Knowledge Bridge

//Kevin Anderson /May 16 / 2013

Malaysian media merger highlights key shift in digital transition

In the early stages of the digital transition, the returns from digital advertising seem small compared to revenue opportunities in traditional media, but as digital audiences grow, advertising opportunities grow with it. Eventually those opportunities are large enough to merit serious attention and investment, and that is what we’re seeing now in Malaysia as major media conglomerate Catcha Media has announced the merger of social news aggregator Says.com with its digital advertising and publishing business.

In a statement, Patrick Grove, CEO of Catcha Media was transparent about the goal of the RM60 m (nearly $20 m) tie-up:

Digital marketing is the future; social media marketing is the apex of this future and is the fastest growing media category on the planet.

This new company offers a tremendous opportunity to dominate the future of digital marketing in Malaysia by pairing two clear leaders in the space in a manner that creates a holistic and complete solution for any brand looking to ride the crest of the new media wave.

It is not just a general new media trend that Catcha is looking to ride but rather the group hopes to take advantage of Malaysians’ social media obsession. Says.com is a social news aggregator that crowdsources trending news items from social media users. It encourages these social media leaders to curate and share news items by paying them when they share advertiser-sponsored content. It’s a low-cost editorial model that differs greatly from traditional news sites, but it is a model that has attracted major global brands including Nike, Coca-Cola and Nestlé.

“Says.com is designed to put advertiser content at the centre of social attention, positioning brands to capture the new generation of consumers,” site co-founder and CEO Khailee Ng told Digital News Asia. Says operates country-specific sites, and Ng says the site is looking to expand to the Philippines, Singapore and India, according to the Next Web. Ng added that the two companies saw a number of opportunities for the “future of advertising” in combining Says.com’s model of social media distribution and Catcha Media’s content.

Catcha Media is building what it hopes will be one of the most profitable new media businesses across Southeast Asia, and Grove said that the Catcha Media will be considering an initial public offering in the next 12 months. It operates Microsoft’s online presence in Malaysia, including the MSN portal and Windows Live site. The group also has 15 national magazines, an Asian auto classifieds business and a luxury goods e-commerce site, Hauteavenue.com. The merger of content, classifieds and e-commerce mirrors the international strategies of other media groups such as Scandinavia’s Schibsted and South Africa’s Naspers.

The fight for advertising

While Says.com doesn’t look like or work like a traditional news website, its low-cost editorial model smartly leverages the intense social media activity in South and Southeast Asia.

One of the most damaging mistakes that news groups in developed digital markets have made was to underestimate the impact of non-traditional news sites like Says.com on the business of journalism. Too many editors, journalists and ad teams didn’t realise the competitive threat these sites posed, either because they defined their competitors too narrowly, seeing only other newspapers or broadcasters as competition, or because they sneered at what they saw as low quality content.

With this merger, it should be clear that Catcha and Says.com mean business, and they already count lucrative international advertisers as customers. In the digital era, anyone who competes for digital advertising is your competitor, and as publishers, media executives and sales team leaders, you need to be able to compete not just against your traditional competitors but also this new breed of business.

To respond to this threat:

• Think of how you can fight for the attention of social media users. Develop strategies to reflect, capture and retain the attention of social media users in your audience.
• Don’t narrowly define your competition for attention and advertising too narrowly as digital grows. Newspapers and magazines are producing more audio and video that could compete with broadcasters, and any ad-supported site is a competitor for digital ad revenue.
• Be creative with your advertising products and strategy. The business and advertising model of Says.com isn’t complicated, but it has obviously been attractive to advertisers. How can you make your advertising products more social?
• Know your audience, which in digital means investing in market research and analytics. It will make for stronger journalism and a stronger proposition for advertisers.

It’s also important in the early stages of the digital transition in your market to be proactive in developing not just your digital editorial but also your digital business. This will put you on a better footing to compete with national and international players when they enter your market.

Article by Kevin Anderson