Friday, January 9, 2009

Winning the ARMEs Race

An acquaintance of mine from Eastern Europe wrote to ask me about what it would take for media businesses to succeed in this increasingly challenging environment.

My view is that in this brave new world, media and entertainment companies will find that they have to fight and win four battles at once in order to create truly incredible businesses:

1. First, the Battle for Attention: How successful are we in getting people to try our service? How much of a consumer's time are we capturing? How engaged is the consumer while they are with us?

2. Second, the Battle for Retention: How many consumers return regularly to our products and services?

3. Third, the Battle for Monetisation: How successful are we in translating attention and retention into revenues and profits?

4. And fourth, the Battle for Extension: How successful are we in leveraging our consumer base, products and services into new channels or areas for growth?

I am afraid that despite the Web 2.0 hype, very few of the companies have figured out the formula for winning this ARMEs race. Too many of them focus on just one aspect or two at most. Unfortunately, this is like trying to win a pole vaulting competition with a toothpick. It does not work.

Of course for those that have been able to get all the pieces together, the results have been astonishing. In a space of a few short years, Google has grown from an interesting start-up company, to an advertising behemoth, already sporting a market cap over US$100 billion. But even in the case of Google, it took an acquisition of a New York based keyword advertising company to fill in the missing piece.

How is your startup doing against each of these dimensions? How can you fill the gaps? Through organic development? Merger? New business focus?