Other people’s questions

Kunal 0:05 So now when we look at how do we make money off of all of this change? The first way is through advertising. This is a snapshot of all of the different players in the mobile ad ecosystem today. This diagram gets a lot more complicated six months from now, even more so twelve months from now. Mobile advertising has this huge promise of growth, uh, you know, the year of mobile and, and whatnot. We're still waiting to see the dollars. Uh, hopefully there are no agencies in the room right now, but, you know, the agencies have been dinosaurs. They have not caught on to it. I've been in meetings with older agency executives who are really asking the question, "Do people actually use their phones for more than making phone calls?"

Kunal 0:56 It sounds funny for us to hear that. I literally got that question last week.

Kunal 1:01 So if those are the people who control the budgets, then it's gonna take a while for those budgets to move over to these devices.

Kunal 1:10 The ad space is opportunistic, but it's also challenging. Some of the challenges you have in mobile advertising today, uh, you know, a lot of the ads are the size of a finger. A lot of the ads are touched accidentally. The post-ad, post-click experience isn't great. Ad targeting is not clear. There's a scale challenge that as an advertiser can't reach a lot of people in an efficient way. There's a data and analytics challenge that the numbers don't add up and match. There's a technology challenge from different servers, different infrastructures, a lot of different players clouding and muddying the waters. All of these challenges in the mobile ad industry today will sort themselves out. There's a lot of companies, there's a lot of people working hard at that. There's standards coming to market.

Kunal 1:58 There's consolidation within the networks. The ad servers from online which are heavily adopted are starting to get their mobile game up to par. Third-party analytics firms like Comscore are starting to now look at mobile more seriously. So play this world forward twelve months, and I think a lot of the challenges and things that are holding agencies back today will be removed. So that world will set itself, sort itself out over the next twelve months, and that will open, uh, the gates and you'll see more and more budgets align towards mobile campaigns and mobile audiences. I think Facebook and Google as examples, and, and very soon Twitter as well, are gonna lead the charge and help open the eyes for a lot of marketers as to why they need to be investing more to reach mobile audiences.

Kunal 2:44 And that benefits everyone. That benefits the entire ecosystem.

Kunal 2:49 The New York Times has, uh, you know, just over a year ago, they announced their paywall strategy. Um, they recently released a couple of figures, and I wanna highlight them as an example of how paywalls and payments can work in a media context. So their digital business is about two hundred and forty-three million dollars for their last fiscal. That's fifteen percent of their overall business, so there's still a lot to grow. Their traditional business is still eighty-five percent of the overall company. Within their digital business, forty-three percent of the business, so just over a hundred million dollars, is coming from digital payments and subscriptions.

Kunal 3:30 That was nonexistent. That hundred million dollar revenue stream was nonexistent twelve months ago.

Kunal 3:37 So just over, you know, just over forty-three percent of their digital revenue is now payments, and it's just one year into this model. You can expect that ratio to grow as the ad number also grows. So that's a promising sign. So promising that you're seeing, you know, The Globe and Mail in about sixty days, they're gonna launch their paywall strategy. You're seeing a lot of the UK and British papers launch their strategy. A lot of the local newspapers, whether it's here in Canada or even in the US, are launching paywall strategies. And our paywall is gonna save, um, the newspaper and, you know, as well, publishing industry. They're not the only monetization stream. Advertising is still important, but on top of that, I think you're going to see paywalls drive incremental revenue off a subset of their audiences, and that's gonna be, um, a, a lifeline.

Kunal 4:30 You're gonna see a lot of companies investing in that over the next twelve months. Um, you know, there, there is gonna be a slight drop-off in their traffic, but their overall traffic is increasing and it's still growing. And the advent of smartphones and tablets and more connected devices, uh, the paywall strategy works, and we're gonna see a lot more of it. So we talked about advertising, we talked about payments, and the third way to, to monetize it, I think we're gonna see longer term is commerce. I wanna highlight Gilt Groupe. Who here has bought something from Gilt Groupe?

Kunal 5:06 A few people. The, you know, Gilt Groupe is approaching a billion dollars in, in commerce revenues. Uh, about a third of their revenues, sales and transactions made are from a smartphone or tablet device.

Kunal 5:24 And what we're seeing, especially on tablet devices, is these are shopping devices, and part of it is how the user is using the device. Time of day is in the evenings, day of the week is on the weekends. The session times are much longer. And that behavior is conducive to purchasing and transacting. And Gilt is just an example of a company that's proven that. About half of their emails that they're sending to their daily subscriber base are opened on a mobile device. So that changes the way consumers are discovering transactions and informing themselves on decisions they're gonna make. Uh, Amazon's mobile business is doubling every year right now. So these are examples of retailers having success in driving transactions on these connected devices.

Kunal 6:10 I think there's a huge opportunity for content-driven companies and brands, uh, to realize part of the success as well. And where media and retail come together is through intelligence and data. You know, if you look at retailers, they're great at making money, and they've proven how to make money online, and a lot of it. You look at media, they're great at driving traffic. They've proven how to get people coming back to their content, regardless of the form factor or device or location or time of day. Uh, you combine the two with intelligence, where you've got traffic coming in through media, as well as the ability to transact and drive revenue through retail. Now you've got a, a commerce and revenue strategy that I think you're gonna start to see in the future. So advertising, payments, and commerce, uh, a three-prong approach, short, medium, long term, is I think how we're gonna see media companies really monetize their mobile presence.