VALNET

Digital Publishing & Content Trends

in 2017
A Publishing Transformation: The Rising Dominance
of Digital Content in 2017 and Beyond

Smaller Screens, New Technologies and Programmatic Advertising's

Impact on Digital Publishing

Authors
Angel Berrocal, Creative Director
Hicham Alame, User Acquisition Director
Joe Alderson, Director of Advertising Operations
David Felicissimo, General Counsel

DEC 2016
www.valnetinc.com
 A Brave New World for Content in 2017:

An Overview
During the last decade, the explosion of Table of Contents

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digital content has radically transformed the
publishing industry. > Introduction: The Digital Content
Revolution
More rich-media, more short-form content, and more economical
ways of delivering content to mobile devices are just a few of the
> #1 - Get Ready for More Visuals,
Fewer Words and Yes,
changes happening across the industry. As print magazines and
Smaller Screens
newspapers have continued to wane in both number and influence,
online content has stepped into the limelight, capturing new > #2 - Vast Legacy Networks Give Way
to Niche Audiences and
audiences, readers and the advertising dollars that publishers seek.
Niche Content
Fueled by the globalization and digitalization of journalism around
the globe, today's content framework has shifted dramatically, > #3 - Video Technology's Future:
increasingly created based on what viewers want to see rather than Virtual Reality, Artificial Intelligence
and More
on the inherent value of the idea or the heart of the content itself.

So what’s next?
> #4 - Content Discovery: The
Behind-the-Scenes Equations
Consumers of content, and the people and companies who create it, That Ensure Content is Profitable
and Consumable
can expect more influence from search engines and data-driven
algorithms, and more relevant, contextual advertising. Publishers > Conclusion: A Very Digital Future
can anticipate a revolution marked by artificial intelligence-based
tools that make video creation a technological ‘snap.’ Movie
theaters and museums might be transformed by full-sensory,
virtual reality-inspired digital experiences that open doors to new
audiences, new technologies, and more opportunities in the world
of content. In this forward-looking report, four digital media experts
from Valnet, Canada's leading digital publisher, examine what the
digital media landscape – including content, publishing technologies
and online advertising – will look like in 2017 and beyond.

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 Introduction:

The Digital Content Revolution

Two announcements made on the same weekend in October 2016 are perfect examples of the rapid change and disruption
happening throughout the digital media and publishing industries. Within days of AT&T’s bid to acquire the media giant
Time Warner, industry observers were already speculating about addressable and individualized ads served directly to
consumers' TV screens as one potential off-shoot of the deal.

Simultaneously, the National Basketball Association announced plans to air a weekly "virtual reality" basketball game
during the 2016-2017 season, with other professional and college sports franchises throwing their hats in the ring as well.

Welcome to the disruptive, rapidly-changing world of digital content. As technology advances and content becomes ever
more digital, real-time and visual, 2017 will bring faster acceleration and unprecedented changes in how content is created,
discovered, consumed and monetized. The digital content evolution is already in full swing, with today's consumers
spending an average of 11.1 hours per week streaming TV and video content on their laptops, tablets, mobile and
gaming devices, versus 7.4 hours streaming content on conventional TV sets, according to research firm RealityMine.
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88 %
2.42 84 %
79 %

...fueled by the
9 in10 consumers (88%) ...and use an average Creative asset specialists increased distribution
say they read and view of 2.42 devices WebDam predicts that by of videos on Facebook,
content on multiple screens simultaneously, 2019, 84% of communication YouTube, Instagram,
(TV, desktop, laptop, according to the Adobe and 79% of Internet traffic and other social media
smartphone)... State of Content 2015. will be video... platforms.

In short, the future of digital content involves more visual storytelling through video, fewer words, smaller screens, larger
experiences, more technology and precisely-tuned algorithms driving the entire behind-the-scenes process.

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 #1 Get Ready for More Visuals, Fewer Words,
and Smaller Screens

Yes, consumers still purchase large TVs for their homes, but The industrywide Accelerated Mobile Pages (AMP) Project,

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much of today's content is consumed on smaller and smaller launched in late 2015 by Google in cooperation with content
devices. The vast majority of TVs (83% by 2019, according publishers, is a recent reader-retention framework that helps
to Statista) will be at least 40 inches or larger, yet Ooyala ensure rich-content web pages and ads will load quickly and
indicates that 51% of all videos are now viewed on mobile simultaneously on mobile devices, primarily to keep viewers
devices, up 15% from 2015 and up a whopping 203% from clicking away from a poor user experience.
since 2014.
Why are speed and visuals so important? Adobe notes that
It's one of the dichotomies in the boom of visual and video between 35%-50% of consumers will switch devices
content: as content gets bigger and more dominant on or stop engaging with content if images are slow to
platforms ranging from YouTube to Facebook to Instagram, load, or if content is too long or unattractive. In fact,
viewers are consuming it on tinier screens. Content creators, 25% of consumers will start to abandon slow-loading
as a result, must make their videos and visuals increasingly pages after only 4 seconds, and some studies indicate
catchy and quick to load. that viewers begin to form an impression of what
they see after just 50 milliseconds. Moreover, 85%
Even with the use of smaller devices, however, and with of adults aged 18-49 watch content on multiple
streaming video usage reaching 50% of US households devices simultaneously – computer screen, tablet, mobile
this year, content providers must consider the simultaneous device and/or TV, according to Google, meaning publishers
use of mobile devices in coordination with the larger screen have to cut through clutter and address a shortening viewer
TV format. Viewers must be able to find, select and view the attention span across every screen.
content they want quickly from their devices, and be able to
manage their streaming experiences without significant
load times.

The Crystal Ball: Visualizing the Future of Content

In this shift toward video domination, look for first-impression visuals, screenshots
and headlines that are compelling, stunning and instantly gratifying – and that can
create the visceral reactions and levels of curiosity that provoke viewers to click, read, view, stay, explore and engage.
It's all about results and traffic: Researchers know that visual content attracts 94% more views than “traditional”
content and will generate more conversions and inbound links, ultimately bringing in the audiences and traffic that
publishers need. Website content will increasingly shift to video formats. News and information sites – if they have not
done so already – will launch companion YouTube channels or post more companion videos on Facebook, Instagram and
other social sites that support video.

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 #2 Vast Legacy Networks Will Give Way
to Niche Audiences and Content

A publishing industry once dominated by content heavyweights – Pew data shows that magazines are retracting, while

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major TV networks and global publishing empires – is being readers of digital magazines are expected to rise from
upended by niche producers, narrowly defined audiences and 75 million to nearly 136 million by 2021 (Statista).
readers/viewers who crave specialized, digital content.
In fact, the entire definition of "network" is shifting toward Bottom line: The influence of traditional TV will continue
"niche," because the digital environment is ideally suited for to wane, and digital content will continue to explode.
niche content. In today's digital publishing environment, 90%
Online channels and cable networks have already adopted
of what is written is done so with the intent of delivering
"niche" content as their mantra, featuring entire TV, digital
a positive return on investment. Content structure, topics,
and video franchises devoted to do-it-yourself themes,
keywords, headlines and accompanying images are strategically
gaming, entertainment, comic book or superhero fandom,
crafted and optimized so that they match the algorithms and
movies, TV and specialty genres, cooking, weather, real
programming tools used by advertisers to reach specific,
estate, celebrity gossip and other areas of interest.
niche audiences.

Major digital content sites, such as Huffington Post,

Nearly 40% of today's audiences increasingly rely on
Forbes, Business Insider, and BuzzFeed, have already
digital news sources – social media, websites and apps – for
evolved from general-interest to specialized "beat" content –
the majority of their news and information, according to (Pew).
HuffPost Politics, Forbes Small Business, as examples –
And while 57% still rely on conventional TV, Google notes to better serve their readers and advertisers. Streaming
that teens watch 64% less TV than adults, and industry powerhouses, such as Amazon, Netflix and Hulu, produce
stats showthat "cord cutters" – viewers who have abandoned and distribute a steady stream of edgy dramas,
cable or satellite TV subscriptions for streaming – now documentaries, sci-fi series and comedies to lure niche
represent 18%-25% of all Americans. viewers away from more staid broadcast TV networks.

The News & Content Revolution:

Out with the Old,
New and existing digital sources of specialty content will
In with the Digital Niche proliferate in number and status to satisfy curious audiences
and the advertisers'need to reach niche audiences. Fans of
any topic, issue or genre will be able to turn to the digital and
mobile environments to find something of interest, thanks to
content creators' pulse on digital traffic, consumers' interests
and advertisers' needs for reaching niche audiences. And
creators of specialty content will also thrive, especially if they
embrace new viewer behaviors and algorithms that shape,
place, and monetize their words, imagery or videos to the
audiences and advertisers that crave them.

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 #3 Video Technology's Future: Virtual Reality,
Artificial Intelligence and More

Video content has evolved as well, away from traditional network Likewise, AI software can shave hours and minutes off of

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TV and cable networks to online platforms, such as YouTube, the complex process of creating and editing videos. Earlier
Netflix, Hulu, Amazon Prime, Apple TV and a host of others. in 2016, IBM's Watson AI-based computer created a
Since 2011, the average time spent per day with digital "cognitive movie trailer" in 24 hours – far less than the
video has grown by 38%, according to eMarketer, with the 10-30-day standard time frame to piece together a
highest viewing growth on tablets (120%) and conventional movie trailer. Imagine the same AI technology
smartphones (92%).
applied to the creation of voice-activated video content,
for example, or social media videos from text.
"The video ecosystem has never been more complicated and
exciting – we have seen an increased number of content creation
Video technology is infiltrating movie cinemas as well,
sources, delivery and consumption channels, and platforms,
fueled by an 11% growth in the number of global
and as a result, more video viewing time. While traditional TV still
digital cinemas (more than 152,000 screens worldwide)
dominates ad revenue, digital video – especially mobile video –
in 2015, according to the Motion Picture Association of
is the fastest-growing video type by consumption." (IAB 2016
America. In the digitally reconfigured movie theater, visitors
Landscape Report).
can don virtual reality (VR) glasses and dive visually and
The evolution of content described by the IAB is particularly sensorially into whatever genre they choose: sci-fi, drama,
evident in the technology sector, where advances such as artificial comedy, romance, comic book, arts and more.
intelligence (AI)-inspired software can create full-featured videos
from raw text in a matter of seconds, and where augmented It's already happening in non-movie settings. The Salvador
reality can transform "content consumption" into a full-sensory Dali Museum in Florida, for example, encourages visitors to
digital experience. strap on VR glasses and climb virtually into the museum's
exhibits and artists' paintings, while the Los Angeles
Wibbitz software, as an example – now used by USA Today Sports, Philharmonic Association has created a 360-degree
Time Inc., CBS Interactive, Hearst, AOL and other news outlets – virtual reality tour for classical music lovers to digitally
relies on natural language processing capabilities and digital explore Beethoven's Fifth Symphony.
content libraries to scrape the text of news stories or articles and
create a studio-quality video or news clip, complete with narration,
background music and stills, within seconds.

Digital Content's Bold Technology Future

Look for more innovation around how content is created and how it’s consumed.
Look for movie theaters and entertainment venues that embrace new types of
technologies, content, devices and experiences. Look for more content that is created
by software with less direct human intervention. Virtual reality, augmented reality
and artificial intelligence, cognitive computing and other technological advances will
all play much bigger roles in what consumers read, view, experience and encounter as
they navigate the converging digital landscape and physical worlds of entertainment.

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 #4 Content Discovery: Behind-the-Scenes Equations Ensure
That Content is Profitable, Discoverable and Consumed

As content continues its shift to the digital environment, According to AdWeek, programmatic ad sales will rise

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advertising dollars are following – and that means to $32 billion by the end of 2017, up more than half
programmatic ad buying will soon dominate the digital from $15 billion in 2015. The Adgorithms company is
advertising and media industry. promoting a programmatic platform, Albert, to automate
digital ad buying.
Content publishers also have been forced to adapt to new
advertising models, especially as ad buyers shift more of their The impact of programmatic advertising on content will be
budgets to digital. IAB's Digital Video Ad Spent Study for broad. As more ad dollars shift to the digital/mobile
2016, for example, found ad buyers expected to increase environment, content will increasingly be crafted to meet
spending 63% on digital video, 62% on the algorithms and search engine optimization (SEO)
mobile video, 41% on advanced TV and 30% for formulas that make it easy to find on the Internet, highly
broadcast/cable/set-top TV. relevant for advertisers' target markets, and able to drive
organic traffic at lower costs.
Forrester data finds that twice as many marketers are
buying ads programmatically in 2016 (79%) Content will continue to inform, but will also be created
compared to 2014 (35%), with the highest spending intentionally to retain readers and viewers, attract
for online display, online video, mobile display and mobile advertising revenues, boost engagement on the websites
video ads. Programmatic advertising involves AI software and that host it, and encourage online visitors to spend more
real-time bidding processes that identify, target and retarget time on the sites and sources they visit.
ad placement on digital-mobile sites, based on advertisers'
desired demographics, audiences, regions and other metrics.

The Future of Content: Targeted,

Niche & Optimized
Content specialists will choose words, videos, images and insights
to help online consumers find exactly what they're looking for –
and to help digital advertisers fine-tune and target their digital
campaigns for the right eyeballs. Look for programmatic advertising
to become even more dominant in the digital, social and mobile
environments, as advertisers increasingly leverage it to find highly
targeted audiences. Programmatic advertising will also shift to social
media platforms, such as Facebook and Instagram, as they become more
video-friendly and video-dominated. Likewise, content will be optimized for
visual- and speech-based queries that feed into new personal assistant devices such
as Amazon Alexa, Google Assistant, Microsoft Cortana and Apple's original assistant, Siri.

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 www.valnetinc.com

Conclusion:

A Very Digital Future

The Internet has created one of the most disruptive eras in the history of media and publishing, and the coming years will
bring more – more disruption, more content formats, more content-specific technologies, and unprecedented changes in how
content is created, discovered, consumed and monetized. The rapid transition from print to digital content has altered not only
the formats in which "content" is delivered to readers and viewers, but it has also forever changed many of the traditional
processes that inform the creation of content and position it for evolving digital advertising platforms.

In fact, the confluence of these forces has fueled a revolution in how today's readers and viewers consume content that
informs, entertains, connects and delights, and the revolution is only beginning.

In summary, today’s consumption of images, words and videos on computers, tablets and mobile devices upends decades of
traditional publishing and distribution practices, and it is an ongoing industry transformation. The digital publishing revolution
is marked by more videos and visuals and a wider array of delivery options, from viewing on smaller smartphone screens, to
streaming from tablets to the TV screen. More metrics enhance publishers' and advertisers' ability to track the impact and
effectiveness of each piece of content, a change that profoundly influences how content is created, positioned and monetized.

Change, in fact, may be the only predictable constant, given the speed with which information, technology, mobile behaviors
and delivery channels continue to evolve in the marketplace.

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About Valnet Inc.
Valnet Inc., owner of seven websites and a dedicated YouTube business, is a world leader
in content and content distribution. The company owns and manages digital content brands
The Sportster, ScreenRant, BabyGaga, The Talko, The Richest, The Things, CBR,
VALNET and Little Angel. Visit www.valnetinc.com

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