Cracking the Code for Delivering a Truly Customer-first Entertainment Experience

Cracking the Code for Delivering a Truly Customer-first Entertainment Experience

Some of the world’s largest content producers — Discovery, Warner Media, and NBCUniversal, to name a few — have created dedicated business units to build subscription-based video streaming services to ward off “cord cutting” and a decline in television advertising.

At the same time, digital news publishers that have seen their advertising businesses sharply decline due to Facebook and Google’s dominance of the digital advertising market are embracing more complex subscription-based consumer strategies. And that’s requiring a new approach to how they manage customer experiences.

A recent study found that by the end of 2019, 50% of adults will have at least two online-only media subscriptions. By the end of 2020, that average will have doubled to four — in total, 580 million subscriptions and about 350 million subscribers.

According to the same study, the cost of each of these subscriptions — spanning TV, movies, music, news, and magazines — typically will be under $10 per month. One-fifth of adults will pay for at least five online media subscriptions, and it’s expected that by the end of 2020, they will have double that — 10 media subscriptions with an aggregate spend likely to average over $100 per month, or more than $1,200 annually.

In short, the subscription industry is booming and there is money to be made — if you can shift your content model and your customer experience management (CXM) solutions.

If your company is considering a direct-to-consumer content model — for video, music, news, podcasts, games, or audiobooks — consider these foundational steps you’ll need to put into place.

1. Get your data house in order

The number of consumer touchpoints and the volume of real-time, first-party data produced by each media channel have exploded. Websites, mobile apps, social media, video, audio, and advertising are constantly generating massive volumes of unstructured data. Most media companies don’t have the specialized infrastructure to collect, onboard, process, and model such data at scale.

This makes traditional approaches to tackling data integration difficult and time consuming. As content companies — Netflix, Spotify, and Kindle, for example — have moved to cloud and subscription models, enabling their services to be accessed on any device, consumer data begins popping up in silos across different systems. Extracting data from various sources and integrating it leads to challenges of data mismatches. And missing and inaccurate data makes onboarding and integration projects time consuming and resource heavy.

To overcome this, media companies must reimagine a data architecture that can manage multiple data sources, build customer profiles, and reduce friction in delivering personalization at scale across an ever-expanding device landscape. And do it all in real time. It is possible — here’s how:

  • AI/ML for real-time customer insights. With rapidly shifting consumer behavior, traditional data analysis approaches create a historical view that is rendered useless before it can even be acted on. Not being able to stitch data and make it available to fuel experience applications makes the information less relevant — and experiences end up being less effective as a result.

    For analytics capabilities to evolve from retrospective reporting to event and behavior-driven activation, media companies must invest in technologies that enrich data and derive more insights with data queries, while using artificial intelligence (AI) and machine-learning (ML) models that automate insights.

  • Ecosystem extensibility. Data management capability across the subscription and advertising supply chain has become increasingly more event-driven, and consequently there is a need for media companies to be able to integrate their systems into the wider technology ecosystem of third-party partners and suppliers.

    To optimize data performance and interoperability of core technologies, media companies must have pre-built pipelines and connectors to enable a seamless flow of both inbound and outbound data.

  • Governance and security. You don’t need to read the headlines to know data collection and usage practices are constrained by user consent and increased data regulations. Media companies are now very aware of the contracts they make with third parties, and they deeply need to understand and own responsibility for their data usage. Thus, they’re becoming obsessed with getting, owning, and using first-party data.

    For this reason, we’re seeing significant investments in customer data platforms (CDPs) and identity management platforms. Media companies need to architect their data ecosystem with this in mind.

2. Build a hybrid business model

The online advertising model has been based primarily on anonymous demographic and behavioral data and a complex ecosystem of third-party intermediaries and data providers.

The digital ad market does not provide a sustainable basis for a large number of media companies to build a business on — and without the volumes of usage, in-depth user data, and targeting capabilities or low content costs of the big platforms, media companies are finding it difficult to make ends meet online.

But building a profitable direct-to-consumer subscription model also requires other extrinsic considerations — consumers’ propensity to pay for content and their ability to afford multiple subscription services, for starters. There is a growing willingness from consumers to pay for online content, such as paid music and video subscriptions, which have seen strong growth. Today, these models are outpacing the transactional models that came before them. Consumers are also more willing to pay for online news content than they once were.

That said, media organizations will not survive on subscriptions or advertising in isolation and, as a result, are experimenting with a wide variety of hybrid business strategies.

Subscription models. For companies creating subscription-based direct-to-consumer products, instead of going through existing channels, it’s crucial to execute the user registration funnel to the acquisition model more effectively. To spend money on marketing and media more efficiently, companies need to quantify and understand how each stimulus — both on-site and off-site — influences and contributes to subscriber acquisition and churn reduction.

The industry is responding to consumer demand by experimenting with more flexible subscription models — digital news publishers are developing more complex strategies around user registration, freemium, and micropayment models and investing in technology to support dynamic paywalls, enabling a more in-depth understanding about their users and making the paywall adjustable to specific users or audience segments.

The purpose of the dynamic paywall is to determine how likely or unlikely it is for a new user to subscribe based on their activity, and altering the paywall accordingly to increase the chances of conversions. At the same time, TV companies are experimenting with “skinny bundles,” operator bundling, and transactional models to create different combinations of content and pricing.

Advertising models. Simultaneously, the advertiser-funded model is evolving. Broadcasters, TV platforms, agencies, and advertisers have more and more access to proprietary data sets and rich consumer data from other sources, creating opportunities to establish new forms of advanced advertising targeting and audience buying, new trading models, and better consumer experiences.

Digital publishers are also reimagining their advertising strategy through industry collaboration, acquisition of ad tech, and forming advertising alliances to build private marketplaces. This shift is mainly in response to industry-wide concerns surrounding brand safety, data governance, lack of transparency in the supply chain, and ad fraud. The change also addresses advertisers’ growing demands for a single point of access to publisher inventory to facilitate an easy buy for scaled quality.

3. Invest in the right technology — and the right team

An effective direct-to-consumer operating model combines technology and operations in an integrated, sequenced way to achieve real gains in customer experience, revenue, and cost-efficiency.

Instead of working on uncoordinated initiatives within organizational silos, companies need to evaluate how their operations can scale to deliver a compelling customer experience, and how to create the organizational structures and processes required to support this.

Media companies delivering a truly customer-first entertainment experience have developed a distinct operating structure that enables them to digitize, streamline, and simplify their most important customer journeys at scale with consistent resources and results.

Plus, don’t overlook the workforce skills and potential culture shift that may be central to building an effective operating model. That includes:

  • Agile development teams that are independent but not isolated from the core business. Teams need to have the autonomy to test and iterate new initiatives quickly. At the same time, they need to foster a culture of innovation that leverages cross-discipline functions, skills, and local expertise, which is central to successful execution.
  • KPIs and business goals with clear, cross-functional alignment. Digital innovation needs to be supportive of the strategic priorities of the business of course, and resource allocation should be set accordingly.
  • Companies need to hire business-critical expertise. For direct-to-consumer companies or models, data scientists and analysts are necessary. What’s more, business intelligence needs to be effectively disseminated across the organization.
  • The technology platform and workflows must be streamlined. They all must support strategic and core projects across multiple markets, business models, and verticals — and must make it easier to get the job done.
  • Create focus and ownership. Post-launch, new products and platforms should have their own dedicated teams and profit and loss responsibility to ensure focus during incubation and growth.

Once you’ve put these three essential pieces in place — getting your data in order, building a hybrid direct-to-consumer business model, and investing in the right CXM technology and teams — you will be focused on a modern customer journey, and on the best workflows for creating and delivering content.

Ultimately, a successful direct-to-consumer model for publishing media content starts with understanding your customers and offering personalized experiences. This happens with unified data for a single customer profile that provides an understanding of their consumption paths and patterns and how to reach and engage them. From there, your brand will be better positioned to deliver the content and experiences your audience loves and keep them engaged for more.

Learn more about creating winning customer experiences here

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