Digital space rewards those who are first - 24.com GM Geoff Cohen

Geoff Cohen, 24.com GM.

Bizcommunity: So where are you guys at the moment?
Geoff Cohen: Our focus is pretty clear. We are positioning ourselves to be the largest digital publisher in Africa. That's our ambition and we're not particularly concerned what platform we're on. So whether it's tablet, mobile, desktop or web, we know that for our business model to flourish - which is advertising-driven - we need to acquire audience.

And how do we acquire that audience? We acquire it with three basic services: technology to build platforms; technology to build ways for people to interact with each other; and technology that builds it off content and, ultimately, communities. So the way it cascades out is that technology builds your platforms, content is what you use the platform to distribute and community is what happens when you have people deeply engaged in content and wanting to interact with each other.

Biz: I see you guys have recently built and released an iPad app for City Press (newspaper) to follow on from the News24 app?
Cohen: Our timeline is to get as many of the Media24 newspaper titles out on their own applications by April.

Biz: This April? That's fast.
Cohen: Yeah, by the end of this April.

Nielsen data released by the DMMA.

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Biz: Is that possible?
Cohen: Look, it is. We can scale our technology platforms and we're quite positive about it. That's our goal. Broadly speaking, our ambition is to make sure that every single newspaper title in Media24 has a [tablet] application of some sort that runs on similar platforms and off a similar technology framework that allows us to scale to consumer demands or consumer interaction points over a period of time.

And the first interaction is going to be very, very basic, which I think is OK. So we say: "Here is a basic application for a newspaper - it's not singing and dancing." We don't make any great claims to that. But what we get out of that early entrance is to build up visibility and learn how consumers interact with our offering. And it's off that basis that we can refine our offering, add in more and more features.

Biz: Well, you guys are ahead of all the big media houses in the tablet arena. So what have you learned about how South Africans interact with the News24 iPad app?
Cohen: We've learned that speed of interaction really, really matters so whatever you're putting in front of the user has to be fast. Just because the tablet is a flashy device doesn't change the fundamentals of our ecosystem. We are still a bandwidth-starved nation so creating an application that requires a huge amount of data to be pulled from a server somewhere else to be rendered on an application - either once off or updated throughout the day - is a recipe for disaster.

We see our interaction sliding the more data is required to be pulled through an application, so with anything more than a 10- or 15-second load time, we see guys bail right out of it. Their expectation - particularly from a tablet or mobile device - is when you click the button, something must happen very, very quickly.

So in some ways what that means from a creative perspective is your creative input is reduced. You've got to take away a lot more before you start adding in. I don't see an application like The Daily [the first iPad-only newspaper created recently by Rupert Murdoch's NewsCorp for the US market] kicking off here because it takes too damn long to download all that information.

Biz: Are the title editors in Media24 interested in tablets and apps for their newspapers?
Cohen: Yeah, of course they are. You know, the tragedy of the situation is that you're talking to deeply creative individuals who want to create the best possible products they can. So they're saying: "I have this device [an iPad] and it can do all these things. I want to make the best experience we possibly can [for my newspaper's app]."

Effectively, we at 24.com own the digital strategy and technology platforms; the editorial guys own the words and how that story gets told - but you have to have a platform first to able to do that. I think we've got to the point where they understand that creating a Rolls-Royce for a market that wants Volksie bugs is not effective.

But I do think there is this desire to create something absolutely cool - and that's right. That's exactly what should happen - there should be this creative tension between the guys building the platforms and the other guys trying to push the envelope.

Biz: And SA's bandwidth is getting better all the time.
Cohen: Absolutely. It will change. It's a question of how much do you invest and when. We plan to be Number One, at best, or Number Two and rising to be Number One. So if we create the best possible tablet application we can with all the singing and dancing girls, that's fantastic but it's for a market of 100 people.

What we want is audience scale so we want to have something that is as broadly accessible and as useful as humanly possible to as many people as possible.

Biz: So do you want audience scale because the majority of the revenue comes from advertising?
Cohen: Absolutely. You know, in just about all instances, the digital space rewards those that are first - those who have the biggest audience they can possibly reach. Being number five and number six is an incredibly kak place to be.

As a guiding principal we say: "Let's get the scale." The Internet allows you build audience at massive scale at very low marginal cost. Once you've got that scale. you can start segmenting it out. Then you can say: "Fine, we've got 300 000 people who use our tablet application and of those 300 000 people, 10% would be willing to pay for a super-premium experience"

...But if your first throw of the dice is to create that super-premium experience, your cost of customer acquisition is going to be massive and it's unlikely you're going to build the traction you're going to need.

Biz: So where does the advertising revenue chiefly come from among the 24.com sites?
Cohen: Display advertising accounts for about 85% for our digital publishing business.

Biz: So are advertisers and media planners in SA asking more complex questions about your audiences and brands?
Cohen: The ecosystem of the digital-media buyers and planners is increasing at a fast and furious rate. It really is. The demand is there. You are seeing a rise in the number of clients who are instructing their agencies to put a significant portion of their marketing budget towards digital.

The issue is that, because we're such a fast-moving environment, the commercial and operational knowledge differs in different areas. Which is to be expected, if you think about it. We've been growing at a fairly hectic pace over the past couple of years. The skills to invest in a marketing campaign in the digital space is spread unevenly.

So what is our challenge as media owners? The challenge is to ensure we have informed the market as best we can through the channels we have - either the DMMA or direct relationships with agencies and clients - of the pros and cons of digital-display advertising. Particularly of brand advertising. And we have to be upfront about it.

Biz: What are the pros and cons?
Cohen: Let me take a step back. Our story is that we have content that people are really engaged in and - like TV to a degree - an advert sitting in that space creates an opportunity for people to interact with it. So who do we compete against then, within that argument?

We compete against other players in the digital market that offer advertising models based on pay-per-click or pay-per-action type response rates. And that works well for some advertisers who are not looking to build out a brand presence but looking for direct engagement.

But the efficiencies in our business get compared to a pay-per-click model and at first glance a comparison looks completely skewed. You might ask: "If I'm paying R10 a click on Google, why should I pay 10 times that for a creative execution on You (magazine) news portal?" And our story back for that is all about deepening the brand exposure.

So we're looking at building out some absolutely awesome creative executions so, when you come and see any of our destinations, you'll see at most two ads. But the ads that you see there won't be a flashing purple banner measuring 468[mm] by 60[mm]. It will be big - so we can say to creative agencies: "Here is a canvas that gives sufficient size to create work that is as good in quality as you find in a 30-second spot on M-Net."

Biz: I imagine that it's key for you to keep your costs down - run a tight ship with a low staff complement. Don't you ever get tired of that?
Cohen: I don't know. We've got about 250 people here.

Biz: Really? That the size of a regional newspaper.
Cohen: With everyone, including [dedicated] sales staff, we've got 220 people. We've got almost as many people in our development and engineering teams as we do in editorial and we've easily about 90 individuals in editorial.

The thing is we've invested at the rate that the market can bear and the size of our organisation represents our ability to take revenue out of the market and serve audience. Certainly, we're finding sufficient traction in the market to justify our overheads more than adequately.

Biz: So that's very positive - much more so that if you were the editor of a newspaper worrying about how long newspapers in print form will be around.
Cohen: For sure. We point to our revenue line, which has been growing year-on-year at more than double-digit rates. We point to our audience growth, which is also more than double-digit growth across the platforms. All of those metrics are pointing in the right direction.

Then we turn around and say: "Digital ad spend in South Africa is way behind the curve of the rest of the world." In the rest of the world, just digital-display brand advertising equates typically to anything between five and 15% of total ad spend. In SA we're sitting on a realistic basis of between 1-2%.

If we can just get to the point where the spend allocated to digital goes from just 2% to 4% and we maintain our market share, you've got a fundamentally different business.

Biz: So what would you do then - if the ship really came in?
Cohen: The real question is, if the Media24 exco looked at the positive contribution that digital business can potentially add to their bottom line, what would they do? I think they would probably reinvest portions of that into the digital business and we'll carry on with our growth.

But the other side of it is that every little bit of this helps to keep more marginal newspapers to keep publishing or you add another year of lifespan onto a title of some kind. And those are all good things.

Biz: What I find interesting about companies such as Media24, Avusa and Independent Newspapers is that you have an intersection of digital and print people. They have such different mind sets.
Cohen: My view is that the intersection isn't between print and digital but any old analogue, one-way media and the Internet. So any business - whether it's radio, TV or print - that is now trying to build out a digital arm is running through these issues. We're all asking: "What do we do? How do we do it? If we make money, what happens then?"

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• Bizcommunity: News sites go after critical mass, ad model still elusive May 2010
  
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