Making money in mobile media

Business media executives see their platform investments start to pay off

By Marie Griffin

New reports about escalating tablet and smartphone usage, increasing mobile advertising and new mobile products, applications and services seem to come out every day.

For example, eMarketer estimates the number of U.S. tablet users will reach 54.8 million by the end of this year, a jump of 63% from 33.7 million in 2011. After the number of smartphone users in the U.S. climbed 50% from 2010 to 2011, to total 90.1 million, eMarketer predicts 18% more growth this year, to 106.7 million. Mobile advertising spending soared 89% to an estimated $1.45 billion in the U.S. last year, and eMarketer predicts it will grow an additional 80% this year, to $2.61 billion.

B-to-b media companies, well aware of these trends, must determine how they will serve their increasingly mobile audiences and the advertisers that want to reach them. While they wrestle with questions about their particular audiences' needs, advertiser readiness and the best technology solutions, one question stands above all: How do publishers make money? That is, how do they ensure they're not just moving revenue from print or the Web to mobile media while their technology costs increase?

Noah Elkin, principal analyst at eMarketer, said different business verticals tend to adopt new technologies at different rates, so media companies should start by analyzing their mobile traffic and surveying their audiences and advertisers. Once audience usage of mobile devices reaches a certain threshold, about 20%, Elkin said, it becomes imperative to offer mobile products whether a media company is moving money from one platform to another or making additional money. Native apps (mobile applications downloaded to an iPad or iPhone using Apple's iOS operating system, Google's Android or less common operating systems) are not the only solution a media company can offer mobile users, he added, but “there's an expectation from the user base that you must have an app.”

Fortunately, business media companies of all sizes—from $7 billion Bloomberg to $5 million WTWH Media—say it is possible to make money with mobile apps, and they're doing it.

Oke Okaro, general manager and global head of mobile at Bloomberg, said: “Every business within Bloomberg is run as a profit center. We have been incredibly efficient [in the design and development of mobile apps], so our incremental development cost is marginal.” He said not only does Bloomberg have the technical infrastructure to do app development in-house cost-effectively but “we fully leverage the infrastructure we have in place for the entire Bloomberg network.”

Bloomberg has a portfolio strategy in which various brands within the company play slightly different roles to enhance one another. “We think about delivering experiences that are optimum” for each platform, Okaro said. “We decided to deliver Bloomberg Businessweek on the iPad because, in a world of information overload, business readers come to this magazine to answer "why.' We have taken advantage of the tablet medium to provide a more interactive, deeper, richer, more engaging experience.”

Called Bloomberg Businessweek+, the iPad app is based on the content of the magazine; weekly issues become available to users of the app on Thursday evenings before print issue dates. The magazine's content is enhanced with features that take advantage of the iPad platform, including an exclusive video with Editor Josh Tyrangiel that takes readers behind the scenes of each issue. The app also enables a user to email articles, create an article archive, share on Facebook and Twitter, and search past issues, among other features.

A Bloomberg Businessweek+ app user reading about a particular company can click the company's name and get up-to-date financial news and stock prices fed by the Bloomberg news network. While Bloomberg Businessweek+ provides business news and analysis, Bloomberg TV+ takes advantage of the company's global news and finance network to deliver live and on-demand video to the iPad. Bloomberg Radio+ takes advantage of the iPhone. Another app, branded simply Bloomberg, delivers the latest financial news on the iPhone and iPad as well as Android smartphones and tablets and Nokia's Symbian operating system.

“Each brand has tentacles that bring people to Bloomberg within the apps. We're trying to keep people within that ecosystem,” Okaro said.

Marshall Matheson is senior VP-online media at WTWH Media, a Cleveland-based b-to-b media company formed in 2006. WTWH publishes Design World, Solar Power World Magazine, Windpower Engineering & Development Magazine and related websites. In February 2011, it launched its Design World iPad app, which cost about $25,000 to develop through a third-party vendor, Matheson said.

The app was sponsored by National Instruments as part of a program that included print, online and mobile. In spite of the bundled pricing, Matheson said, “We absolutely made money. Our development costs were covered. I don't think we would have gotten the program at all if we hadn't been able to provide the mobile component.”

At Cygnus Business Media, the “strategy was to get some quick wins,” said Tom Kohn, exec VP-digital strategies. “We knew that our public safety customers, both end users and advertisers, were very mobile-savvy; 24% of the traffic to Firehouse.com came via mobile, and they were asking for tablet apps.”

To control costs, Cygnus developed its iPad apps in-house. Between October and January, the public safety group launched four iPad apps—Security Technology Executive, Firehouse, Law Enforcement Technology and Law Enforcement Product News. EMS World was launched Feb. 28. Beyond public safety, Cygnus has also released iPad apps for Sustainable Construction and Farm Forum, a custom app for Case IH. The company has plans to introduce more apps later in the year.

“These are platform extensions of our magazines, so the stories have multiple content pieces, such as videos, that people can interact with,” said James Capo, director-digital business development at Cygnus Business Media. “Right now, the content is refreshed monthly, but we're looking to do it more frequently.”

The monetization model for the Cygnus iPad apps currently is sponsorship, but the company plans to focus this year on “bundling advertising,” Kohn said. “We can give advertisers the Web, tablets and mobile sites—we just launched or redid mobile websites for our 40 brands—to provide tremendous reach.”

As to profitability, “every project would be profitable in an ideal world,” Kohn said. However, top management is giving the digital team some leeway to experiment with new ideas that may take time to show a return. “We're riding the fence between making money and being R&D-focused,” Kohn said.

Tech titles advance mobility

At UBM TechWeb, “mobile is another platform, not another business,” said Ed Grossman, exec VP of the InformationWeek Business Technology Network and one of the leaders of TechWeb's digital best practices team. “We're expanding our current business model into mobile; we're not here to champion one channel over another.” Therefore, monetization of the mobile platform will come from “tying together multiple platforms for clients to make sure they can engage with our users wherever those users want to engage with our content,” he added.

“In 2011, we were able to gain critical mass on the iPad—we now have 14 iPad apps within the TechWeb portfolio—and we redid our mobile sites,” Grossman said. “In 2011, we allowed each group some flexibility to find the right strategy for their markets. In 2012, we'll achieve greater unification of approach as we scale the best practices across TechWeb. There will be a continued evolution at an accelerated pace.”

Anthony Adams was senior VP-products at Ziff Davis Enterprise before leaving the company last month when it was sold to QuinStreet Inc. Last year, ZDE “made the decision to go all-out” in mobile, he said. While the majority of media companies have developed native apps for one or two operating systems, ZDE launched native apps for five different smartphone operating systems—Android, Apple's iOS, Microsoft's Windows Phone, Nokia's Symbian and RIM's BlackBerry—as well as three tablet formats, iOS, Android and BlackBerry PlayBook, for a total of 36 native apps. In addition, all the company's mobile websites received a face-lift, and regular websites were optimized for viewing on tablets.

As well as providing users with experiences tailored to a variety of mobile devices, ZDE was differentiating content and advertising for each platform—digital magazines, the Web, smartphones and tablets. “If you don't have a solid editorial strategy that differentiates content for each platform, you will only cannibalize your brands and move money from one place to another,” Adams said.

Similarly, ZDE helped advertisers prepare ads for mobile platforms. “We had a small number of [initial] partners, and we were working very closely with them to develop creative for tablets,” Adams said. “We were looking to create industry-leading engagement metrics.”

Those metrics were based on actions users could take within an ad, such as watching a video or sharing content through email or social posting. Mobile advertising at ZDE was sold on a CPM or impression basis. Even though many media companies are using a one-price sponsorship model with mobile apps, Adams said ZDE chose to go with traditional digital advertising metrics to make the buying process easy and transparent.

Originally posted on: 3/9/12