Table Stakes: What It Takes to Play the Game

February 20, 2017

Verizon and Walmart have each recently made significant announcements that are generating headlines. However instead of being credited for innovation, these investments are necessary to simply keep up.

For Verizon, it’s unlimited data and for Walmart it’s 2 day online shipping.

Walmart is hoping that by using a $35 minimum order for free 2 day shipping, they’ll be able to gain ground on Amazon Prime. However, it’s already a juggernaut with half of U.S. households belonging to Prime and even more importantly, those households spend nearly twice as much per year as non Prime households.

According to Consumer Intelligence Research Partners, the average Prime member spends “on average about $1,100 per year, compared to about $600 per year for non-members.”

In a story about the shift in strategy in recode, Marc Lore, CEO of Walmart’s U.S. e-commerce division said, “in today’s world of e-commerce, two-day free shipping is table stakes.” At the same time, he called the initiative “the first of many moves we will be making to enhance the customer experience and accelerate growth.”

Switching gears from online shopping to the mobile devices and carriers people use to make such purchases, Verizon is now offering unlimited data.

Just last month on an earnings call with investors, Verizon CFO Matt Ellis announced that adding an unlimited plan is “not something we need to do right now.”

However, corporate strategy can quickly evolve, especially when stock price is underperforming. As reported in MediaPost, “Verizon shares have dropped about 2.3% over the past 12 months, compared with a 78% surge for T-Mobile and a more than threefold gain for Sprint Corp., which has also been aggressively pushing unlimited plans,” observes Bloomberg’s Crayton Harrison.

In both cases, express 2 day shipping and unlimited mobile data, which previously commanded a premium from customers, are now baseline expectations.

Table Stakes for Radio

When we view radio through this lens, many items quickly come to mind as table stakes … engaging personalities, strong music position, multi-platform social media presence, video production, streaming, station mobile app, and most recently, Alexa voice command integration.

However, all of it has become table stakes and no longer provides a long term competitive advantage that can be leveraged and aggressively monetized.

In a world of infinite content creation and distribution channels, the old model built on scarcity and licenses, has been replaced with a new model built on abundance. In this environment, doubling down on your content might not be your best bet. After all, how much content do your personalities actually create when you analyze your clock?

According to Harvard professor Bharat Anand, author of the book, The Content Trap, media companies have “a bias towards content, product and quality.” Yet the real opportunity is to leverage your content to empower listeners to connect with each other.

Want more proof of this strategy? Look no further than Facebook.

Just three years ago, in 2014, Facebook crossed $10 billion in annual revenue for the first time. Overall, it was much smaller than radio. The following year, in 2015, they eclipsed radio for the first time with $17 billion in revenue and in 2016, they started to significantly pull away, generating $26 billion in ad based revenue.

What did Mark Zuckerberg say earlier this month as he reported earnings? “Our mission to connect the world is more important now than ever. Our business did well in 2016, but we have a lot of work ahead to help bring people together.”

What does Wall Street think of this audience connection strategy? Facebook’s market cap is currently $385 billion, $200 billion more than Comcast, the largest media company that focuses on generating content. In fact, you could add Comcast ($180B) and Disney ($170B) together and still fall more than $30 billion short of the market cap of Facebook.

Whether it’s crowd sourced content or professionally generated, the billion dollar question is how does your content connect the audience with each other?

Is your target demo working moms? How are you helping them share dinner recipes or summer camp options for their kids? As a community forms around these conversations, there will be plenty of opportunities to monetize this audience generated content.

Similar to hosting a party, you make sure the guests are having a good time by joining the online conversation, add a few on-air mentions and moderate the inappropriate comments, while letting those at the party do most of the work generating the content themselves.

It starts with knowing your listeners by name and understanding that in a world of infinite content, there are new ways to evolve and grow, which connect listeners to each other and transcend the transmitter.

On behalf of Catherine Jung, Doug Smith and everyone at DMR/Interactive, thanks for reading and working each day to drive radio forward.

Andrew Curran, President and COO

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