New Media Channels and Its Impacts on Consumer Consumption Behaviour

XU, Jiao | VAN ITTERSUM, Koert | KIM, Jun | FORMAN, Chris

News media channels have undergone fundamental shifts over the past decade in the wake of digitisation. For instance, mobile consumers can access and consumer information via either mobile websites or apps. These two channels offer advantages and disadvantages to consumers since websites offer more news contents while apps offer better usability and experience. Therefore, it is not clear how consumers choose and consume news contents between these two channels. Given the popularity of mobile devices among consumers, an answer to this question has important implications to marketers and advertisers who must decide how to allocate their advertising budget between different channels.

HKUST scholar Jun B Kim and his co-authors consider this issue using the real case of Fox News, a major news organization in US. In early 2010, Fox News introduced a mobile News app in addition to its mobile website. Under such a context, the authors study the impact of additional channel on consumers’ media consumption by analysing the data from more than 5,600 smartphone users before and after the launch of the Fox News app. For the analysis, the authors adopted pseudo panel technique to better control other factors. Such an approach allows them to precisely study how the introduction of app affected consumers’ channel selection and the corresponding media consumption.

First, they report that the mobile app complements and does not substitute websites in terms of consumers’ media consumption. That is, introduction of News app led to a positive spill-over to website, resulting in a higher demand for Fox News by 40%. This finding has an important implications for advertisers. “If there is substitution or switching from the new to existing media channel, it may be more challenging for advertisers to reach their target audience because it means more scattered audience across channels. On other hand, if a new media channel serves as a complement, advertisers that are present on both channels have a better chance of reaching target audience multiple times,” the authors said. Next, authors study the extent of complementarity across consumers who adopted the Fox News app. They report a strong complementarity for consumers who exhibit more right-leaning views (based on their visits to other “right-leaning” news web sites) while left-leaning consumers use the app as a substitute for the website. In addition, they report that consumers who were more time-constrained also tended to use the app as a substitute to the Fox News website.

All of this findings meant that introduction of apps could be an effective channel for media companies to increase their traffic levels, but were potentially tricky ground for advertisers.

“Advertisements placed across the two channels are more likely to have repeated impressions on the same audience than a single impression on a broader set of audiences. Consequently, media planners who pursue frequency more than reach should consider placing ads on both apps and websites. Those who pursue reach may find it more cost effective to place ads only on the mobile website to minimise duplicated impressions,” they said.

Advertisers should also pay attention to the ideological divide because advertisements placed on both channels could be expected to repeatedly reach consumers whose ideology is aligned to that of the news provider.

The authors also advised both news providers and advertisers to consider how to manage the two distribution channels differently. News providers could rationalise their investment in apps and offer more news stories on the mobile website than on the app, since apps have limitations in offering a wide variety of content but nonetheless drive consumers to the website. Marketers could consider different strategies for the two platforms even if this might cost more upfront.

“A company could, for example, have different types of advertisements on the two platforms, such as simple banner ads on apps and more detailed ads on mobile websites, and rely on consumption complementarities to encourage consumers to visit both platforms,” they said.