IBM study identifies challenges to media companies
By Sean Callahan
Chicago—As consumers of media content increasingly move online, media companies continue to face challenges monetizing those consumers, according to a study released by the IBM Institute for Business Value.
The study, which surveyed 3,300 consumers in the U.S., Australia, Germany, Japan and the U.K. in the third quarter of 2009, showed that older users were driving the growth of Internet usage and swapping traditional for online media. For instance, users 45+ increased their adoption of social media from 31% in 2008 to 50% in 2009. Similarly, usage of online newspapers by users 55+ increased from 44% to 59% in the same timeframe.
The challenge for media companies is that as their users move online, advertisers want to pay less for them. In an interview, Karen Feldman, global media & entertainment lead for the IBM Institute for Business Value, pointed out that Hulu garners about 10% of the price for advertising on traditional TV.
The path for media companies to charge more for advertising lies in context and relevance, Feldman said. "Marketers have already shown a willingness to pay slight premiums" for relevance, she said, adding: "The question becomes, over the next five-year period, how much of a premium is that going to command?"