With advertising revenue in flux, it’s clear that diversifying your revenue is the key to sustainable growth for media companies today. Relying solely on money from advertising – at one point the only game in town – is a risky business these days.
Our latest Trends in Media report points out that 39% of media companies expect advertising spend to continue going down over the next 18 months. With companies slashing advertising budgets due to economic conditions, media companies are grappling with how to protect their businesses as their top source of revenue decreases. One avenue worth exploring? AI – especially the emerging technology around generative AI.
What’s on the minds of media pros?
We surveyed hundreds of industry decision makers worldwide to uncover the trends, priorities, and challenges defining the media and entertainment industry.
We found that media companies are finding other avenues to gain revenue, as advertising budgets shift. Among them are subscriptions, content licensing and rights management, live experiences, and commerce, to name a few.
The key is getting the most from the revenue streams you already have, while also looking at new ways to grow advertising. AI can help media companies diversify their revenue — without hefty investments.
There’s a big reason why AI is a no brainer for a media company’s revenue, and that’s data. Your AI efforts are only as good as the data they draw from, and media companies do data well.
Think about it — you have a clear view of your customers through the data they generate. This includes the shows they watch, the podcasts they consume, or what content they’re clicking on or subscribing to, just to name a few data points, and it’s only getting better.
Data quality and implementing AI are top priorities for media company decision makers, our trends report says. Using your trusted data can help AI technology boost your revenue strategy, and is a critical path forward in a murky future.
Here’s a look at how AI can help optimize the three main revenue streams for media companies.
1. Rejuvenate advertising revenue
Advertising may be on the decline, but it’s not going away. Preserving your No. 1 revenue source should still be a priority.
For the most part, the advertising sales lifecycle has been highly manual for content owners. Far too many employee hours have been spent on data entry, fixing costly errors, switching between multiple systems, and dealing with customer churn — all leading to low productivity.
AI can help provide the most value for brands who choose to advertise on your platform – keeping them happy and ultimately encouraging them to invest in it more.
Here’s how AI can help:
With AI technology, you can analyze and understand customer preferences, behavior, and demographics. This information will help you target advertising more effectively to reach the right audience. It’s a highly efficient and effective way to deliver personalized ads, increase engagement and conversion rates, and ultimately receive a higher return on investment.
By using AI, you can make sure the ads placed on your platform are in the best spots to generate revenue. AI technology can automatically identify the most effective ad placements (such as video or banner, for example). It can also draw from your customer data in real time, making necessary adjustments as things change to make sure ads are relevant and timely for the best performance.
You can also optimize your pricing and inventory management with AI. This technology can analyze market dynamics and customer behavior, pairing that information with historical data such as demand, competition and engagement. With all that data, AI can help you determine the best pricing strategy for ads, as well as ways to grow sales and improve campaign delivery.
2. Keep customers engaged and subscribed
Media companies are in an increasingly competitive market when it comes to fighting to prove their value. And expectations are high. We found that 65% of households subscribe to at least one video service, and 39% of them say they aren’t worth the price. The result is an annual turnover rate of nearly one-fifth of all subscribers.
AI can play a crucial role in optimizing subscription revenue and providing insights, personalization, and marketing strategies. This can help you not only win more subscribers but also reduce churn.
Here’s how AI can help:
Your subscriber data is a treasure trove of information for AI to feed off. This technology can instantly analyze your data to identify customer segments based on their preferences and engagement patterns. It allows you to tailor your content and subscription offers to these groups, enticing them to stay.
With AI, you can also use subscriber data to deliver personalized content recommendations that resonate with your customers, keeping them engaged and exploring new offerings.
AI can also flag an account that is at risk for churn by analyzing historical data, behavior patterns and engagement metrics. It allows you to keep subscribers engaged through targeted promotions that resonate with them, along with relevant incentives.
Trying to figure out pricing? AI can help with that too. It can analyze market trends, competitor pricing and a customer’s willingness to pay, giving you clear information you can use to take action. Using AI to optimize your pricing helps not only attract new subscribers, but keep your current ones happy, and identify opportunities for upgrades. Using AI can give you the best of both worlds: customer satisfaction and increased revenue.
Keep your subscribers happy
As more companies shift from the ad-driven model to subscriptions, finding ways to not only attract but keep subscribers will be key to success. The data you already have can help.
3. Simplify complicated licensing tasks
An underutilized revenue stream that AI can optimize is content licensing and rights management. According to our Trends in Media report, 59% of media organizations don’t yet have a revenue strategy in place for this. Perhaps that’s due to the fact that there are a lot of complicated, manual tasks involved, with a world of data to comb through.
Here’s how AI can help:
With AI, you can automatically analyze and identify copyrighted content within your company’s library through techniques such as image recognition, audio fingerprinting, and video analysis. AI can then help determine the rights associated with each asset and assist in managing the complex process of rights clearance.
AI can also help you identify appropriate content for licensing based on historical data, user preferences, and market trends. By analyzing viewership patterns, demographics and social media data, AI can identify opportunities to acquire rights to content that aligns with your audience’s interests, and provide insights on pricing strategies. Once that content is on your platform, AI can give you the performance metrics you care about most.
You can use AI to help manage the manual tasks that go into contractual terms and data that go into the calculation and distribution of royalties by tracking content consumption, ad impressions, and engagement. AI can determine royalty amounts owed to content creators, simplify the payment process, and ensure fair compensation.
AI technologies, such as machine learning and language processing, can help you identify and track available digital content more efficiently, streamline licensing negotiations, and monitor content usage and enforcement. It’s fast making AI a valuable tool for content licensing professionals, allowing them to more effectively manage and monetize content.
Any edge you can gain in this increasingly competitive and uncertain market will help you succeed. You don’t need to reinvent the wheel. AI takes the strategies you currently have in place to make sure they’re working as intended.
All in all, AI can enable your teams to make better decisions, save time, and increase efficiency, improving the revenue streams you have now and helping you find new ways to make money.
Spark growth for your media company
Automation plays a huge role in the media and entertainment industry’s drive to boost productivity. Research from Salesforce and Omdia explores how automation can help you get closer to your customers and make your teams more efficient.