1. Media and Entertainment Industry Group
The Billion-Dollar Challenge:
Monetizing the Digital
Opportunity
Media and entertainment companies are struggling to adjust
to the inexorable digitization of the industry. Innovation is
occurring, to be sure, but transforming digital innovation into
digital revenue streams will require more fundamental and
therefore more difficult change.

2. The Traditional Marketing Funnel: Missed Opportunities to Influence Consume
A new paradigm of engagement creates opportunities for unlimited dialogue and interaction throughout the marketing
Figure 1.
The traditional marketing funnel: Missed opportunities to influence consumer choice
and sales process, not only at the bottom of the funnel. Embracing this new engagement paradigm can lead to
significant competitiveparadigm, an inverse relationship exists between the number of consumers moving from awareness to loyalty
In the traditional marketing
advantage.
(left), and the number of consumers who can be engaged in dialogue (right). Dialogue occurs mostly at the end of the funnel, where numbers
are relatively low. This means that traditional approaches have, in general, not been able to leverage opportunities to engage with consumers
and influence choice earlier in the marketing and sales process.
High Low
Awareness Awareness
Consideration Consideration
Ability to
Number of engage
consumers consumers
Purchase in dialogue Purchase
Use Use
Low Loyalty High Loyalty
The challenges of monetization in the
digital world are profound. Media and
If media and entertainment companies are
to generate the digital revenue streams
Understanding the new
entertainment companies, as well as required to support growth—a state we'll consumer engagement
marketers, face the difficult task of call "monetization nirvana"—they must: paradigm
bringing a new business model online (1) understand and leverage the unique
The opportunities that digital advertising
while still maximizing profitability from capabilities of digital to influence consumer
and digital content present to media and
the old model. They also live in a world of behavior and spending through more
entertainment companies must be under-
dramatically shorter lifecycles for products relevant interactions; (2) use the distinctive
stood both from the consumer's and the
and services, and also companies and aspects of the digital world to help
marketer's perspectives.
markets. Dynamism and volatility marketers achieve more specific, measur-
constitute the "new normal" of the able and accountable outcomes; and (3)
Engaging with the consumer today is one
digital marketplace. continuously optimize the user experience
of the areas where too few companies are
and the marketer's value proposition
Bold action is needed. Instead of trying to leveraging the distinctive power of digital
through enhanced analytic capabilities.
passively protect old models in the face marketing. Consider that the traditional
of industry disruption, companies need to frame of thinking has been focused on push
actively engage with that disruption. marketing—reducing messages to the basics
Instead of bringing analog formats and and getting those messages in front of as
pricing models into the digital environment, many eyes as possible. But that paradigm—
media and entertainment companies must the traditional marketing funnel that moves
understand the distinctive capabilities of people through awareness, then consider-
digital and put in place compelling value ation and purchase of a product, then usage
propositions and metrics for marketers and development of loyalty (see Figure 1)—is
and consumers alike. Achieving high being significantly disrupted and reshaped.
performance in the digital world isn't
about doing old things in new ways.
It's about doing new things in new ways.
2 The Billion-Dollar Challenge: Monetizing the Digital Opportunity

3. luence Consumer Choice
oughoutFiguremarketing
the 2.
m can lead to engagement paradigm of digital marketing
The new
With the new digital paradigm, the marketing funnel is opening up, transforming its shape. More opportunities exist for dialogue,
interaction and engagement throughout the marketing and sales process, even at the stages of awareness and consideration.
Embracing this new engagement paradigm can lead to significant competitive advantage by more effectively influencing consumer choice
to drive highly valuable business outcomes.
Awareness
Consideration
Purchase
Use
Loyalty
The new marketing paradigm (see Figure 2) Take the example of a manufacturer of food Companies also must be attuned, in real
is about influencing consumers' brand blenders that produced a humorous online time, to what is happening to their brand
associations and buying behaviors by video campaign to support its entry into the over digital experiences such as social
engaging them in dialogue and interaction— retail market. In its ongoing series of videos, networks. Consumers are much smarter and
in part because dialogue and interaction are a variety of oddities are placed in the better informed than they were just a few
distinctive capabilities of the digital world. blender to demonstrate its blending years ago, and they are connected—all the
Companies have the opportunity through a strength. The videos became a viral hit, time, anywhere and everywhere. One only
variety of digital experiences such as social drawing more than 60 million viewers needs to consider how social media helped
networking to engage in dialogue with during the first year of the campaign. But build the "Obama" brand during the most
millions of potential consumers. And every people weren't just "viewing" the video recent US presidential election to under-
interaction—even those at the very earliest ads—they were providing feedback, sharing stand how future brands will be built.
stages of awareness—becomes an opportu- the video link with others and spreading the
nity to influence choice. Media companies word through social networks. Retail sales One-way marketing may live on in the
and marketers alike now have a magnitude rose 500 percent in the first year of that marketplace for a time, but it has passed the
of opportunities for interaction and 2007 campaign. stage of maturity. Pushing and controlling a
dialogue—at the front end as well as message will not earn the trust needed to
throughout the funnel—that can be much achieve high performance. Media and
richer in terms of content and experience entertainment companies as well as
than what was possible before social digital marketers must therefore look to where
capabilities arrived. their target consumers are across all the
different modes of social interaction and
engage those consumers in ways that are
meaningful to them and that engender trust.
The Billion-Dollar Challenge: Monetizing the Digital Opportunity 3

4. The Consumer’s Mindset
Figure 3.
Monetizing the consumer experience by staying highly relevant
Consumers are concerned with whether a digital experience is relevant to their
needs, pain points and interests. The good news is that consumers are increasingly are highly relevant to
Media companies as well as marketers must ensure that the digital experiences they offer across all channels
consumers' needs, pain points and interests. The good news is that consumers are increasingly willing to pay for relevant experiences
willing value to their lives.
that add to pay for relevant experiences that add value to their lives.
Perceived relevance:
“This experience is valuable to me.”
Low value High value
I could do what
I wanted to do
easily and freely.
Revenue model:
“I am willing to pay for this experience.”
Services are free Pay for use
Free Free trial • Subscriptions
• Virtual goods
• Pay per use
The Marketer’s Mindset
Marketers want to increase their ability to measure the impact on desired outcomes
The importance ofoptimize results based on is the primary reason search-Publishers and the challenges, there is also
and incrementally Relevance quantitative insights. In spite of
participating ecosystem players should enable marketers to so profit- and manage If relevance to the consumer
consumer relevance based advertising has become
measure good news.
able. If a user is searching for "blenders," or user is high, we are finding that people
their desired outcomes and then only charge for aresults achieved. of
The other critical dimension of the new that's probably fairly sound indicator are increasingly willing to pay for digital
consumer engagement paradigm is an intent to buy a blender. But other experiences (see Figure 3)—through
relevance. Media companies, and marketers innovative ways to target users with subscriptions, for example, or on a pay-
Outcome/result:
as well, must be highly relevant to a relevant information must be developed if per-use model. We're also seeing that
“I reached my desired business outcome.”
consumer's interests and pain points. the industry is to succeed. micropayments for virtual goods (buying
Weak outcome assets in a virtual-world game, for
Strong outcome
Achieving that relevance is becoming A significant challenge in this environment
Sample outcome:
example) is also finally catching on after
exceedingly difficult, however, given the is that media consumption patterns are
a few failed early attempts.
fragmentation of channels and the user also highly fragmented. Companies are value
Increase customer lifetime
experience in today's marketplace. It's competing with almost innumerable
Result:
becoming increasingly easy for users to platformsMarketer improved value by
and channels. That means they
take matters into their own hands (as with 10 percent in 3 months.
must be highly relevant all the time, at
app stores), re-composing their overall every point of interaction, to gain be attributed
Half the increase can
end-to-end experience into something to specific digital activities.
significant user mindshare. If they fail to be
meaningful and relevant to them.
Revenue model: relevant, companies risk negative brand
“I pay based on results.” associations which can then spread virally.
Not Performance-
performance- based (high
based (little accountability)
accountability) Cost per Cost per Cost per Cost per Cost Per
mille click lead acquisition Desired
(cannot be
the model
Outcome
of the future) (CPDO)
4 The Billion-Dollar Challenge: Monetizing the Digital Opportunity

5. The Marketer’s Mindset
Marketers want to increase their ability to measure the impact on desired outcomes
Figure 4.
Providing increased value to marketers
and incrementally optimize results based on quantitative insights. Publishers and
participating ecosystem players shouldentertainment companiesto measure and accountability, which means their ability to
In the age of "performance marketing," media and enable marketers must increase their manage
their desired outcomes andathen only charge for results achieved.charge for results achieved.
measure whether they have helped marketer achieve its desired outcome—and then
Outcome/result:
“I reached my desired business outcome.”
Weak outcome Strong outcome
Sample outcome:
Increase customer lifetime value
Result:
Marketer improved value by
10 percent in 3 months.
Half the increase can be attributed
to specific digital activities.
Revenue model:
“I pay based on results.”
Not Performance-
performance- based (high
based (little accountability)
accountability) Cost per Cost per Cost per Cost per Cost Per
mille click lead acquisition Desired
(cannot be
the model
Outcome
of the future) (CPDO)
New ways to provide value that are embracing the distinctive nature and major global brand, for example, has an-
capabilities of digital and using those nounced it will no longer pay its advertising
to marketers: Pricing capabilities to shape their pricing models. agencies by the hour or based on fixed fees,
models based on outcomes Those capabilities and models become a way to but instead, only for achieved results. Consider-
stay relevant to marketers and provide them ing today's challenging economic climate, this
Part of the old-world thinking that still
with dramatically higher and more accountable is a clear sign that accountability for results is
pervades digital advertising has to do with
levels of service. increasingly sought within the industry.
pricing models. It's been 15 years since the
appearance of the first online display ad, In terms of pricing models and metrics, Although the transformation to performance
measured in traditional "cost per mille" (cost Accenture believes that the industry will marketing will be challenging to most media
per thousand views) ways. That's really no migrate to something we have termed, “Cost companies, it presents a strong potential for
different a pricing model than paying for a per Desired Outcome” or CPDO. Such a metric growth. Consider that, at least in theory, a
newspaper ad insertion; it’s simply substituting will be a distinctive feature of the age of CPDO model means that a marketer's budget
the cost of showing a web page for the cost of "performance marketing"—where media is limited only by supply constraints. If the
showing a newspaper page (independent of companies will ask marketers to pay based on marketer is paying based on the desired
whether or not the user/reader actually pays performance or the achievement of a outcome of X dollars of sales with attractive
attention to the ad). particular outcome. This is a distinctive profit margins—paying a percentage of
competitive advantage to a media company— revenues—then the more the sales, the more
Some digital advertising metrics do begin
being able to tell a marketer, "Let's work advertising budget there is to spend. It's a
getting to more defined goals: cost per lead
together to precisely define the outcomes you win-win all around.
(CPL), for example, pays only when a legitimate
are looking for, then you will pay only if we
and well-qualified buyer expresses interest. Paying for outcomes is a major trend that
help you achieve that desired outcome.” (See
Other metrics—cost-per-action, cost-per- media companies will eventually be forced
Figure 4.) This approach also improves the
acquisition, cost-per-engagement—try to move to embrace. Marketers will soon demand it.
effectiveness of marketers because they must
the pricing model toward a more accountable Any media company that does not aspire
think more clearly about business objectives
and performance-driven arrangement. toward performance marketing and a metric
that drive desired results.
such as CPDO will be disrupted or extinct at
However, if we look at where innovation is
We are already seeing the beginnings of some point.
happening in the world of advertising today,
performance marketing in the industry. One
it's with media and entertainment companies
The Billion-Dollar Challenge: Monetizing the Digital Opportunity 5

6. Monetization Nirvana
As the chart indicates, marketing that is not relevant to the user will face accelerated
Figure 5.
extinction. Product/service success stories represent a more compelling model. The
Monetization greatest success, however—monetization nirvana—will be in the space where the
nirvana
As the chart indicates, consumer experiences andrevenue streams (the ones the user willat the user asextinction. the
publisher connects the marketing that are not relevant to targeted face accelerated well as
Product/service success stories represent a more compelling model. The greatest success, however—monetization nirvana—will be in the
ones targeted at marketers) with reinforcing mechanisms that benefit each other
space where the publisher connects the revenue streams (the ones targeted at the user as well as the ones targeted at marketers) with
reinforcing mechanisms that benefit each other inthe quality of the service.of the service.
in a way that improves a way that improves the quality
High
Accelerated Monetization
Extinction Nirvana
Ability to deliver
desired business
outcomes to marketer
No Product/
Game Service
Success
Stories
Low High
Perceived relevance to the consumer
Achieving monetization • Companies that fail at both consumer However, where an optimal future lies—
relevance and accountability to marketers call it “monetization nirvana”—is at the
nirvana will not be in play at all—it's no game. intersection between (1) digital experiences
Getting digital monetization right— that are highly relevant to the consumer
• Companies that do not create experi-
achieving monetization nirvana—means and (2) a performance-based model using
ences that are relevant to consumers will
optimizing both the dimensions we have the CPDO metric based on achieving the
face accelerated extinction, even if they
discussed to this point: mastering desired outcome for the marketer. Both
improve their accountability to marketers.
consumer relevance and influence on dimensions—relevance and outcomes—
the one hand, and mastering the ability • Companies that achieve a high degree generate value to stakeholders, and even
to provide more accountable outcomes of consumer relevance can stake out a reinforce each other without trade-offs.
to marketers on the other. position where they can achieve a degree
To achieve high performance, media
of success, whether or not they achieve
As shown in Figure 5, the challenge and companies must excel at relevance and
additional revenue streams from
opportunity alike for media and entertain- accountability at the same time. Excellence
marketers. Apple iTunes, for example,
ment companies in the digital age can be in one dimension only will not support
sells other companies' products, on top
summarized as follows: competitiveness in the long run.
of its own products, at premium prices.
With or without advertising, it's a
compelling business model.
6 The Billion-Dollar Challenge: Monetizing the Digital Opportunity

7. z
Figure 6.
Managing fragmentation and shortened lifecycles with science-based optimization
Today, innovation is occurring across all technologies and models in the digital world— engagement platforms, content types, delivery
From Fragmentation to Science-Based Optimization
mechanisms, advertising units and pricing models. Tomorrow's challenge is rooted in the fact that this multi-faceted innovation is leading
to increased fragmentation of therequire developing new capabilities of ways of influencing consumer of the user experience and market
Fragmentation and complexity consumer experience and, therefore, in science-based optimization choice. Product, service
lifecycles have also been dramatically shortened, creating a dynamic and volatile environment. Traditional management techniques fall short
and marketing performance.
in the digital environment. Decision-making must be supported by automation and science-based optimization. New analytic techniques
and tools can enable media companies to continuously optimize (1) the consumer experience and (2) marketing performance at scale and at
lower cost.
Today’s situation The challenge of fragmentation Tomorrow’s solution
Engagement platforms Quantitative, continuous, science-based
Devices: Mobile, PC, TV, etc. optimization of the user experience
Services: Facebook, Twitter, etc. and marketing performance to enable
solutions at scale
Content types
User-generated content,
premium, short-form,
long-form, etc.
Delivery mechanisms
Widgets, websites, RSS feeds,
tweets, etc.
Units
Ads, campaigns, etc.
Pricing models
CPA, CPL, CPE, CPDO, etc.
Using science-based The quality of information and data is also
critically important to the value of the
search engine marketing (SEM), among
other elements in the marketing mix. These
analytics to continuously insights generated. Analytics are only as kinds of analytic approaches have a consid-
optimize the consumer good as the data that is used. In our erable impact on profitability and in some
experience, companies that are more
experience and the advanced in their analytics capabilities
cases on the viability of entire business
models. The science behind things like the
value to marketers have attained a high degree of granularity,
mass-personalization and optimization of
quality and timeliness in their data. Near
The explosion of devices and channels, the landing pages is still in its infancy but
real-time data generation and access is
shortening of product lifecycles, and the becoming increasingly essential. Companies holds tremendous potential.
different ways to access an ever-increasing also need the organizational and decision-
supply of content have strained ordinary making structures that enable them to act 2. Master how to influence the
modes of user and usage analysis past the quickly on the insights generated. desired actions of the consumer
breaking point. To successfully execute and to drive profitability.
monetize digital services and advertising, These analytics capabilities, in turn, enable
companies need stronger, science-based Companies must also continuously optimize
companies to continuously optimize the
analytics capabilities that generate insights the consumer experience so that it is made
consumer experience and the value to
into customer preferences and desires and continuously relevant across all channels.
marketers. Such optimization requires
that also support continuous improvement The one-size-fits-all approach of tradi-
mastering three complementary things:
in terms of accountability to marketers. tional mass marketing will not drive
differentiation; such an approach increas-
Better analytics tools, methods and
1. Master how to be found.
ingly represents a risk to the brand. High
approaches can enable companies to Continuous optimization of how consumers perceived value to the consumer will be
embrace fragmentation on multiple levels locate a digital experience is increasingly rewarded by the ability to be paid for
and then tie outcome-driven strategy and a matter of how the digital experience is services—either directly (e.g., subscriptions)
execution together in effective and architected and built. The importance of or indirectly (e.g., micropayments for
actionable ways. This is not a trivial search and discovery today means that virtual goods). High perceived value to the
problem to solve, from either a technical media companies must leverage search consumer will also allow for increased
or a business perspective. (See Figure 6.)
engine optimization (SEO) in addition to positive influence of offline behavior.
The Billion-Dollar Challenge: Monetizing the Digital Opportunity 7

8. Transforming digital innovation into digital revenue streams requires funda-
mental and difficult change. Media companies must create highly relevant
consumer experiences, characterized by engagement and dialogue, that
can influence consumer buying behaviors. These companies must also work
in closer cooperation with marketers, offering pricing models based on
accountability for outcomes. Success in both dimensions requires sophisticated
analytics and optimization platforms.
.
3. Master how to deliver and In addition, these platforms will accommo- encourage and enable experimentation at
measure marketers’ desired date dynamically adapting objectives as all levels and with all stakeholders.
outcomes. demand and supply factors change, helping
to create more agility in business and its Aim to define an explicit roadmap that
This concept refers to the continuous
underlying technical and organizational enables your organization to break out of
optimization of marketing performance to
infrastructure and processes. old, siloed ways of thinking. Then, invest in
the marketer with both the "ad unit" (for
analytics and continuous science-based
lack of a better word, since "advertising"
might be the wrong expression here) as well On the path to optimization. Increased complexity and
fragmentation mean that competitive
as the pricing model behind it (e.g., Cost high performance differentiation and achieving high perfor-
per Desired Outcome or CPDO). This kind
The end of the old push paradigm for mance will depend on the ability to
of optimization will allow for accelerated
marketing could result in dramatic revenue continuously optimize the consumer
innovation in digital advertising—innova-
growth for media and entertainment experience and the value proposition to
tions that are truly analytics- and data-
companies as well as marketers—indeed, marketers with data-driven capabilities.
driven—adding value not only to the
marketer but also to the consumer. for any company in the value chain.
Success today is based on influencing Contact
All three opportunity areas represent a consumer brand associations and buying
behaviors. It's important to create opportu- For more information on how Accenture
path toward monetization nirvana. These
nities for dialogue, which then influences can help your company achieve high
ingredients have to be operationalized at
consumer choice. performance by transforming digital
scale across the ever-growing cloud of
innovation into digital revenue streams,
services and data if they are to positively
At this stage in the evolution of the media please contact:
influence the bottom line.
industry, media companies should be more Philipp Stauffer
Tomorrow’s solutions will enable companies open and transparent, working collabora- philipp.stauffer@accenture.com
to more easily manage sophisticated tively with marketers to create and realize Matthew Symons
analytics and optimization platforms the vision of performance marketing based matthew.symons@accenture.com
that will allow for accurate and relevant on highly relevant consumer value
propositions. Companies should also Marco Vernocchi
measurement of business outcomes. marco.vernocchi@accenture.com
8 The Billion-Dollar Challenge: Monetizing the Digital Opportunity

9. Copyright © 2009 Accenture About Accenture
All rights reserved.
Accenture is a global management
Accenture, its logo, and consulting, technology services and
High Performance Delivered outsourcing company. Combining
are trademarks of Accenture. unparalleled experience, comprehen-
sive capabilities across all industries
and business functions, and extensive
research on the world’s most success-
ful companies, Accenture collaborates
with clients to help them become
high-performance businesses and gov-
ernments. With approximately 177,000
people serving clients in more than
120 countries, the company generated
net revenues of US$23.39 billion for
the fiscal year ended August 31, 2008.
Its home page is www.accenture.com.