RESEARCH REPORT

In brief

In brief

  • Content is foundational to platform companies’ business value and content operations are critical to their success.
  • Despite this importance, most have focused on customers and customer engagement when trying to maximize business performance.
  • But, as with customers, not all content has equal value.


Customers AND content drive revenue growth for platform companies

Successful platform companies deliver explosive, sustained customer growth on a global scale. This customer growth draws high valuations as platform company investors typically focus on customer measures such as user growth, engagement per user and revenue per user.

Often valuation models estimate likely attrition and engagement over time to arrive at the lifetime value of an average customer. But volume and quality of content are also crucial to platform company success—and are often overlooked as a valuation metric. Companies typically see an accompanying growth in content under management that even eclipses customer growth.

Evaluating the lifetime value of content

The net value of content is a function of four levers: the quality of the content in the inventory, the costs associated with managing it, the utility that the platform drives from the content and the speed with which it is published. In order to maximize value, platform companies need to manage all four levers simultaneously, recognizing that the operational imperatives within each one varies.

Content quality

Quality is maintained by ensuring poor quality content is not on the platform and enhancing acceptable content to maximize appeal and engagement.

Costs of operation

As AI improves, operations will tend toward a hybrid-approach, with humans better enabled by the AI to deliver more radical processing of content.

Utility

Utility is derived from how relevant, discoverable, sharable and engaging content is on the platform.

Speed

Speed represents the responsiveness of the platform to publishing relevant content, with the objective of publishing in near real-time.

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Toward a tiered approach to content management

The four-lever equation provides perspective on ways to maximize the overall content value on the platform. But, platform companies need to recognize one more aspect to take this to the next level: just as customers are not equal, neither is content.

Some content—either a content type, or from a particular source, or on a particular topic—drives inherently more utility on their platform. If the other value levers can be managed successfully, then that content will, by definition, be more valuable. Said another way, every platform will have a segment of highly valuable, engaged users. It will also have a sub-set of highly valuable, engaging content.

Managing the lifetime value of content requires a careful, long-term commitment to improvements—much the same way as large-scale manufacturing processes for physical goods require improvements over time.

Going forward: Managing the lifetime value of both content and customers

How platform companies should take action on their content value levers is a function of where they are with their content operations. If it is clear that one or more levers of content value are deficient, that is a clear place to focus. If it is not clear how the platform is operating across the four levers, an assessment could provide a roadmap for improvement. Finally, if content operations are mature, it may be time to try to understand the differential value of the platform’s content and build a strategy for segmenting and prioritizing content to maximize its lifetime value.

Kevin Collins

Managing Director – Innovation Lead, Software & Platforms


Martin Stoddart

Principal Director – Platform Experience, Software & Platforms

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