Into the Hands of the Consumer

The realization that it’s all about the web has long been accepted as a fait accompli by communicators. It’s now official – finance has derived the numbers and marketing has hit on the killer app.

Item one: financial value creation. A new research report from Spain’s IESE Business School reports that the stock performance of new media organizations far out performs that of traditional media channels.

Over a five year period ending in 2007, IESE Professor Javier Aguirreamalloa analyzed the financial performance of American and European businesses in the technology, new media, and telecommunications sectors. Here’s the bottom line. New media channels – software companies, social media, and web-base rich media – delivered higher levels of shareholder performance. The five sectors that created the most value were: social networks (+42%), businesses that provide services to telecommunication companies (+28%), online content retailers (+24%), multimedia application software (+21%), and consumer electronics (+19%). By contrast, traditional communication companies such as radio/television stations, record labels, and press publications shattered shareholder value.

Professor Javier Aguirreamalloa’s conclusion is that narrowing the distance between the communication sector and the end user delivered the greatest financial value. Those segments that made content more accessible and gave users greater control performed best. This comes as no surprise. Now there’s financial performance data to backup the growing number of market studies that all show the impact of Web 2.0.

Item two: Killer App for iPhone. They’re everywhere. The Apple iPhone is a hit with consumers largely because of the library of downloadable apps. There are apps that let users connect to their Facebook account, play games, or purchase from eBay. But one of the most popular iPhone apps comes from Kraft Food and provides recipes and shopping lists for Kraft products including Jell-O and Minute Rice. Don’t laugh, it’s true. iFood Assistant is one of the top selling apps for the iPhone. Yes, that’s selling apps. Consumers are paying Kraft Food to be marketed to on their iPhone. The app is one of the top 100 most popular paid apps and is number two in the Lifestyle Category. The app was launched in December and consumers have found it a helpful tool for making dinners faster, easier, and more convenient. The lesson: consumers are willing to pay when they discover something that’s useful and gives them greater control.

Item three: Accessibility. The research report from Prof. Aguirreamalloa draws a clear line between proximity to the consumer and successful performance. Putting the consumer in control is central to success, whether its 24 hour service, a selection of pizza toppings, or DVR playback when the consumer is ready. This explains the success of online rich media companies such as YouTube and Hulu. A recent post by blogger Chris Pirillo points out, “It’s a numbers game. YouTube is now 25% of the Internet’s search traffic, and if you’re not doing something on YouTube, you’re… crazy.” Joining the on-demand bandwagon last November is the Vatican. Available in four languages, the Vatican Channel offers news and other information about Pope Benedict XVI and Vatican events.

Yes, it’s all about the web – finance has the numbers, marketing has the killer app, and Web 2.0 even has a papal blessing. (That last item may be a bit of a stretch.) Those communication providers that bring consumers closer to desired content and put them in control, are those who will deliver the greatest return.

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