The Rule of Cannibalization: Mashable CEO Pete Cashmore Disintermediation

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The article is about a telling, one-on-one interview I did with Pete Cashmore, the CEO of Mashable, at SXSW 2010 in Austin.

In the exclusive, Pete Cashmore maps out how Mashable disintermediated mainstream news media competitors, opening his playbook on:

• Mashable’s rise and transition from niche to mainstream news media outlet
• The impact of the iPad on the print publishing industry in the news business
• How to make online advertising CPMs (cost per thousand impressions) profitable
• How they adapted to the changing media landscape and social media newsfeeds

Pete Cashmore also shares insights into the potential of the iPad as a platform for paid content and the need for traditional media outlets to embrace digital transformation or risk being overtaken by social media.

As a public relations agency leader focused on helping my clients build visibility and credibility through implied, third-party news media endorsements, I have acutely tracked the rise of digital media and how it has cannibalized the mainstream media.

So before you listen to my podcast with Pete Cashmore or review the takeaways from our discussion below, here are my thought on how the digital transition impact the business of public relations.

Digital Transformation Empowers PR Agencies to Embrace Content Marketing and Engage Directly with Stakeholders

The need for traditional media outlets to embrace digital transformation or risk being overtaken by social media has empowered public relations agency leaders to use content marketing as an effective way to speak directly to stakeholders. Here’s how this transformation has occurred:

1. Shifting Media Landscape: As traditional media outlets have faced challenges in maintaining their audience and relevance in the digital age, the landscape has shifted. Many consumers now turn to social media and digital platforms for news and information.
2. Decline in Traditional Advertising: Traditional advertising in newspapers and magazines has seen a decline as readership has dropped. Public relations agencies recognized the need for alternative avenues to reach their target audiences.
3. Direct Access to Audiences: Content marketing allows PR agencies to bypass traditional media intermediaries and communicate directly with their target stakeholders. They can create and distribute content via digital channels, such as social media, websites, blogs, and email newsletters.
4. Content as a PR Tool: Content marketing has become a powerful tool for PR agencies to tell their clients’ stories, share valuable insights, and establish thought leadership. This content can include articles, blog posts, infographics, videos, and more.
5. Engagement and Interaction: Social media platforms enable PR agencies to engage with stakeholders in real-time. They can respond to comments, answer questions, and build a community around their clients’ brands, fostering stronger relationships.
6. Measurement and Analytics: Digital platforms provide robust analytics tools, allowing PR agencies to track the performance of their content marketing efforts. They can measure reach, engagement, conversion rates, and other key metrics, enabling data-driven adjustments.
7. Targeted Content: PR agencies can tailor content to specific audience segments, ensuring that the right message reaches the right people. This level of targeting was more challenging with traditional media.
8. Speed of Communication: Digital channels allow for rapid dissemination of information. PR agencies can respond to events and trends quickly, which is essential in today’s fast-paced news cycle.
9. Cost-Effective Outreach: Compared to traditional advertising and PR methods, content marketing through digital channels is often more cost-effective. It allows PR agencies to achieve broader reach with smaller budgets.
10. Global Reach: The digital landscape provides PR agencies with the opportunity to reach global audiences without geographical limitations, expanding the reach of their clients’ messages.

In summary, the digital transformation of the media landscape, along with the rise of social media, has compelled public relations agencies to embrace content marketing as a means to communicate directly with stakeholders. This shift has offered PR agencies more control, interactivity, and cost-effectiveness in conveying their clients’ messages while adapting to the evolving media environment.

Pete Cashmore on Social Media Guide and Content Marketing

00:45 — Mashable CEO Pete Cashmore talks about his online social media guide, which is designed to provide information to those focused on social media marketing, individuals looking to get the most out of tools like Facebook, Twitter, and Foursquare hands how to use social media tools and services as utilities.

01:36 — Mashable was founded in 2005 by Pete Cashmore at 19 out of his house in Scotland.   Fueled by his interests in the Internet and a hunch that blogging seemed as good a way as any to get started, he decided to launch the site with no real connections to anyone in social media at the time and the belief that he could run by doing.

Since then, Nashville has grown to 20 employees and over 50 writers working part-time.  But Pete maintains a grounded perspective by spending most of his time out of the social media bubble in his home country, the UK, where he can focus on creating great content.

02:52 —  Given the doldrums of the ad-supported media business, Pete has managed to buck the trend by focusing on delivering niche content to a premium audience, which provides high CPMs.  As brands look for ways to get people to pay attention to what they’re doing on Twitter and Facebook, Mashable presents a highly targeted advertising opportunity.

03:22 —  Pete sees the iPad as a potential savior for the print publishing industry. By presenting publishers with a viable, practical alternative to the printed page, Mashable CEO Pete Cashmore says that since people are somewhat comfortable paying for content on their mobile phones, he believes that comfort will extend to the iPad. 

“It’s essentially a device that lets you package media.  I think it might even break the cycle of people expecting news for free on the web. And we might see that people are used to paying for content with devices like the iPad and the iPhone. Believes could be channels where people are prepared to pay for media,” says Cashmore.

04:15 — Regarding how much a magazine publisher might charge for an iPad subscription, Pete says the numbers vary widely. But his guess is an annual subscription might go for around $10.

05:46 —  Pete Cashmore discusses what he considers a good CPM for online advertising: anything over $15 for online display ads and as much as $20 for online video.  For publishers with really focused content, he has seen them get as much as $30 per thousand impressions.  Google AdSense, on the other hand, provides much lower CPMs of $1-$2.

Cannibalization and Media Transition

06:36 —  There’s a cannibalization that needs to take place, says Pete.  We are seeing traditional publishers resist the transition. They’re trying to keep the cash cow alive. The written word in print may be more profitable currently than online, but obviously, there will be a transition.

On how the mainstream outlets are doing so far, Pete believes many of the major newspapers and magazines are transitioning to digital quite well. And those who don’t leap will disappear by attrition. 08:07 —  Commenting on Marc Andreessen’s recent comment that mainstream media outlets need to “burn the boats,” Pete says “The rule of cannibalization is you either cannibalize yourself or someone else is going to do it for you.”

08:30 — To drive his point home, Pete talks about how Apple cornered the music industry with iTunes by making it easier to pay for music instead of just suing people. 

Through ease-of-use and accessibility, they became major players in the music business simply because the music business stayed focused on milking their cash cow, leaving themselves open to cannibalization, which is precisely what Apple did. And now, the same risk exists for print publishers.

Blogs have sprung up, and if print publishers don’t leap, they, too, are vulnerable to being cannibalized.  That cannibalization is well underway in the tech space, where consumers are early adopters of technology.

10:45 — Pete thinks all media companies should be open to a variety of formats. But Mashable’s expertise currently is creating excellent text. Rather than divert his focus at this point he is steering clear of audio and video. Nevertheless, he can foresee approaching those opportunities through media partnerships.

Mashable’s Coverage in B2B and Analytics

12:16 — Mashable does not currently cover B2B extensively. However an example of a company he believes is serving the interests of B2B marketers is CoTweet, which makes it easy for multiple authors to collaborate on a brand’s Twitter account.  

The other area of B2B that Mashable covers are the analytics firms that monitor, measure, and evaluate the effectiveness of social media marketing initiatives.

14:16 — In terms of people who Pete associates with social media marketing, he mentions Chris Brogan who speaks about how brands can command and communicate well with audiences.

Pitching Social Media Story Ideas to Mashable

15:15 — For those interested in having their social media products or services featured in actual, the best way to pitch is by sending e-mail to news@mashable.com which is staffed 24/7.  For best results, keep it short and to the point.

Photo by Brian Solis.