Whether mainstream or adult, the media industry has undergone a change due to the downturn in the U.S. and world economies. The declining value of the dollar and the increasing competition for online buyers have created an environment of uncertainty and uneasiness, forcing many media groups to consider changing their online business models to maintain their revenue streams and market shares.
As a seasoned transaction processor, we at CCBill are fortunate to have a global base of clients who are willing to engage us in discussions regarding how the market and exchange volatility affects them. Many of these conversations came to a head mid-to-late 2007, as the U.S. dollar hit a 30-year low and the U.S. economy hovered just above the recession mark. Those who market and price their content to a domestic base but accept payments from foreign users were left at risk for unprecedented deep foreign-pricing discounts (due the dollar's declining exchange rate) and uncertain global economies.
With the economy trending downward, how are online media groups expected to survive and continue to grow? New localization models? More innovative tools and service options? New business relationships?
Unfortunately, none of these alone is a panacea, and each business needs to address its own "pain" issues to determine the best path through an unpredictable market. But each of these methods offers options for improved business and sales performance.
An initiative that appears to be popular with our adult and mainstream clients is to create a regional market split in website presence, presenting U.S. and non-U.S. website offerings with targeted language, content, marketing strategy and pricing. Some of these clients have chosen to invest in geotargeting applications. Many GeoIP solution providers offer licenses and APIs that, once you add a script to your header or Web page, automatically contact a database to detect the city, country or region of the end user's IP. The end user is automatically served the proper localized content. Though this requires a reasonable small investment, it calls for some monitoring and management on the website owner's part.
A simpler method, which achieves some localization but with less controlled results, requires the user to choose his or her home region from options posted on the index page of a website. This is much more prevalent in the mainstream space than in the adult market, since the adult market is more apprehensive about allowing the user and the sale to "get away."
One of the main challenges facing the U.S. adult market is that many have difficulty seeing beyond U.S. borders. However, those who have chosen to expand into international markets are driving more revenue. By investing in market research and market-driven pricing and content offerings, they can easily use localization tools such as multicurrency and multilingual forms, international card offerings and alternative billing options that processors and third-party providers offer. For example, in addition to CCBill's auto-served GeoIP payment-form solution, we released the first phase of our regional-pricing functionality to clients in April. The clients who use the preset pricing per region have seen sizable increases in sales and revenue.
As with any economic downturn, there are those who wish to not weather the current storm or are faced with difficult business decisions they would not have been forced into two or three years ago. We have only seen a few clients completely sell their online adult businesses. Others have either chosen to accept foreign investment to increase their international presences or have opened and managed their own merchant accounts in an effort to counter the weak dollar with lower rates.
The real question might be "How has the economy - coupled with the addition of tube sites and the always-present mainstream competition for the entertainment dollar - affected the volume of adult sales?" Overall, the volume is fairly consistent and has followed the same calendar-driven ebbs and flows as in previous years. I think the significance here is that if you choose to not adapt to the trends in the economy and you continue to follow the same formula from years past, your sales volume stands a better chance of being affected negatively. However, from what we have seen on the processing side, those who proactively make changes to address their international marketability are, at the very least, enjoying very stable numbers in 2008 and are better prepared for what the future might bring.
Laurie Biviano is the vice president of education and marketing for CCBill.
This article initially appeared in the June 2008 issue of AVN Online. To subscribe, visit AVNMediaNetwork.com/subscriptions.
