Branded Digital Entertainment

Content Syndication 2.0

2008-05-14T15:29:00.000-07:00

I’ve always disliked the term Web 2.0. It’s become an overused term whose indiscriminate, often incorrect, use has rendered it practically meaningless. I mean, can you name a popular website or application that doesn’t claim it’s Web 2.0? What does it really mean? Is there some Internet governing body verifying these claims? Umm, no.

At the same time, I understand the term’s necessity. You see, it gives business and creative people the ability to describe this new class of capability and functionality without having to actually understand the underlying technology. It’s a euphemism that levels the playing field. (For those who care, Tim O’Reilly actually coined the term Web 2.0 in a seminal essay in 2005.)

Despite these protestations, I’m going to introduce my own numerical euphemisms in the nascent content syndication space. I feel justified because the distinctions I’m about to demonstrate represent a true paradigm shift in digital content distribution fueled by some underlying technological developments. But you be the judge. First, some background:

If I haven’t already told you, Reset Media Partners (of which I’m a Principal and paid employee) is a Branded Digital Entertainment Company (the etymology of this phrase should probably be the subject of a future post). Simply stated, we help media companies (our clients) create sponsored content offerings, package their video content with sponsorship integration and then distribute that “branded” (advertiser funded) content across our content syndication networks.

At first blush, it may not sound all that simple. But in fact, it’s just a new spin on a concept that’s been around since the beginning of television. Advertiser-supported content launched the television industry – Texaco Star Theatre, soap operas, quiz shows and the seemingly unstoppable Hallmark Hall of Fame Series were all paid for by advertisers. Today, reality TV shows like the “The Restaurant” (in full disclosure, my partner Tracy Dorsey was a co-executive producer on this show) are the latest productions to be advertiser-financed. Reset Media has simply taken the model, tweaked it slightly and applied it to the web.

So now let me describe what content syndication looks like today. The large media networks (NBC, Disney, Viacom, Fox, etc.) already distribute their premium video content across multiple websites within their company-owned networks. There are many advantages to this approach but 3 stand out:

The networks can generate significantly more digital revenue by attaching ads (pre-rolls/overlays/player skins/etc.) to the content and distributing it to the user bases of multiple sites.
Production costs can be amortized over a greater number of impressions thereby increasing the profit margin on each additional impression.
The networks can reward their websites by providing them with premium content not available outside the network and, in effect give their sites a perceived competitive advantage.

To view this from an economic standpoint, the networks can use syndication to increase their overall profit margin on their video ad inventory. For example, a pre-roll ad in front of a Lost: Episode Recap may draw a CPM of $35 whereas the same pre-roll ad in front of According to Jim: Sneak Peaks may only garner $25. From a purely economic standpoint, you’d much rather have online users watching LOST than According to Jim and will probably decide to syndicate LOST to other websites within your network.

So once you’ve figured out the right syndication mix within your company-owned network and have begun to maximize the profit on those eyeballs, how do you continue to grow your revenue? You syndicate your content outside of your company-owned network to sites like AOL, Yahoo, MSN, YouTube, Hulu and a host of other smaller video sites. Most media networks are now doing this as well. The good news is that you’ve increased your revenue by monetizing the traffic that these large sites generate; the not-so-good news is there are also some significant costs:

You lose control of the advertiser/marketing relationship.
Your margins have decreased significantly – instead of the $35 CPM you were getting on your network you now receive 50% of the host website’s NET revenue (NET meaning less hosting, administrative, sales and production costs).
Someone else’s sales force is now selling ads on your content and they care a lot less about who associates with your content than you do.
· Your control of the distribution is limited to the options provided by the portal. Said differently, distribution offerings are created to maximize the site’s profit and not necessarily to serve the content owners’ myriad other objectives – cross-promotion of other content, network branding, etc. - without significant additional cost.

So wouldn’t it be great if you could get all of the benefits that content syndication brings without all of the costs?

And that brings us to what I call Content Syndication 2.0 – the distribution of sponsored content across an ad hoc network of contextually and/or demographically targeted websites.

To effectively execute this we need to mash-up (to use a Web 2.0 term) some technology and cool applications with our video content: enter widgets and RSS. In a previous post: “Widgets: What’s in a Name”, I defined a widget as a portable content window that can be used as the basic building block of digital distribution networks. In Syndication 2.0, widgets, RSS feeds and the concept of packaging content with sponsors are critically important.

Before I go any further let me be explicit and concise about the benefits of content syndication in general:

Within company-owned websites - Increased revenue and margins on digital video advertising.
On third-party video portals - Incremental revenues (with lower margins).
Increased awareness and promotion potentially resulting in new audiences for your content both digitally and on other platforms like print and TV.

Though I’ve already listed the primary issues with 3^rd party syndication above, it’s important to emphasize the most critical issue – media companies make their money by controlling both the advertiser relationship and the distribution. Content syndication’s greatest sin to date is that it requires media companies to surrender control of the advertiser relationship to the portals. And the limited formats and packages offered by the portals serve to reduce the content owner’s control of the distribution.

Content Syndication 2.0 addresses these issues by putting content owners in control of the advertising relationship, the packaging and placement of the advertiser within the content, and the ultimate distribution of the so-called “sponsored content”.

So here’s how it works. I’ll make up an example using Access Hollywood (an NBC Universal property). According to Compete, AccessHollywood.com had just over 500K unique visitors to its site in April 2008. The site’s key demo – W25-54 is highly sought after by Guarnier Fructis. In its current campaign, Guarnier Fructis would like to garner 75MM impressions against women in this category while also maximizing its reach over the coming quarter.

Unfortunately, with its respectable - but modest - site traffic, AccessHollywood.com cannot fulfill Guarnier’s digital campaign requirements on its own. So here’s where content syndication comes into play. Just to make this more interesting, I’m going to apply some made-up numbers to better illustrate the scenario:

Maximum quarterly impressions available for Guarnier Fructis on the AccessHollywood.com website – 3MM (more than this will look like Guarnier has taken over the site)
Avg. on-site CPM - $28
Max on-site revenue – $28 * 3,000 = $84,000

So if AccessHollywood.com wants to service the entire campaign they need another approach, like content syndication. With some help from a company like Reset Media, AccessHollywood.com can assemble an ad hoc network of contextually relevant and demographically targeted sites to carry its sponsored Guarnier Fructis content. And with some creative packaging, AccessHollywood.com can assemble a sponsored widget offering (see below) that actually garners a higher CPM. So let’s look at the numbers now:

Maximum impressions available – 75MM
Sponsored widget CPM - $32
Cost of distribution across the 20 site ad hoc network - $14
Max. Revenue - $18 (net CPM) * 75,000 = $1,350,000

So that’s quite a difference. The obvious question is why aren’t more media companies doing this? The answer is simple – they will. If you question why Guarnier Fructis would pay more for off-site reach, have a look at the additional value and increased brand association they get in the example widget here:

In this example, AccessHollywood.com offers “Breaking News” content (updated by the minute via RSS) in a Guarnier Fructis sponsored widget. The widget can be embedded on gossip enthusiast’s personal sites and deliver impressions beyond the initial syndication purchase. Because this widget is controlled by AccessHollywood.com, once it is embedded by a user, the content can continue to be updated regularly and the advertiser can be swapped out once the initial 75MM impressions are delivered – a pretty compelling opportunity.

Content Syndication 2.0 - the distribution of sponsored content across an ad hoc network of contextually and/or demographically targeted websites – can be deployed as a complementary strategy to current, large portal syndication efforts. It can be part of an overall media syndication mix that includes:

Company-owned network sites,
3^rd party video portal sites, as well as
Ad hoc syndication networks

In summary, the benefits of Content Syndication 2.0 are compelling and include:

An almost unlimited supply of high value advertising inventory via contextually relevant and demographically targeted 3^rd party websites
Incremental revenue from monetizing the traffic of 3^rd party websites while maintaining control of the advertiser relationship.
Decreased marginal costs - Content production can be amortized over a greater number of impressions thereby increasing the profit margin on each incremental impression.
Increased awareness and promotion of company-owned content. On 3^rd party websites this means potentially generating new audiences for your content digitally and on other platforms like print and TV

I’ve only hinted at the longer-term consequence (and big opportunity) for media companies that incorporate compelling content and useful applications into widgets. In a future post, I’ll explore the syndication endgame that is emerging for media companies - creating content (and advertising) channels direct to their consumers via embedded widgets.

Feel free play around with the sample widget. I’ve disabled it’s embed capability so it can’t be re-syndicated.

2008-04-14T06:24:00.000-07:00

Widgets: What’s In a Name?

I’ve earned my living professionally in the Internet industry since 1994. As the industry has developed, the demand for new words and names to describe technology concepts and business activities has increased. From the beginning, industry denizens have re-purposed terms from other industries and even taken them from popular works of fiction. I mean, who really knew what an ‘Avatar’ was before Neal Stephenson popularized it in “SnowCrash?” The word ‘Cyberspace’ was taken from Gibson’s “Neuromancer” to describe all things Internet. One thing these new word uses have generally had in common – there was usually an obvious, or at least apparent, connection between the original definition and the new use.

So why is it so difficult to understand the term “widget?” I mean it’s a word nearly everyone has heard before. The problem is, for most people, the new use of the word has absolutely no relation to the common usage of the word… or does it? As I was doing research for this post, I came across the following definition on WhatIs.com – “In general, widget is a term used to refer to any discrete object, usually of some mechanical nature and relatively small size, when it doesn't have a name, when you can't remember the name, or when you're talking about a class of certain unknown objects in general.” So that’s it – it doesn’t actually have a name (or, if it does, I can’t remember it) so let’s call it a widget.

But I’m still not satisfied and continue to have blind faith that the Internet Intelligentsia had a reason for calling them widgets – whatever they are. A little bit of research reveals that the word has been defined and used in many contexts from economics to computer programming to television shows.

For fun, let’s briefly explore some of the many uses of the word with an eye toward understanding how its current meaning came about. According to Wikipedia, the word first occurs in the 1924 comedic play, Beggar on Horseback (1924), written by George S. Kaufman and Marc Connelly. The hero, a struggling composer, must choose between creating music that stimulates his soul but earns no money or earning a soul-crushing living in a "widget" factory. "Widget" is never explained, but clearly it is some mechanical product without artistic or spiritual value.

Without debating who created the term first, economists in the 20^th century began using the term “widget” as a placeholder name for an “object or, more specifically, a mechanical or other manufactured device.” Anyone who’s taken a business or economics class in college has no doubt heard the term in this context.

Widgets were later adopted by the object-oriented programming community to describe elements of a graphical user interface (GUI) that display information or provide a specific way for a user to interact with the operating system or application. In this context, widgets include icons, pull-down menus, buttons, selection boxes, progress indicators and many other devices for displaying information and for inviting, accepting, and responding to user actions. The term is believed to be a conflation of the terms “window gadget”.

Finally, the American Heritage dictionary defines widget as “a small mechanical device, as a knob or switch, esp. one whose name is not known or cannot be recalled”. This could explain some of the strange uses for the word like the "floating widget" found in kegs of beer - a hollow sphere; 3 cm in diameter that helps keep kegs of beer pressurized. You can have even more fun by typing “define: widget” into a Google search box.

So after acknowledging all the many uses of the word, I’d like to define it for the context of this post. A widget is a portable content window that can be used as the basic building block of digital distribution networks.

To continue this discussion in the proper context, we need to first define a few more terms: distribution, syndication and RSS. I’ll defer to the American Heritage dictionary definition for the first two. Accordingly, distribution is “the act of dispersing or the condition of being dispersed; diffusion”. Most people understand conceptually the idea of distributing content.

Continuing, syndication means “to publish simultaneously, or supply for simultaneous publication, in a number of newspapers or other periodicals in different places: Her column is syndicated in 120 papers.” If you substitute “websites” for “newspapers or other periodicals” then you have the proper context for my usage.

RSS (Really Simple Syndication or Rich Site Summary) is an XML format for delivering regularly changing web content. Many news-related sites, weblogs and other online publishers syndicate their content as an RSS Feed.

So then widgets - portable content windows that can be used as the basic building block of digital distribution networks – represent a new paradigm in the distribution of content for publishers, media companies and individual producers.

Here’s why. Widgets are portable – meaning they can be distributed on any website and then taken by a consumer and placed anywhere that accepts HTML – a social networking site, a personal blog or website, even a desktop. They can also contain any type of content – text, graphics, music, applications, interactive games, video or any combination thereof. When combined with RSS, widgets become powerful vehicles for content syndication – meaning publishers can automatically update or change the content within any widget regardless of where it ultimately resides.

So when you combine the capabilities of widgets - to carry any type of content, to be distributed anywhere on the web, to be automatically updated by its publisher and to ultimately be taken and “owned” by any consumer – you now have the building blocks of custom distribution networks between publishers and consumers. This is the future of content distribution on the web!

In my next post, I’ll further illuminate this concept by describing content syndication networks and how publishers, media companies and individual producers can begin building their own networks.

Welcome to the Reset Media Blog!

2008-02-01T15:20:00.000-08:00

We are excited to be releasing both a redesigned website at ResetMedia.tv and a new blog at BrandedDigitalEntertainment.blogspot.com today.

We hope that our new site and this blog will help us better define what we do for our customers and partners in the digital video distribution space. There is a tremendous amount of hype, misinformation and general noise surrounding the syndication and monetization of digital content. In this environment, it is important for us to enter the conversation and explain what we do and the unique role we play in this burgeoning space.

Additionally, we plan to use this blog to communicate new offerings, new partners and important information about our company and the digital video industry.

We also encourage you to comment and to share your feedback.