As media companies continue their quest to survive and grow in the challenging macroeconomic climate, two recent conflicting strategies have emerged and are worth taking a look at.
1) AOL’s upcoming launch of it’s new content management and production engine
2) News Corp.’s efforts to keep their content out of Google and only in Bing search results, with resulting direct compensation from Microsoft
To start with, Tim Armstrong (CEO of AOL) deserves kudos for his recently announced plans as he is faced with a set of challenging circumstances:
- Overhead is not in line with revenue and the company is bleeding cash
- 20% of AOL’s major revenue source (ISP subscribers) annually defect causing significant cash flow issues
- Between 20 and 50% of AOL’s traffic is generated from ISP subscribers directed to their core AOL Mail, AOL.com, or AOL/Google search pages
So, what has he done?
- Announced a voluntary layoff plan to reduce 2500 jobs with, what I would call, generous severance packages. This should tighten their belts and align overhead against projected revenue.
- Managed the separation from Time Warner so AOL acts as an independent entity.
- Re-branded the company in preparation for the 12/10/09 date when the new AOL common stock trades on Wall Street
- Publicized his renewed focus on becoming a super content engine with the soon-to-be-launched AOL content and analytics engine
Tim’s decision to build technology and align people resources against a massive analytics-based content engine is smart. According to a Pew Internet Study the data is clear – roughly 50% of users consume their content via search. Focusing on solutions to drive SEO must be prioritized as a critical component of any media business. Coming from Google, Tim gets the importance and quantitative nature of content and search. Although there are lots of “so called” SEO experts few recognize and prioritize the necessary data-driven approaches to a comprehensive inbound marketing strategy. Trust me, it is no small feat to build an engine (people and technology) that uniquely generates thousands of user-centric and analytically-driven content pages.
I commend Tim for his strategy.
My prediction is that if he is able to successfully launch this “AOL content analytics engine” and rallies the appropriate people resources he will drive traffic and scale back to AOL as a network of premier media brands.
Good luck Tim, I believe you’ve turned on Google.
In contrast to AOL’s strategy to work with Google, Rupert Murdoch (Chairman and CEO of News Corp.) and company have relentlessly voiced their disapproval of Google strategy and have announced plans (or threats) to block their content from Google search. News Corp. is on the street trying to rally other media companies to join them. Additionally, they are in discussions with Microsoft to strike a deal whereby Bing pays them for exclusive access to their content.
I think Jeff Jarvis’s Buzz Machine articulates it well, “Rupert Has Balls.” Basically, Jeff contends that although Mr. Murdoch is a smart man with years of experience he makes mistakes and doesn’t always know something that others don’t. TechCrunch wrote an interesting post about the real strategy behind the public threats to block Google. They contend there is a much bigger strategy by playing both sides (Google and Bing) in search result prominence, as Murdoch would never pull his content from Google.
My take is simple – there is no way News Corp. can convince shareholders of value without making sure their content gets listed and is actively promoted by Google. The media propaganda around “turning Google off” is nuts. Even though Jonathan Miller comments that Google’s value is not as big as you would expect – I don’t believe it. If this is part of a larger leverage strategy, I hope it works for them. We all get it, the challenges and frustration are high for media companies:
- Google holds a lot of power with their search technologies and doesn’t pay anything for the content from which they make their bread and butter.
- With “free on the web” in a poor advertising market, the economic value of content is not recognized and can’t continue.
- An effective content site relies on a material amount of traffic from Google.
The solution is not to turn-off Google, rather media companies should find ways to do a few things right:
- Cost-effectively produce exceptional unique content
- Diversify business models so as not to be completely reliant on Ad revenue
- Leverage a comprehensive inbound marketing strategy that includes SEO, Social, SEM, and landing page optimization
- Create win-win partnerships that extend content in meaningful ways
If News Corp. does end up turning Google off – they will desperately need some digital Viagra for that libido problem.
