Following yesterday’s video post on Deseret Digital Media’s (DDM) stance on separating new media from old, it’s time now to drill down on the “how.” (video below)

As a brief recap, media companies that launch digital products under entirely new divisions can benefit from nimbleness and growth that isn’t saddled with an innovator’s dilemma. As discussed yesterday, this church & state separation happens on many levels, such as sales and product development.

For the latter, Deseret has developed products that natively make sense for mobile, rather than shoving desktop formats on a smaller screen. As we’ve seen, desktop ad formats don’t monetize as well in mobile, which has been the biggest reason I’ve observed for publisher and advertiser reticence with mobile.

So the answer — as we’ve espoused in the past — is to work with entirely new formats that not only make sense for mobile’s unique form factor, but actually utilize it’s unique variables to create higher performing ads. Those performance deltas lead to premiums, thus counteracting the monetization dilemma.

Those formats and strategies can involve things such as location targeting and calls to action to capture high-intent mobile actions (like calling a business). But as DDM’s Christopher Lee demonstrates in clear economic terms, it’s also about abandoning traditional formats — like display — altogether.

He names lots of examples of what DDM calls “mobile ready” revenue, then zeros in on native advertising such as sponsored articles. This has traditionally been snubbed in news and journalism contexts but makes more sense in the smartphone era, he argues. The 10 minute highlight reel is below.

The post Conference Video: DDM Part II: Finding “Mobile-Ready” Revenue appeared first on BIA/Kelsey - Local Media Watch.

Following yesterday’s video post on Deseret Digital Media’s (DDM) stance on separating new media from old, it’s time now to drill down on the “how.” (video below)

As a brief recap, media companies that launch digital products under entirely new divisions can benefit from nimbleness and growth that isn’t saddled with an innovator’s dilemma. As discussed yesterday, this church & state separation happens on many levels, such as sales and product development.

For the latter, Deseret has developed products that natively make sense for mobile, rather than shoving desktop formats on a smaller screen. As we’ve seen, desktop ad formats don’t monetize as well in mobile, which has been the biggest reason I’ve observed for publisher and advertiser reticence with mobile.

So the answer — as we’ve espoused in the past — is to work with entirely new formats that not only make sense for mobile’s unique form factor, but actually utilize it’s unique variables to create higher performing ads. Those performance deltas lead to premiums, thus counteracting the monetization dilemma.

Those formats and strategies can involve things such as location targeting and calls to action to capture high-intent mobile actions (like calling a business). But as DDM’s Christopher Lee demonstrates in clear economic terms, it’s also about abandoning traditional formats — like display — altogether.

He names lots of examples of what DDM calls “mobile ready” revenue, then zeros in on native advertising such as sponsored articles. This has traditionally been snubbed in news and journalism contexts but makes more sense in the smartphone era, he argues. The 10 minute highlight reel is below.

The post Conference Video: DDM Part II: Finding "Mobile-Ready" Revenue appeared first on BIA/Kelsey - Local Media Watch.

Like George Costanza, Deseret Digital Media (DDM) likes to separate its worlds. This is a longstanding debate among media companies about whether or not new digital products and divisions (and correspondingly, ad sales teams) should be independent of the legacy business.

Having these new products/divisions under the operational control of the main organization is what often happens, usually for reasons of control or inertia. But DDM CEO Clark Gilbert believes that this is a fatal mistake. He showed us why during the opening keynote at ILM ’14. (video below).

This furthers Gilbert’s message that has origins in research from his mentor Clayton Christensen. He shows how only 9 percent of companies facing industry disruption managed to grow revenue past the industry peak. Every one of those launched separate divisions to innovate new products (including DDM).

Advantages include allowing new divisions to have their own sandbox and avoid a classic innovator’s dilemma (speaking of Christensen). Digital products won’t hold a chance if they can’t have the independence and autonomous decision making to move at the speed of their pure-play competitors.

Interestingly, the concept of separating worlds transcends operational control. Sales teams selling advertising around digital products should also be separated according to Gilbert. The sales aspects of this debate are central to a BIA/Kelsey white paper that will publish tomorrow.

And the product execution itself — such as native advertising as DDM demonstrates — should likewise be separated in terms of the talent that’s producing it. For example, there should be a church & state division between journalists at a newspaper, and the writers of paid content marketing pieces.

See the 10-minute highlight reel below. This mostly covers the “why”. As for the “how,” the full session was choc full of examples of how DDM is pulling this off. We’ll be back tomorrow with Part II, covering its tactics around things like mobile monetization and native advertising.

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Surviving the shift from tradition to digital revenue may not be the most challenging transformation for media companies. Speaking at BIA/Kelsey’s recent Leading in Local: Interactive Local Media conference,Christopher Lee, president of Deseret Digital Media, offered a primer on staying ahead of revenue’s transition from traditional to digital to “mobile ready.”

One of the key’s to making this shift is developing a strong native advertising capability, and Deseret is an early leader among media companies in mastering the art and science of native.

Lee says Desert Digital Media has two digital revenue buckets. The first is display (which he describes as “90 percent at risk”) and the second is “mobile ready,” which is growing by about 30 percent annually, according to Lee. Assessing the mobile-readiness of revenue is a critical test of a media business’s sustainability.

While CPMs are currently low, through skilled targeting, CPMs can grow over time. So what defines mobile-ready revenue? Here is Lee’s list:

Deseret has been particularly innovative in native advertising, building its own internal capability and developing an evolving set of KPIs and best practices. Lee says native packs a much bigger punch than more tradition forms of online advertising like banners.

The average native article on Deseret’s online properties generates 13,424 views, only slightly below the 13,836 that editorial articles receive. Lee estimated it would costs $39,000 to get 13,000 brand engagements with a brand using banner ads.  With native, Lee said advertisers for “much lower cost get the same result.” Deseret sells native in packages that include content creation and posting, with clients free to use the content on their own properties as well. In some cases Deseret will distribute the native content via social media and email marketing, for additional fees.

However, Lee did acknowledge that native is not a fit for all advertisers, particularly not very small ones.

He also captured a primer on how to develop an effective native advertising capability on the following slide:

The post At ILM 2014: Is Your Revenue Mobile Ready? appeared first on BIA/Kelsey - Local Media Watch.

Clark Gilbert is a respected authority on digital transformation — he’s studied it at the Harvard Business School and he’s put his ideas into action at Deseret Digital Media. Today at BIA/Kelsey’s Leading in Local – Interactive Local Media conference in San Francisco, Gilbert offered a checklist of milestones traditional media companies need to hit in order to declare themselves legitimately transformed.

No. 1: The average digital share of total revenue of a U.S. media company is 11 percent, according to Gilbert. “If that is all that it is, you have not transformed your company.” This lead to key indicator No. 2: “[Revenue] should be at least 33 percent from digital.”

Gilbert named three companies other than his own that are hitting that milestone. Forbes, Schibsted Media Group (a European media company) and Atlantic Media Group.

No. 3: Gilbert says a company should generate at least 50 percent of its digital revenue from sources other than display ads. Gilbert uses the term marketplaces. What falls into this bucket? Classifieds, deals, directories, listings, travel and booking. Another key, according to Gilbert, is to hire e-commerce experts, not digital advertising experts, to run these businesses.

No. 4: Gilbert contends a transforming business should be growing digital at by at least 15 percent annually. “If you are in single digits you have not transformed your business.”

Traditional media digital revenue growth has actually moved in the opposite direction, according to data Gilbert shared, showing digital growth declining from 10.9 percent in 2010 to 1.5 percent in 2013. “This is not a good trend line.”

Gilbert talked about the trap many media companies fall into, where they reach a “local peak” of growth through an approach of selling digital via the traditional organization, rather than building a new digital organization to grow the business, which is core to Gilbert’s playbook for digital transformation. At a certain point you can’t grow any more, Gilbert says, and the next move is to accept having to take a temporary step down (in order to change the sales model) in order to achieve sufficient long term growth.

Once disruption hits, less than 10 percent of the companies ever grow again from their peak, Gilbert said. Of those that do return to growth, he contends 100 percent have a separate sales organization to sell digital.

No. 5: Gilbert’s final key metric was 0 percent — the amount of time he says his digital people spend thinking about the traditional business.  “If you are not organized for that, you are not going to be able to adapt to the future.”

The post At ILM 2014: Deseret's Digital Transformation Test appeared first on BIA/Kelsey - Local Media Watch.

Clark Gilbert is a respected authority on digital transformation — he’s studied it at the Harvard Business School and he’s put his ideas into action at Deseret Digital Media. Today at BIA/Kelsey’s Leading in Local – Interactive Local Media conference in San Francisco, Gilbert offered a checklist of milestones traditional media companies need to hit in order to declare themselves legitimately transformed.

No. 1: The average digital share of total revenue of a U.S. media company is 11 percent, according to Gilbert. “If that is all that it is, you have not transformed your company.” This lead to key indicator No. 2: “[Revenue] should be at least 33 percent from digital.”

Gilbert named three companies other than his own that are hitting that milestone. Forbes, Schibsted Media Group (a European media company) and Atlantic Media Group.

No. 3: Gilbert says a company should generate at least 50 percent of its digital revenue from sources other than display ads. Gilbert uses the term marketplaces. What falls into this bucket? Classifieds, deals, directories, listings, travel and booking. Another key, according to Gilbert, is to hire e-commerce experts, not digital advertising experts, to run these businesses.

No. 4: Gilbert contends a transforming business should be growing digital at by at least 15 percent annually. “If you are in single digits you have not transformed your business.”

Traditional media digital revenue growth has actually moved in the opposite direction, according to data Gilbert shared, showing digital growth declining from 10.9 percent in 2010 to 1.5 percent in 2013. “This is not a good trend line.”

Gilbert talked about the trap many media companies fall into, where they reach a “local peak” of growth through an approach of selling digital via the traditional organization, rather than building a new digital organization to grow the business, which is core to Gilbert’s playbook for digital transformation. At a certain point you can’t grow any more, Gilbert says, and the next move is to accept having to take a temporary step down (in order to change the sales model) in order to achieve sufficient long term growth.

Once disruption hits, less than 10 percent of the companies ever grow again from their peak, Gilbert said. Of those that do return to growth, he contends 100 percent have a separate sales organization to sell digital.

No. 5: Gilbert’s final key metric was 0 percent — the amount of time he says his digital people spend thinking about the traditional business.  “If you are not organized for that, you are not going to be able to adapt to the future.”

The post At ILM 2014: Deseret’s Digital Transformation Test appeared first on BIA/Kelsey - Local Media Watch.

The end of the year usually means a few things to us: the holidays; our annual predictions; and Leading in Local: Interactive Local Media, the industry’s flagship event.

This year’s event is especially hot — a 2 1/2 day extravaganza taking place Dec. 3-5 in San Francisco. More than 50 speakers have been recruited by the analyst team, and we’ve added some great extra-curricular activities, including a Tech Expo with top companies showing off their wares “Before The Bell” on Day 1; a Women’s Leading in Local networking event on day 2; and an International Roundtable.

Here’s our newest news: BIA/Kelsey Analyst Emeritus Matt Booth (currently CEO, Connectivity) is coming back to moderate one of two Executive Sessions with Google leaders. We’ll kick off with Managing Director of Global Channel Sales Todd Rowe, than go deep in conversations with Head of premier SMB partnerships Christine Merritt; Adwords Express Product Manager Francisco Uribe; Google My Business Senior Product Manager James Croom; and Global Business Leader for Google Shopping Max Frause.

We also have feature presentations set by YP CMO Allison Checchi; Deseret Digital Media CEO Clark Gilbert and President Chris Lee; Yodle CEO Court Cunningham; Pinterest Head of Partnerships Joel Meek; and Salesforce VP Randy Wootton.

We are also set with a great discussion between me and Business Book of the Year Winner Brad Stone, author of The Everything Store: Jeff Bezos and the Age of Amazon. And then there are the feature presentations by First Data SVP Krish Mantripragada; InfoGroup CDO Matt Graves; and Go Daddy SVP Raj Mukherjee. And we’ve also got a great, seven company Superforum dedicated to local’s most important issue: “Make the Phone Ring.”

There’s so much more. Check out the Full agenda. Register here.

The post Leading in Local Update: 50 Speakers Are Set (Dec. 3-5, SFO) appeared first on BIA/Kelsey - Local Media Watch.

Building a digital agency involves a lot of heavy lifting — making the right hires, structuring the right organization, building the capabilities to fulfill programs and measure their success. This morning at the Digital Agency Summit in Chicago, seasoned agency vets broke down the details on how to build a digital agency. BIA/Kelsey is partnering with the Local Media Association in presenting the summit.

First up was Greg Walls, VP, reseller channel at Local Edge. LocalEdge is the digital agency within newspaper publisher Hearst Corp. Local Edge is the legacy of Hearst’s acquisition of the independent Yellow Pages publisher White Directory. Local Edge still publishes some print, but has shifted its emphasis to the digital agency business. White works with a lot of newspapers who resell the Local Edge digital agency services, including most recently Fairfax Digital in Australia. Local Edge is all about selling digital bundles. Walls offered several tactical tips for hiring and training digital agency salespeople.

“Assume 50% of each [sales recruit] class will turn over within six to seven months. Set classes up accordingly,” Walls says.

If this isn’t handled well, an agency risks falling short of revenue targets as they scramble to replace lost sales people. One key is to set up another training class six months into the previous classes tenure.

Walls offered three possible approaches to initial training. The first involves a solid two-week captive training program, the first week devoted to product training, and the second week is about how to sell, specifically how to sell a digital bundle.

The second approach is called gap training, and covers a three to four week span. The first weeks is all about product training, with some preliminary sales training. Then the rep is sent out to sell, make mistakes and learn from them. The final one or two weeks are about training to fill the gaps in sales skill that week two revealed.

The third approach involved how to train a partner’s existing sales force, which after all touches most of the company’s revenue. “We need to get them training, but no one wants to pull them out of the field,” Walls said.

His approach is to train legacy reps gradually by pulling them out of the field in half-day increments.

The other piece, Walls said, is that you have to hold legacy reps accountable for selling digital.

“Otherwise, rules without consequences is merely advice,” Walls said.

Next, Chris Lee, President, Deseret Digital Media, gave a primer on the economics of digital agencies. He made the case for using a digital agency as a source of new sales for higher-margin owned and operated inventory.

Utah-based Deseret has five different digital only sales channels. The company no longer has legacy seller carrying digital products.

As Lee noted, margins for a media company (selling mostly owned and operated inventory) are much better than those of an agency (which largely resells other’s products).

Agency economics involve 20%-40% gross margin products, not 80%-90%, Lee said. This is substantially different than the publishing business. Different business, different economics. As a result agencies need to compensate their sales people differently, with commissions based on margin rather than revenue.

Lee pointed to two scenarios that allow a digital agency to make money. One is that it drives very high sales volume. The other is that it facilitates upsell to higher margin owned and operated media.

“Nothing else will drive success,” Lee said.

Deseret’s strategy is to leverage the agency to drive higher margin sales on Deseret’s owned and operated digital properties.

“We must move to our owned and operated media,” Lee said. “And to do that we need to focus on audience development. We won’t make money just doing agency in my opinion.”

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