Using eCommerce To Monetize Digital Content In The Media Industry - December 2012
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A Forrester Consulting Thought Leadership Paper Commissioned By Group Commerce Using eCommerce To Monetize Digital Content In The Media Industry December 2012
Forrester Consulting Using eCommerce To Monetize Digital Content In The Media Industry Table Of Contents Executive Summary ................................................................................................................................................................................. 2 To Distinguish Yourself As A Media Company, Invest In eCommerce Now ............................................................................. 3 Know Your Limits And Find A Partner That Will Help Successfully Execute............................................................................ 5 Media Companies That Understand The Tenets Of eCommerce See Results ............................................................................ 8 Key Recommendations ......................................................................................................................................................................... 10 Methodology ........................................................................................................................................................................................... 10 © 2012, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester®, Technographics®, Forrester Wave, RoleView, TechRadar, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. For additional information, go to www.forrester.com. [1-L49640] About Forrester Consulting Forrester Consulting provides independent and objective research-based consulting to help leaders succeed in their organizations. Ranging in scope from a short strategy session to custom projects, Forrester’s Consulting services connect you directly with research analysts who apply expert insight to your specific business challenges. For more information, visit www.forrester.com/consulting. Page 1
Forrester Consulting
Using eCommerce To Monetize Digital Content In The Media Industry
Executive Summary
Digital platforms are a necessity and a norm for media companies today, but the
opportunity to monetize the efforts has not been taken advantage of. Digital Sixty-two percent of
media companies
revenue streams mimic that of print (traditional ad sales) despite the enhanced acknowledge that to
features that can be offered digitally. eCommerce proves to be one of the most become a leader in the
digital space, they need
profitable options for media companies to create a new revenue channel, to rethink the way that
enhance engagement with their audience base, and differentiate themselves from they are serving the
digital audience.
every other media company with a digital channel. The transition from
exclusively offering content to offering retail alongside content is a daunting
challenge for most companies — and one that won’t even be considered by top management — but vendor solutions
exist that will make the transition manageable and lucrative.
Group Commerce commissioned Forrester Consulting to evaluate the way companies in the publishing, broadcasting,
and media industry view eCommerce as a tool to drive online revenue. To further explore this trend, Forrester studied
how prepared these companies are to add eCommerce to their portfolios. Forrester’s in-depth interviews with four
businesses in the publishing, broadcasting, and media industries and a specially fielded survey to 106 companies in the
publishing, broadcasting, and media industries found that the majority of companies are not suffering losses from
digitizing their content, but they have yet to turn it into a promising revenue stream.
Key Findings
Forrester’s study yielded these key findings:
eCommerce is a priority initiative for media companies, but few have the necessary support. It is
acknowledged in the media industry that when done well, eCommerce can enhance consumers’ interaction with
digital content, which in turn drives audience loyalty and revenue. However, few companies have successfully
incorporated retail into their site as a result of budget constraints and business models.
Contrary to assumptions, consumption of digital content brings positive business results. Traditional content
providers have been leery of the jump to a digital platform, but media companies reported that as a result of the
shift to digital content, there has been an increase in the number of paid print subscriptions, audience base,
market share, and revenue generated from advertising. This gives businesses a solid platform of advertisers that
they can partner with and an audience base that they can engage with to drive eCommerce on their site.
Technological solutions are in demand. Media companies recognize that advanced website functionality is a key
opportunity for driving revenue and report that implementing and managing a technology platform is one of the
key services they would like to see from vendors.
For the purposes of this study, Forrester defined the following terms as:
eCommerce. This refers to activities in which the Internet is used to transact funds in exchange for products or
services (e.g., shopping for, paying for, and booking a spa service on the Internet).
Marketplace. This is a transaction-enabled website with an aggregated variety of products and/or services from
different providers where fulfillment is taken care of by the seller, not the marketplace operator (e.g.,
Amazon.com).
Daily deals. These specific products or services are sold at a discounted rate for a short amount of time. Deals
may be launched daily, but in some cases, they are launched less frequently (e.g., livingsocial.com).
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Using eCommerce To Monetize Digital Content In The Media Industry
To Distinguish Yourself As A Media Company, Invest In eCommerce Now
The majority of media companies today offer their content through a digital channel, but few have done anything to
differentiate themselves from the competition. As consumers increasingly rely on media companies’ digital channels for
content, there is an opportunity to further engage with their audience base and create a new revenue channel. Forrester
found that media companies that have successfully operated an eCommerce platform have seen considerable revenue
growth and audience engagement. Additionally, eCommerce is more likely than additional advertisers to drive
revenues, deepen brand loyalty, and increase audience base. When going digital, media companies should be aware of
the following:
Digital content demands new rules of engagement. Media companies report that offering digital content has
had very little negative impact on their business overall (see Figure 1). More than 50% of media companies
responded that the use of Web and mobile to access content has positively affected paid subscriptions, and the
majority of them have seen increases in advertising dollars and market share. There is no question that media
companies must offer digital content today. The question is how they will engage with their new tech-savvy
audience. To date, media companies have not taken advantage of their larger audience base and modern media
platform to generate more revenue. Traditional ad revenue models suffice, but their days are numbered as
consumers see digital ads as a disruption to their overall experience with the content. eCommerce, on the other
hand, allows media companies and brands to engage with consumers while enhancing their experience with the
content. To retain and build their audience base and advertisers, media companies must engage with their
consumers in a way that seamlessly deepens loyalty and enhances discovery — and that is not with an interactive
advertisement. Media companies must realize that offering updated digital capabilities is as important as offering
updated news.
“We’re trying to figure out how to best engage our audience base — is it emails with updates, is it a blog, is it
eCommerce?” (Advertising director, lifestyle magazine)
To stay relevant, enhancing the digital channel has to be a priority. As consumers increasingly turn to digital
channels for their content and their expectations grow, media companies will need to do more than embed video
in a news story. An enhanced digital channel is one that reduces touchpoints, aids in product and information
discovery, and creates a convenient and comfortable experience. If media companies do not take advantage of
this time while consumers’ digital content habits are being molded, they will not only miss a huge opportunity to
drive revenue but will also be surpassed by modern media companies that take the risk to offer an enhanced form
of engagement. Three-fifths of media companies responded that eCommerce will be a key factor in how they
invest in technology to support content, but about half are not in a position to offer eCommerce today (see Figure
2). Focused investment now is the answer to winning market share.
eCommerce turns a threatening channel into a money maker. Media companies have yet to embrace their
digital platform as an opportunity for generating revenue and as a result report that they can’t figure out how to
make money in the digital age. eCommerce platforms that are successfully implemented alongside digital content
are described by media companies as a revenue stream and an audience-engaging channel in the same way that
classifieds once were for traditional print media. There are success stories that prove eCommerce enhances all
sides of the business. A number of popular news, cooking, and active editorials offer marketplaces with curated
products that match and enhance the content in their digital and/or print editions. Content providers that started
off as a digital-only platform (not print) entered the eCommerce space early on and have seen huge success. Such
companies have reported an increase in audience base, the amount of time spent with the content, and the
number of unique views. Traditional media companies blame the lag time on corporate initiatives that question
eCommerce as a revenue stream. The question that needs to be asked is if they can afford to wait.
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Using eCommerce To Monetize Digital Content In The Media Industry
“We offer digital content because it is the only way to stay relevant in today’s media world — not to make
money.” (VP of digital content and research, entertainment media)
“There are not enough corporate resources allocated to developing the digital channel, so we do the minimum —
provide content.” (VP of digital content and research, entertainment media)
Figure 1 Digital Content Positively Affects Business But Doesn’t Drive Revenue
“To what extent have consumers' use of web and mobile technology to consume
content impacted the following in your business?
65%
Overall reach or audience base 19%
8%
60%
Overall advertising revenues 20%
17%
57%
Number of advertisers 31%
6%
66%
Market share 21%
6% Positive impact
55%
Paid Digital Subscriptions 20%
9% No real change
41%
Paid Print Subscriptions 21%
19%
Negative impact
35%
Number of pages in print editions 25%
24%
Base: 106 US-based media organizations with digital content
(multiple responses accepted)
Source: A commissioned study conducted by Forrester Consulting on behalf of Group Commerce, August 2012
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Using eCommerce To Monetize Digital Content In The Media Industry
Figure 2 Digital Engagement Leads To Profitability
“To what extent do you agree or disagree with the following statements about your
organization”
A digital and print subscriber is worth substantially
more to us than just a print subscriber 35% 33% 18% 5% 4% Strongly
agree
Agree
In the future our eCommerce strategy will be a key
factor in how we invest in technology to support our 34% 27% 11% 15% 9%
content Neutral
Our company must rethink how it serves the online Disagree
audience to become a leading digital content provider 25% 37% 26% 4% 5%
Strongly
disagree
Our organization must change dramatically to enable
an eCommerce marketplace 23% 26% 30% 15% 3%
Base: 106 US-based media organizations with digital content
(percentages do not total 100 because an average of 4% of respondents selected “Does Not Apply”)
Source: A commissioned study conducted by Forrester Consulting on behalf of Group Commerce, August 2012
Know Your Limits And Find A Partner That Will Help Successfully Execute
Media companies across the board perceive a level of preparedness that is not reflected in today’s market. Despite
having a digital channel, media companies will likely need to further develop technological capabilities in addition to
their understanding and knowledge of retail best practices. Vendor partnerships are a solution for media companies
without internal capabilities and those that want to go to market as soon as possible. Knowing the following will
prevent mishaps early on:
Perceived internal capabilities are often inflated. The transition from content provider to retailer is challenging.
Understanding what your business is and isn’t capable of may be the biggest hurdle. While the majority of media
companies responded that they are prepared in most areas to offer eCommerce, the market is nowhere near
saturated, and half of respondents are aware that their organization must drastically change to enable
eCommerce (see Figure 3). Managing a digital content platform is drastically different from managing an
eCommerce platform. Additionally, deal sourcing, fulfillment, and merchandizing must be handled by a retail
expert. For media companies without expertise in eCommerce, a vendor partner will be the best way to move into
the new space.
Developing a user experience around content is very different from developing one around products. Media
companies are aware that their technology capabilities need to be updated to support an eCommerce platform. A
successful vendor partnership will result in an eCommerce platform that takes into account all of the nuances of
online retail including platform management, fulfillment, merchandizing, and product assortment. Forty-two
percent of respondents are most interested in vendors that design and develop the user experience, while 34% are
interested in vendors that implement and manage the technology platform (see Figure 4). A successful user
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Using eCommerce To Monetize Digital Content In The Media Industry
experience will incorporate best practices from both media and retail sites to ensure the reader receives product
choices and content that simultaneously enhance the overall experience. When selling anything online advanced
website functionality and customer experience go hand in hand to make the session comfortable for the
customer.
Partner with a vendor that knows how to monetize your content. Media companies have limited themselves in
thinking that their content is only consumable as words and so they can’t be retailers, which Forrester believes is
dated. With the right vendor, broadcasters can take a radio show and spin it into daily deals offerings, or a
network can take a cooking show and launch a website with recipes, videos, and a marketplace selling the
ingredients and cooking utensils needed to make the recipe. A well-selected vendor will curate and create
products and services that resonate with the audience base and enhance content. Musicians are starting to evolve
their brand from entertainer to perfumer and designer as their revenue stream from music sales dwindle. Media
companies must similarly evolve their brand as revenues from ad sales dwindle. If media companies take
advantage of the unique position they are in, within five years, digital media channels will be as important to
consumers for their content as they are for their products.
“Offering curated deals is the biggest challenge to our daily deals model, but we would not feel comfortable
outsourcing deal/product sourcing because we don’t trust a third party to understand our consumers.”
(VP, software and digital content provider and online community)
“We are content providers, not retailers. Products are just too much to manage.” (VP of digital content and
research, entertainment media)
Misguided decisions negatively affect results. The majority of media companies responded that they view
marketplaces as a more profitable eCommerce option than daily deals. While marketplaces can be popular,
Forrester believes that this idea comes from a misconceived notion of daily deals and a hyped idea of a
marketplace. While both have proven to be profitable, it is important for media companies to understand both
options and decide which one will enhance their content. For media companies without eCommerce and retail
knowledge, a vendor should be consulted before moving forward with either decision. A popular digital city
guide successfully operates a daily deals platform that offers highly curated products and services, while an
international news editorial created a successful marketplace by partnering with its advertisers to offer exclusive
products. Before making any decisions, media companies must be well informed to make a decision that will
make the launch successful.
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Using eCommerce To Monetize Digital Content In The Media Industry
Figure 3 Despite Stated Preparedness, Few Media Companies Have Gone To Market
“How prepared are you in each of the following areas to offer an eCommerce marketplace on your website?”
Order fulfillment 33% 30% 22% 8% 7%
Ability to embed items for sale into relevant
digital content 33% 25% 29% 8% 5%
Online payments and fraud management 28% 37% 20% 8% 7% Very
prepared
Customer service 26% 37% 22% 10% 5%
Prepared
Order management capabilities 26% 32% 27% 10% 4%
Somewhat
Merchandising 24% 28% 27% 17% 4% prepared
Commerce related content production & Not prepared
management 24% 37% 26% 8% 5%
Product (or deal) sourcing 24% 20% 26% 16% 14% Not at all
prepared
Commerce technology capabilities 22% 37% 30% 8% 3%
Site operations 18% 39% 30% 10% 3%
Base: 106 US-based media organizations with digital content
Source: A commissioned study conducted by Forrester Consulting on behalf of Group Commerce, August 2012
Figure 4 Media Companies Want Vendors That Enhance Their Digital Platform
“If there were vendors that could help you enable an eCommerce marketplace or daily deals platform on
your website which services would you like to see?”
Design and develop the user experience 42%
Implement and manage technology platform 34%
Manage the customer service 32%
Product warehousing 30%
Source marketplace stores or daily deal
partnerships 30%
Tailor the product offerings to match the digital
content 27%
Order management, fulfillment and logistics 27%
Develop and manage the mobile offering 25%
Marketing related to the marketplace or daily
deals 13%
Product or deal merchandising 13%
Base: 106 US-based media organizations with digital content
(multiple responses accepted)
Source: A commissioned study conducted by Forrester Consulting on behalf of Group Commerce, August 2012
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Using eCommerce To Monetize Digital Content In The Media Industry
Media Companies That Understand The Tenets Of eCommerce See Results
Moving into the retail space demands an understanding of online retail. Media companies that do well in this space
understand that operating an eCommerce platform requires an understanding of the following retail best practices:
Advanced website functionality is a must. Content providers have mastered curating content, and in most cases,
their sites offer little more than that. However, it is clear to innovative media companies that advanced website
functionality is a growth driver. Advanced website functionality is necessary to facilitate eCommerce and
enhance the customer’s experience. Seventy-two percent of respondents consider advanced website functionality
to be important for increasing revenue and audience base, which will only feed the accumulation of more
advertisers and online retail — the second and third most important ways to increase audience base and drive
revenue, respectively (see Figure 5). Media companies that have seen success in this space offer an online
shopping experience that is as flawless as that of an online retailer. Convenient checkout, price transparency,
payment options, and shipping preferences are all pieces of the puzzle that aren’t forgotten when done well.
The balance between content and retail is controlled. As a media company, it is important not to oscillate from
content provider to retailer. The media companies that see positive results in their online metrics (unique views,
brand loyalty, time spent on site, etc.) and revenue growth through product sales maintain a balance between
their role as a retailer and content provider. Media companies with a successful eCommerce platform understand
the role that their content plays to drive interest in products and provide context around a purchase. The most
successful media companies are tastemakers that use their content and products to drive trends and ideas.
Additional context makes the shopping experience more emotional, and the media companies with high
eCommerce revenues fulfill their consumers’ need for instant gratification when shopping by keeping
touchpoints to a minimum so that conversion rates are high.
Business initiatives foster investment in eCommerce. Media companies that do well in this space have an
eCommerce budget and team that is comparable to that of an online retailer. Media companies are limited to
content by their business model and budgets (see Figure 6). While media companies are very behind in the digital
space, they are in a better position today than ever before to move forward. With a handful of media companies
operating a highly successful eCommerce operation today, there are examples that prove that now is the time to
take the risk and allocate the resources. Successful media companies have the budget and the support to hire a
vendor to do what is necessary and utilize internal resources. With support from the top and focused investment,
these companies are seeing big results.
Marketing and consumer education are as important as product selection. Media companies have found it
difficult to engage with their audience base on a regular basis. Emails, promotions, and free content have proven
to be failures for many, but with targeted marketing and education initiatives, the attempts are lucrative. One of
the largest online cooking community sites with an eCommerce platform drives significant traffic to its site with
emailed newsletters that include product recommendations. For this particular site, 75% of visitation is driven
through emails, which drives about one-quarter of overall sales. Until consumers are used to using the site for
retail and content, educate them on what is available and how to use it.
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Using eCommerce To Monetize Digital Content In The Media Industry
Figure 5 Advanced Website Functionality Will Drive Revenue
“How important do you think the following are to increase your audience base and drive revenue?”
Advanced website functionality 37% 35% 16% 9% 3%
More online advertisers 32% 32% 20% 11% 5%
Very important
A separate online store 25% 19% 27% 19% 9% Important
An online marketplace with offerings Somewhat
embedded in the digital content 25% 24% 21% 14% 16%
important
Not important
Curated digital content 22% 36% 26% 9% 7%
Not at all
An online daily deals platform with offerings important
embedded in the digital content 18% 27% 25% 10% 19%
A separate daily deals site 17% 28% 25% 13% 16%
Base: 106 US-based media organizations with digital content
Source: A commissioned study conducted by Forrester Consulting on behalf of Group Commerce August 2012
Figure 6 Business Models And Budgets Are The Top Inhibitors Of Growth
“In your opinion, what are the barriers/challenges preventing your organization from offering better or
more eCommerce marketplace/daily deals options?” (Select all that apply)
Limited by company business model 31%
Lacking the budget 29%
Lacking technology 19%
No demand for eCommerce from audience 18%
Difficult to implement 18%
Limited by current company policies 18%
Lacking vendor providers 18%
Unsure of what our audience wants at this time 15%
Limited by distribution partners 11%
None 9%
Other 2%
Base: 106 US-based media organizations with digital content
(multiple responses accepted)
Source: A commissioned study conducted by Forrester Consulting on behalf of Group Commerce, August 2012
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Using eCommerce To Monetize Digital Content In The Media Industry
KEY RECOMMENDATIONS
Media companies have an opportunity to create a revenue stream while enhancing customer engagement. Successful
players will:
Consider where they will be in five years if the investment is not made now. Media companies that do not
move into this space soon stand to lose more than revenue. Digital media companies are increasingly innovative
and move fast. Within the next five years, consumers will favor media companies that enhance the online
experience by fueling information and product discovery.
Realistically assess in-house capabilities across all dimensions of eCommerce. Sourcing products, marketing
online, managing product content, brokering orders, handling customer service, and preventing fraud are just the
top-level operational and technical capabilities required to provide an exceptional eCommerce experience. Media
companies must mindfully evaluate their ability to drive a retail experience. In many cases, companies will initially
benefit from working closely with partners as they develop and mature their offering. Over time, those capabilities
and business processes may be brought back in-house as cost and operational considerations warrant.
Integrate the content and commerce experience. Simply adding a retail tab on your website and expecting
customers to find product sales is not a likely path to success. Commerce must be woven into the content and
editorial experience and across all communication channels in order to bring awareness to the offering. It is
essential to do this to enhance and not disrupt the consumption of digital content.
Be patient. It may take time to see the real benefit that adding eCommerce to a media business has on the bottom
line. Customers must grow familiar and comfortable with the marketplace while companies work to perfect the
experience. It is also important to remember that online retail of any kind will capture smaller margins than
traditional advertising models.
Focus on curated offers. For those interested in a daily deals model, note that among consumers and advertisers
alike deal fatigue is an issue. Highly relevant deals in specific interest niches are the products that most resonate.
Capturing unique offers requires a team that is closely connected to the content, the brand, and the customer.
Methodology
In this study, Forrester conducted an online survey of 106 US-based eCommerce/Digital Marketing decision-makers in
charge of the digital channel at local and regional media, publishing and broadcasting companies (e.g., newspapers,
book publishers, trade magazines, fashion/news magazines). In addition, Forrester conducted 4 qualitative interviews
with business leaders responsible for the online channel at media, broadcasting and publishing companies. The surveys
and interviews intended to evaluate the needs and expectations digital leaders have for eCommerce and how it may
support additional revenue streams and advertising relationships going forward. The study began in July 2012 and was
completed in August 2012.
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