do as audience-engagement data suggests preferences. “You need to have one point of entry for the business unit to access their audience data in one place,” Capo says.
So, let’s assume you’ve gathered your team and decided to move forward. Here’s Capo’s perspective on what your to-do list might include:
- Any unified database tool needs to be one that is easy to use, that the business owners want and are willing to use.
- Demos and user testing are critical when selecting systems. The data conversation, and more importantly, access to the data, needs move out of the back office into the hands of the operating groups.
- Sales and marketing shouldn’t have to pick up the phone and ask someone about data they want to use. They should be able to access it at any time and create simple target segments in an intuitive platform on their own.
- Sales should be able to create audience segments, in real time, while sitting with a client. As they do that, the client will start to ask more engaging questions, and begins to play the “what if” scenario. “What if we change that, or add this?” It quickly becomes a more consultative conversation.
- Marketers should be able to create segments that show them which readers/attendees are most engaged on their site, or with email, as well as add demographics filters and then be able to quickly deploy a campaign against that data.
- The platform should be able to input “offline” data like print subscriptions or registration data that may not be as dynamic (in terms of changing often like web behaviors) but provides valuable first-party info (strong demographics and intent data—did they subscribe, are they attending? What sessions?
“I’ve described it as the conductor of an orchestra,” Capo says. “The conductor (the marketer/salesperson) is arranging the music (the campaign and data) and telling the various instruments when to play (email, banner ads, social) and the audience reaction is your analytics. Are people responding? In what way?
“Taking this view begins to simplify what systems need to do what,” Capo says.
Tailoring Your Approach
Every company will be somewhat different, and many are at various stages in the process. Jonathan Moffly is CEO of his eponymous regional publishing company in Connecticut. “If you’re a small business, this requires crawling before walking before running—and a pretty substantial investment in the learning curve on how to make use of data. A chief insights officer may be one of the three most important people in my company of the future.”
The “crawling” stage for Moffly is implementing a new database-management software across the company’s spectrum of data sources, including fulfillment, events, email, and advertisers. “We want to understand how many ways we’re touching a single person, and right now we don’t,” he says. “We have five different groups of activities going on and nothing that really links them.”
Then the priority is training key team members on how to use data. Moffly says he’ll put a monthly-reporting process in place and designate someone (perhaps that chief insights officer) who business-unit leaders can ask questions of. “Our first investment is going to be in our own people to understand this,” he says. “Then, as we can monetize this, we can invest more.
“Frankly I would be happy to break even the first year. Check back in in nine months and see how far we’ve gone,” he adds.
At Active Interest Media, Clurman has the same priorities as Moffly, and in the same order. “We have a legacy system, but we signed a contract for a unified audience database that has an email-marketing piece and a behavioral-targeting piece,” he says. “We’re hiring people to manage it, and we’re paying for the customization of it. It’s really staff first, then technology. It’s a major six-figure investment.”
For his part, TechTarget’s Strakosch takes a contrarian perspective. He says data is not the most important piece. “The main thing is the content and the analytics,” he says. “That’s the secret sauce. The tech you can buy off the shelf. Content and engagement are the main things.”
If content is back to being king, then perhaps other traditional skillsets will regain some of their traditional importance. “Data scientists?” says AIM’s Clurman. “It used to be the circ department. Then they got their name changed to the audience development department. And if their name changes again, they may be called data scientists.”
Hanley Wood’s Goldstone offers one of the most cohesive visions for converting a legacy media company to a data-forward marketing and media company. Three key elements, says Goldstone, are top-management alignment; breaking down of operating silos; and revamping of corporate culture. Those principles are clearly reflected, if not stated the same way, in the approaches of Moffly, Clurman and others. HW even created a new mission statement: “Every day, we create engagement with our audiences in ways that help our customers grow.”
Or this: “Data that informs, media that connects, marketing that activates.” “We’re still the best conduit to the market advertisers want to attract,” Goldstone concludes.
An Alternative Perspective
As core as the conversation around data has become, there remains a school of thought among influential media executives that too much emphasis on marketing services is not necessarily a good thing. It’s not that data-focused business isn’t critical. It’s more that data, generally speaking, serves customized marketing-services solutions that are not as predictable as other revenue sources, and that marketing services moves the emphasis away from a community orientation that remains essential to media-company success.
“At the heart of traditional B2B media companies are communities that are served through content and networking opportunities,” says Don Pazour, CEO of Access Intelligence. “To effectively do this in more targeted and relevant ways, we are building database technology for doing some customized offerings and providing targeted opportunities for our advertiser partners.
“What I have wanted to avoid,” Pazour says, “is using our content-generation competencies and our customer databases and knowledge to do custom work for our advertisers that is not tied to our brands. I do not want to become an advertising agency nor an event agency, doing things for marketers on a cost-plus basis. We will work with any advertiser/marketer in partnership, but never in a monogamous fashion like an agency would.”
The distinction can be subtle. It’s about ensuring that media brands continue to be at the center of the community, with positions that provide natural barriers to entry. “To play a role in the path to purchase is part of our objective, but we do it by leveraging our brands, not by becoming an agency,” Pazour says. “One of the issues we are dealing with is not building up an infrastructure for marketing services, as that business is cyclical.”
On the other hand, Pazour believes, “A major event that a community loves has huge barriers to entry and is becoming the core license to connect with both buyers and sellers in a community—at the event and year round.”
In the end, there is no real debate about whether to become a data-centric company. The real question is how to do it—what the first steps are how to move forward after that. Here’s Ziff’s Zucker: Get yourself a CTO who understands how the technology works and a business lead who understands how to make money from it. “You need technology and you need a business understanding of what you can do with the technology.”