The implications of the convergence of Digital Content, Commerce and Advertising

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The implications of the convergence of Digital Content, Commerce and Advertising Introduction and context The digital transformation of personal entertainment as well as shopping is gathering pace, with the rapid rise in the volume of commerce from mobile platforms. At the same time we are seeing increasing pressure on the effectiveness of digital advertising as […]

The implications of the convergence of Digital Content, Commerce and Advertising

Introduction and context

The digital transformation of personal entertainment as well as shopping is gathering pace, with the rapid rise in the volume of commerce from mobile platforms. At the same time we are seeing increasing pressure on the effectiveness of digital advertising as click through rates drop and mobile platforms make advertising much more difficult. These and other digital trends are driving the convergence of digital content, commerce and advertising, creating opportunities for new revenue streams as (personalised) content becomes king again.

This point of view explores the emerging trends in the area and the opportunities for new revenue streams for content producers.

eCommerce trends and the rise of mobile commerce

There is a rapidly increasing trend for mobile to become the platform of choice for eCommerce. Figures from IMRG show that all ecommerce growth in the UK now comes from mobile platforms. We are seeing similar trends in the USA and we expect this to accelerate with the arrival of a next generation of tablets from mainstream supermarkets and retailers, priced to capture a much wider market.

Implication: A mobile device first approach is needed to ensure access to the consumer for ecommerce.

Trends in media and entertainment and multi-platform viewing

There is a rapid growth in the consumption of media and entertainment content across platform, as people continue to access content as they move from device to device and expect a seamless experience on that journey. In the UK we see Sky converging its different services (TV via set top box to VOD from NowTV) into a seamless cross platform experience. Evidence from research, particularly around the Olympics, is that this does not necessarily mean that one channel cannibalises another, rather the viewing and access of content is additive as users access movies and other material on their travels.  The main impact is then on the paper versions of the content.

This trend expands further into multi-platform viewing, ie accessing a smart-phone or tablet for social engagement whilst also watching TV. In a digital TV household we are seeing the arrival of set top boxes capable of matching viewing opportunities on TV to the social conversations going on from the same living room, driving towards a personalised experience.

Implication: Ensure any platform is designed to support deployment of content cross device and the architecture enables personalisation of the experience.

Advertising trends and the impact of mobile

The growth in mobile access produces problems for digital advertisers, in the available space to place adverts around or across content.  This is coupled with the rapidly diminishing click through returns on adverts as users avoid or skip them. In this environment in-line advertising becomes necessary but, in a time lapsed world where little is viewed live on the device, these ads can be skipped. In this environment we are seeing two trends, the growth in native advertising and the programmatic buying of adverts.

Native advertising is the design of adverts which have content which has a context with the content in which it sits. In such an approach the user is less likely to skip the content as it has an interest in its own right, in the newspaper world an ‘advertorial’. This creates a demand for more creative content in the adverts.

Programmatic buying is essentially spot buying of available slots, which will be micro slots for placement at a given moment in time, with the cost varying as a function of the audience. This approach allows targeted adverts and is driven by platforms which can process a wide range of rules. These systems are being accessed directly by the advertisers, often by passing their agencies. This creates a huge demand for micro content to satisfy wide ranging slots, driven by rules for content once the advert and campaign is defined.

Implication: There is a growing need for variable content to meet the need of new advertising models 

Content growth and the role of the curator

In this environment there is a growing fight for attention between content producers and product and service suppliers, who want to tell their brand story. We are seeing an increasing attempt by service providers to generate content and create destinations of interest. At one extreme we have big brands like Nike that can create stories of interest around their products. At another end we can see traditional services providers such as BT, trying to make their service destinations, content destinations as well.

Given this trend, we see the growth of content alliances, as product and service providers seek to add content to their platforms, a good example being the use by AOL of the Huffington Post to generate content on its home page.

The other model that is evolving is that of the content curator. Here content is assembled from a wide variety of sources and assembled into an easily accessible location, centred on a style or brand. At one extreme this can be algorithmic, where streams of news are assembled  based on rules set by the user or even personal decisions, as we see on Summly. At the other end the content is assembled and edited as in a magazine and or newspapers. The difference with the off line world is ability to create a multi-media experience, with in-built videos, 3-d animations and games. In such an environment the level of content that appears in some on-line magazine (such as Wired) borders on the standard set by the television broadcasters as they bring their content on-line. The brand of the content curator then becomes key, as once it becomes a favoured destination then it can be leveraged for a broader media, entertainment and ecommerce experience.

Implication: Content destinations can (and need to) readily expand by curating multi-media content and providing a destination of broader appeal.

Generating commerce from content.

We have seen above the convergence of different on-line experiences and we are seeing a number of trends to complete this convergence through buying directly through content. The Daily Telegraph in the UK has experimented with these concepts but the leader in the area is the UK Daily Mail. A good example is Lady Gaga’s shoes.

The Daily Mail teamed with Polyvore to enable the direct buying from a Paparazzi shot of Lady Gaga. The content technology allowed the user to click on the shoes which linked through to the page written by the fashion editor commenting on the shoes. This then gave the opportunity to the reader to by comparable shoes directly. So users went straight from content to buying and the Daily Mail earned a commission on the sales.  

The launch of Call of Duty 4, allowed users who watched the Youtube Video advert to click on content in the video and go straight through to purchase.
As product placement starts to take hold, given the pressures on advertising then we can see this direct to commerce opportunity increasing, if the right content and relationships are set up.

Implication: Content producers and publishers need to think of new ways to monetise their content.

The way forward for content producers

We have seen that content producers have a range of options in the on-line world for leveraging the strength of their off-line brand.

The first port of call for many is to put up a paid firewall and charge on a subscription basis. This can work initially based on the strength of the off-line brand but in the highly competitive on-line content world the on-line destination will need to evolve. Becoming a content curator of a broad range of multi-media content will be key.

Licensing the brand and the content to other organisations, wishing to leverage content to drive access to their service, is an option. The on-line world is evolving through networks of relationships and leveraging those relationships rather than just relying on advertising becomes important as digital advertising is squeezed.Generating commerce revenue by linking directly to buying options, by generating product and commerce relationships is an area of experimentation and potential growth.

However, there is no right answer and the key to success is to adopt a ‘test and learn’ approach so that you can evolve the services as quickly as consumer preferences change.

Thus digital should be thought more of as a business mindset rather than a technology, where strategy is replaced by a vision and an ability to look and implement (quickly) two steps ahead.

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