**Full unedited speech delivered by Pierre Bellanger at the Forrester Consumer Marketing Forum in London on November 19th, 2006.**
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Ladies and gentlemen,
I am here today to talk to you about a real-life scenario – how a traditional analogue media form such as radio can convert successfully to digital and the consequences of this for radio itself, its audience and its advertisers.
First of all, I would like to tell you a bit about our background. Skyrock, the radio station I founded, is the most popular youth radio station in France for the 26th consecutive year. As the most popular station in the 13-24 age bracket, Skyrock has around four million listeners a day.
Skyrock first started during the “radios libres” movement in France, which in the late 1970s fought against the state-run radio and television monopoly, resulting in its downfall in 1981. On the run and pursued by the police, our driving force was this desire for freedom of expression. This is what makes up Skyrock’s DNA – freedom of expression and allowing listeners to air their views.
When we started looking at the Internet for radio in the late 1990s, we did the same as everyone else. We put our broadcasts online, added the programme schedule, presenters’ photos and downloadable screensavers. We have seldom done anything as boring as this.We asked ourselves what was not working. We had made two mistakes. The first was that we had thought of the Internet as a supplementary broadcast and promotional medium. Secondly, we forgot about people. The strength of the internet is not as a supplementary broadcast medium but as social network for electronic exchanges. The strength of the Internet is conversation, the strength of the internet is people.
We opened up our website to Internet Relay Chat (IRC), forums and finally, in 2002, to personal weblogs or “blogs”. This allowed for our transformation and we call this process our “netamorphosis”.
We have targeted the first digital generation. Born in the 1980s, reaching adolescence in the 1990s, this generation grew up in the 1990s with the internet and mobile phones and its world revolves around electronic exchanges.
Thanks to our experience, our imagination, a constant return of users to our services, a “new” audience with no pre-formed habits and ongoing efforts to move forward and better serve the online community, we have achieved a true sociological revolution among the youth generation.
This is borne out by the figures. In September 2006 – our most up-to-date figures – we had 11.5 million unique monthly visitors, 2.6 million visitors a day and 3.253 billion monthly page views. This compares 14 million unique monthly visitors for Facebook or 8.1 million for Bebo. With over 3 billion page views, our website is ahead of Blogger, Yahoo 360, Live Journal and Windows Live Space. Furthermore, this has been achieved only with a monolingual version – and in French, not in English.
According to figures for October, our website is No. 10 in France in terms of unique visitors and No. 4 in terms of page views, ahead of Yahoo and eBay. All of Microsoft’s websites in France generate a total of 3 billion page views, compared with 2.689 billion for us. Yahoo is also behind us with 1 billion page views. In the 15-24 age bracket, our website is No. 1 in France in terms of page views, ahead of Google. We are also the largest blog platform in Europe.
We have a total of 6 million active Skyblogs, with 15 to 20,000 new Skyblogs created and 1 million posts published every day. Each day, 20,000 new videos are added to the website, compared with around 70,000 for Youtube. The site has 312 million posts and 580 million comments.
Our platform is currently one of the leading websites in Belgium and Morocco and one of the top social networks in Canada.
We saw that our platform was operating independently of the radio station, from which it has unhitched itself outside France. Having been inundated with requests for multilingual versions from both users and our international advertisers, we are due to launch our English, German and Spanish versions in early 2007.
We believe that the social networking market will ultimately consolidate around half a dozen large-scale international operators. Infrastructure efforts in terms of servers, continual platform improvement, the need to moderate contributions and copyright protection require the resources of global players.
Our aim is to become the world’s No. 1 social network for the young.
However, let us go back to our netamorphosis. Our original radio business has been transformed. With the radio studio receiving more than ten thousand messages a day from listeners via mobile phone and internet, radio has changed and become more reactive, faster-moving, more “alive”, like a dead limb suddenly coming back to life. From a radio station with listeners, we have developed into listeners with a radio station.
We call this the radio-community. Interactive symbiosis has finally been achieved between the radio and its audience. This indicates that the meaning of the word “radio” has changed. It no longer refers to just a radio station, but also its listeners. If you ask a teenager about his relationship with the radio, he will talk about not only the radio shows but also his friends on the network, his skyblog and his profile, which he views regularly. The interactive experience is now an integral part of radio.
In terms of revenues, our company generated revenues of $40 million in 2005, with EBITDA of $9 million. The interactive platform, which I stress is profitable in its own right, also generated revenues of $9 million, including internet advertising revenues alone of $5.7 million.
In 2005, interactive services accounted for just over 20% of total revenues. This year, internet revenues have doubled to $11.5 million, with interactive services accounting for one-third of total revenues. Imagine if the world’s leading traditional media groups underwent a similar netamorphosis, with interactive services providing one-third of revenues and earnings. This would revolutionise their value. Interactive services are expected to account for 50% of revenues in 2007 and should exceed traditional radio revenues in 2008.
This transformation of a traditional media form into an interactive platform is a rarity and is on the agenda for all major media groups at present. The stock markets are continuing to pay close attention to what the future holds, penalising what they regard as dead-ends in the digital revolution. We have made it over this hurdle.
In the past, traditional media were the only way of passing information onto people. This information was known as content, as it was contained in forms adapted to the few available means of dissemination: radio, television, newspapers, books and records.
This analogue zoology has been transposed to the internet by shifting the points of reference. This was a mistake for all of us. In order to have content, there has to be a container. The Internet is not a container, the content disintegrated and became the sources. Taking this notion further, records have become MP3s, newspapers have become posts, radio programmes have become podcasts and television programmes have become downloadable series.
This disintegration of content has resulted in the emergence of three new mediators: “searchcasting” - search engines such as Google, which are used to find appropriate sources, “servercasting” – platforms such as YouTube on which files can be downloaded and viewed, and “peoplecasting” – social networking websites such as MySpace and Skyblog.
It is not surprising that the recent major acquisitions in the Internet sector concern these three new mediators, which are a source of considerable value for those who know how to use them.
People therefore constitute a new mediator, as they provide information about themselves by expressing their preferences. New friends can be made through an artist’s “skyblog music”, allowing you to get to know thousands of people who like the same artist. And these friends enable you to discover other friends and other music.
The collective intelligence collected and reassembled by the network constitutes a resource in the same way as fuel did for the economies of the twentieth century. According to Metcalfe’s law, the value of a computer is proportional to the number of computers to which it is connected. This idea can be transposed to people in that a person’s emancipation and power is proportional to the number of people to whom that person it is connected. This constitutes the largest driver for growth since printing and mass literacy.
Integrating collective intelligence is at the heart of value creation on the Internet. Ranking the links resulting from a query entered into a search engine according to the number of links pointing to the website is based on integrating collective intelligence into the search process, as in the case of Google. Creating a system rating buyers and sellers on an online auction site is also done by integrating collective intelligence, as in the case of eBay. Increasing average spend by recommending items bought by similar users to receive free delivery also requires the integration of collective intelligence, as in the case of Amazon. Further examples include Linux, Wikipedia and numerous other extraordinary success stories.
People have become the Internet’s centre of gravity and the Internet has become people’s centre of gravity. While the twentieth century was the age of dissemination, the twenty-first century is the age of conversation. After the age of the masses, we are now in the age of networks.
What does this mean for advertisers?
In the past, a brand’s share of voice was measured in relation to its competitors. Today, initial views about a brand are generated by users. In the past, it was virtually impossible for users to find out whether an advertisement was truthful, while today users are able to make their expertise available on the Internet. This means that purchasing decisions are based on electronic exchanges.
This calls the traditional dissemination-based model into question. The new model is emerging within the new generation, which dominates usage and is updating practices.
What is emerging? Firstly, traditional media – which are undergoing a renewal through their netamorphosis – are used to enter a conversation more quickly. Broadcasting is a way of reaching a lot of people very quickly. That is to say, broadcasting equals speed. This is an important factor, as within an electronic exchange, bad news comes quickly and good news slowly. Advertising is good news.
Broadcasting reaches the same target on two levels – online advertising and through electronic exchanges. I would like to tell you about some of our exchange-based campaigns with major advertisers such as Procter & Gamble, Johnson & Johnson, Apple and Adidas. Our customers now include most of the world’s leading brands.
The first campaign was for Visibly Clear, a skincare product targeted at young girls. Johnson & Johnson wanted to break away from its traditional advertising, with models in an artificial scenario, and create an electronic exchange. We enabled young girls to present the product and their beauty tips themselves. Nearly 2,000 videos were uploaded and the campaign generated 350 million page views and 880,000 unique visitors.
The second campaign is the iPod nano campaign launched by Apple, targeting teenagers who were not very familiar with its website. The idea was to make users test the iTunes website and the iPod nano and vote for the best tester. The campaign generated over 150 million page views.
In the third campaign, to inaugurate our “skyblog music” service, through which artists promote their music directly, P&G created an R&B group called “Sistaz” to promote the Tampax range.
The sample of the Sistaz song “Vis sans effort” has been listened to more than 136,000 times and an entire conversation about personal hygiene was generated in a lifestyle context.
The fourth campaign concerned the opening of Adidas’ flagship store on the Champs-Élysées, with skybloggers testing the store directly. This campaign generated over 50 million page views in just a few days.
Some of these brands, which I cannot name for reasons of confidentiality, have carried out extensive post-trials of this new form of advertising, which show that it increases market share and is more effective than television advertising for the same cost.
While analogue media created pedestals seen by everyone, the Internet creates arenas that can be visited by anyone – both brands and people. The brands that enter the arena are those that benefit the most from this new world.
Today, it is difficult for teenagers not to have a skyblog to make friends. In the future, it will be difficult for a brand not to enter into electronic exchanges to attract customers.
On the Internet, brands become people and the definition of a person is the ability to respond when spoken to.
I would like to thank you for your attention and, as I am a person, I will now answer any questions.
Pierre Bellanger
19-11-06
