Zac Echola is muffin but trouble

Say it: Cutting the cords, bridging the gaps

Published on 03/01/09
by Zac Echola

Note: If you’re reading this in your feed reader, this post is likely best read at my site, due to some formatting. Stray h4s here and there in the feed may occasionally chop up your reading experience. Sorry for the inconvenience. — Zac

For the past few weeks I’ve had a fairly angry post sitting in my drafts. I can’t bring myself to hit the publish button, no matter how hard I edit the damn thing. The gist of it is that I’ve become increasingly annoyed with the business strategies—or lack thereof—at most newspaper Web sites. There’s absolutely zero creativity going on at most companies, which is troubling as it feeds the myth that “online might not provide a reasonable solution for dwindling print revenue.” Staff reduction does little for the bottom line, rather it jukes the stats by driving the bottom further down.

That post is going to sit in the drafts queue forever. For the most part, it’s unnecessarily mean. And full of math. If you want to see my random angry outbursts, follow me on twitter, where I happen to explode occasionally.

However, amidst the rant, I think I had some useful points to be made.

“Lastly, our study shows that newspapers are trying to improve their web programs and experimenting with a variety of new features. However, having actually reviewed all these newspaper websites it is hard not to be left with the impression that the sites are being improved incrementally on the margins. Newspapers are focused on improving what they already have, when reinvention may be what is necessary in order for the industry to come out of the current crisis on the other side.” — The Blevins Report.

Media companies must sever the bindings that drag business in the long run. Market fluidity, the key to the successes of the few that weather the coming storm, will only come through agility and unyielding focus on the future. Mammals didn’t inherit the Earth because the dinosaurs died. The dinosaurs’ extinction was a product of an outside force that lead to a more hospitable environment for mammals. Yes the majority of revenue comes from the ‘core’ print product, the ‘core’ broadcast product. But we aren’t in the ‘newspaper’ business. We aren’t in the ‘broadcast’ business. We are, by definition through ownership of web domains, in the information business. We’re in the advertising business. The medium is just that—a medium for passing information and advertising, connecting audience in search of information to business in search of audience. The Web is best suited to show measurable results to advertisers looking for ways to not spend advertising during a recession.

Now, I know most of you understand this concept. I’m not trying to patronize. However, the gap between knowledge and action shows few signs of narrowing. I’d like to turn some of the issues that must be addressed (preferably months ago) on their heads:

“It is fair to surmise that newspaper stocks last year got trounced twice as badly as the broader market , because investors have not seen any plausible strategies from publishers to reverse the accelerating declines in readership, advertising and profitability that have been under way since 2006.” — Alan Mutter

  • Media sites think too small with regard to scope.
  • Media sites think too big with regard to advertising.
  • Media companies don’t disrupt. They allow themselves to be disrupted.
  • Vendors, ever the albatrosses, hang heavily around our necks.
  • We place too many barriers in front of potential advertisers.
  • Our advertising products stink when compared the competition despite our obvious advantages.
  • We tend to think in terms of what the advertiser wants, when we should be thinking about what the advertiser needs: results.

Scope

“Major advertisers such as automotive, financial services, retail and real estate will not return any time soon; they will be diminished and different when they rebound a year from now. That is a disaster for local media, which could easily see more than half their ad revenue base wiped out in 2009.” — Dianne Mermigas

Dyed-in-the-wool newspaper folk think in terms of their geographical markets. In a time when geographical monopolies existed, this lead to sound business practices. Online, where geography is little more than a Google map and an entry on Wikipedia, media companies need to think bigger.

I’ve made the argument before that newspapers should create content for the Web that travels beyond the bounds of geography. It should scale to regional, national and international audiences. Hyperlocal can mean more than place. It can be ideas, too. Niche bloggers figured this out and quite a few have made a killing doing it.

The same philosophy should be applied to advertising. You can’t do that with banner ads and sponsorships alone. A business that manufactures widgets locally, but sells them online, sells them online with the expectation they can reach a wider customer base. Selling them a generic banner ad on the weather page of their local site probably doesn’t do much for their reach, to say nothing of a direct impact on sales.

Media companies with many properties tend to reserve networked advertising for the largest advertisers, which is absurd. An impression is an impression no matter how deep the pocket. Your job is to connect the advertiser to the potential customer, despite location. Well, not despite location, but despite your concept of location. Who does the advertiser want to reach and which audience segment is likeliest to buy?

This holds especially true for vertical classifieds. People are willing to travel for the right car, the right apartment, the right house. So why wouldn’t people travel, at the very least digitally, for the right widget? Who cares if the widget-maker is local? Everything is local in the right context. Again, when you’re online local doesn’t have to mean place.

Microscope

“Internet publishers have forced marketers into a straightjacket of standard ad units too small for brands to breathe. If the sector is to capture a larger share of brand advertising from magazines and television, the creative needs to have more impact.” — Nick Denton

At the same time media companies think too narrowly in terms of what money they can go after, they think too broadly.  Look at where building business models on the back of employement, auto sales and Realtors has left the newspaper business. It made sense even a couple years ago, and still makes sense in a few markets, but I wouldn’t want to hinge my business on toxic industries. We have to reevaluate our budget forecasting, and we have to accept the current fiasco for what it is. Continuing to view these industries as the backbone of your business model is akin to looking at a paraplegic and thinking he has scoliosis. Either way, it’s a shitty situation, not a silver lining.

Big retailers, tied just as tightly around the neck as the above industries look to be cutting back their advertising bugdets, too.  Despite what some people in our industry still think, the consumer market just won’t pay for content online; Let’s throw the transaction model out the window for now. Those who have tried it haven’t shown meaningful, sustainable revenue. Newspapers haven’t yet properly responded to craigslist and eBay with classifieds solutions that work (by generating much money or by being of any use to people). So where do you turn?

The first step may be to diversify your advertising offerings. Figure out your advantages with particular audiences and move on businesses that want to reach those people. Not just with those that already advertise in the paper on on air, but also go for the businesses that haven’t advertised in a newspaper or on television for years because the price point was too high. Fan out. One thousand dollar bills spends the same as a hundred $100 bills.

In order to fan out we need to become more sophisticated in tracking and segmenting audience. We need to become more sophisticated in putting the most effective ads in front of the right audiences. We need to better understand contextual advertising and demographics targeting, among other metrics.

Google, for example, likely already provides contextual advertising to your pages through the Adsense program. Google scans the content of your page and delivers ads in their inventory that match up well with the content. The first problem with Adsense, though, is that you have no idea what your cut of the profit is. Google just cuts you a check and you have to hope you’re getting a fair share. The second problem is that you already know what content is in your databases, so why do you need to farm out advertising placement to Google?

This is a technological issue. It can’t be done with manpower alone. It’s just not cost effective to send reps after lots of small potato advertisers. So, something needs to change technologically to make these sales more efficient. There isn’t a media company in existence that can do technology the way Google can, but isn’t providing a reasonably good contextual advertising solution, taking 100 percent of the profit better than an amazingly good contextual ad solution for a vague percentage?

And it’s not just ad placement that needs to become more sophisticated. Have you ever tried to buy an ad on a newspaper site? It’s a horrible, horrible experience! PDFs of unintelligible rate cards, or worse, simply a fax number for a rep would drive any new customer to Google, Yahoo and Facebook where they’d have a targeted campaign up, paid for and running within a half hour–without the BS jargon and with better metrics to track the effectiveness of a campaign.

Part of the problem, which I’ll get into in greater detail in a bit, is that newspapers buy into vendors that focus only on the print product. The Web interfaces are an afterthought. Don’t believe me? Try to buy a classified ad on any major newspaper site near you. Do it now. This post isn’t going anywhere.

At a time when potential advertisers want to hold onto their money as tightly as possible, we’re making making the process of buying into our systems convoluted and burying effectiveness in poor information architectures.  The cash flow must be as liquid as possible, not obfuscated in cryptic rate cards and piss-poor online buy solutions.

Getting back to contextual advertising with a simple example, start by thinking about how your advertisers could change their campaigns based real customer interest. If you sell a sponsorship on the weather page, why make it such a broad advertisement for a retailer that it becomes meaningless? The content of that retailer’s ad is their brand, just as your editorial content is your brand. If the forecast calls for rain, the advertiser should be able to sell their umbrellas. If the forecast calls for snow, the ad should be for their shovels. That’s something useful to everyone: Readers, advertisers and media companies (since it’s technically two different ads, and if you’re charging for click-throughs, you’ll probably see a spike).

Lastly, niche content abounds. Mommy sites, prep sports sites, etc. crop up everywhere. They’re a constant trend from media companies. Most of them kinda suck or at the very least fall prey to entropy through mismanagement, but you have a real opportunity with them to do something beyond sponsorships and run-of-site banner advertising. Editorial products like these prove perfect playgrounds for aggregating an entire arsenal of contextualized advertising you may already have but don’t yet realize; Niche classifieds, demographically-targeted email marketing, video ads, search advertising all work extremely effectively on these sites, especially when the scope of the site exceeds the bounds of the narrow print circulation market I mentioned in the previous section.

The rope to hang ourselves

When disruptors like craigslist take a chunk of classified sales from newspapers, newspapers have been slow to react. Throwing up your hands in defeat solves nothing. Not changing your product to match the competition’s offering does nothing. Yet we see it again and again. Craiglist moves into a market and the local papers don’t react appropriately.

“How do you compete with free?” “We’re not craigslist, so you can’t compare our product to theirs?” Both counts are simply ridiculous. You can compete with free. You can give away your classifieds and still make money from them.

Rather than selling the Web as an upsell, why not give away classifieds online and sell the paper as an upsell? You’ll garner more pageviews that way which can turn into ad dollars. You can sell premium placement for classified ads, the same way Facebook marketplace does. You can come up with solutions that contextually tie paid items from classifieds to content.

My wife sells discarded library books and other used books on Amazon. She makes a decent income doing it. When I asked her why she sells on Amazon, and not craigslist, Facebook or her own Web site, where she wouldn’t have to pay Amazon’s fees, she tells me it’s because Amazon does all the advertising for her. She simply has to manage inventory and Amazon will put her products in front of people likely to buy them, through their own search and recommendation engine, but also across the Web through their affiliate advertising program.

Yet classifieds pages on news sites tend to be tucked away, running lists of text and, if you’re extremely lucky, you have a search bar and a dropdown menu. Boring!

Over the past year we’ve seen some interesting experiements in how to disrupt on the editorial side. Reporter blogs are ever more present. Sites like The Batavian and Northfield.org have taken on the task of directly disrupting local media. Everyblock turned granular information gathering on it’s head, effectively proving that “the story” isn’t all there is to news. Where is that entrepreneurship on the business side?

When we ourselves don’t disrupt, we allow ourselves to be disrupted. There is nothing stopping the Batavians from moving into markets that already have established sites. Even a half-assed site will still pull in a certain percentage of marketshare. And marketshare means dollars. If done right, it could mean substanial revenue.

The rope goes beyond being disruption. It represents an unyielding reluctance to try anything new and untested. Denton is right about the IAB standards. They suck. Why follow a standard that sucks?

The noose

What I’m suggesting here requires development, taking a hard look at your assests and figuring out what you can build on or make better. The costs upfront will be expensive to develop, for sure. But in the long run you’ll be better positioned for any sudden changes.

Building it yourself means you have complete control over the final product. When we buy into vendor systems like Legacy, newsbank, print-focused classifieds vendors and more, we essentially give up that right to have complete control over the product. In the case of many vendors, you don’t even get to have their system running on your domain (in most cases, you can’t even fake it through a DNS mask). So when someone does a search on your site and that brings them to newsbank, you can say goodbye to any search advertising opportunity you may have had had you done it yourself. When someone goes to Legacy to view an obit, kiss massive pageview numbers goodbye.

Sure, you can advertise on these pages in some cases, but chances are you’re looking at another vendor or you’re further tying your future to your vendors success.

That isn’t to say all vendors are bad. A few give you complete customizability and even offer APIs your IS and Web teams can tap to further extend your product. But vendor contracts have to be chosen with care. Newspapers need to decompartmentalize their divisions so that a descision for, say, print classifieds, doesn’t tie the hands of the people on the Web–and vice versa.

A certain level of openness has to break through when it comes to vendors. No longer can you sit with vendor products that focus almost entirely on the print operation. No longer can vendors deny developers access to a companies own data via modern technological standards.

The Associated Press doesn’t divvy out a quarter as much shit as some vendors do, yet the AP is on the chopping block at many companies (I agree with dumping the AP for a better model, but that same business logic needs to be applied to every aspect of an operation).

I know not every paper can afford to hire developers and I know most programming talent doesn’t want to work for “old” media, but for those that do have the resources, you’re sitting on an opportunity to become that vendor that doesn’t completely suck.

When life gives you lemons…

Let’s face a few facts: Nothing a newspaper can do will stop the migration of readers (and ultimately money) from printed product to the Web. No redesign, no layoffs, no consultant will change the will of the information consumer. I’m not suggesting print will completely die. No medium has yet desimated another medium, only forced new technologies to deploy the old media. Video hardly killed the radio star, but the addition of new technology certainly changed the game–and with it, new business models were forged.

“Ads are the revenue but in all cases they are tag along with content. My wife likes to say that food is just a vehicle for the sauce. Content is the vehicle for the ads. If the content isn’t being consumed the ads aren’t being delivered, regardless of the media used.” — A commenter at Lost Remote

When I worked in television, I had a manager say to me upon the release of the iPod video, “Nobody will want to use that when HD becomes more prevalent.” He was flat wrong.

Now on the broadcast side, you’ll not only become more screwed over by consumer tendencies, but also the networks cutting you out of the loop to go directly to consumers through iTunes, Hulu, Netflix and other on-demand services. The technology for High Definition TV over IP is already here. It’s just a matter of waiting for the home broadband lines to catch up. To compound this, I can’t honestly see DTV lasting more than a decade (at most) before the earnest discussion of opening the spectrum to Internet services begins. 20 years (at most) until it actually happens and local TV is just a Web site nobody goes to.

Too many reps continue to sell the newspaper, adding the Web as an up-sell or worse, bundling the Web with a print buy. Move beyond that model. Sell your audience. Again, connect your advertiser to the people most likely to buy a product. A run-of-site display ad packaged with a print run makes sense for an advertiser looking to reach mass audience. But advertisers also want targetted results, which you can easily give them online.

That means unbundled your advertising. It means giving more advertisers easier access to your audience. It means creating pricing structures that allow for a wide spectrum of ways to interact with potential customers. Let your advertisers buy slices of that spectrum in increments.

…Make lemonade

“Sounding a more positive note, [Russ] Stanton said the [LA] Times’ Web site revenue now exceeds its editorial payroll costs.” — via David Westphal

When the Wright brothers sought to crack the problem of man-powered flight, they began by breaking the big problem (flight) into smaller problems they could digest and solve individually: Lifting surfaces (wings), a method of balancing and controlling the aircraft and propulsion. Each of those problems could be broken down into more solvable problems. But unlike other inventors, like Sir George Cayley, the brothers sought to solve each problem with consideration to the final design at the outset. When they made a change to the propulsion system, they took into account any redesigns needed for the wings and controls.

Product development works the same way. When a website manager decides to launch RSS feeds, as many newspapers did in the past couple years, the consequences of what that means for other products needs to be taken into account. A strategic change shouldn’t happen in a vaccuum. Adding RSS feeds means opportunity for advertising, but according to the Blivens Report it doesn’t look like many newspapers thought the entire strategy through. Adding those feeds would mean making changes to the advertising strategy. It would mean making changes in how managers calculate metrics.

The promised land: Building an elegant business application. Why make your advertisers sign into a separate account to manage their advertising, when you could give all your registered user accounts access to purchase an array of ads–or merely post free classifieds? When you create something like a marketplace database for businesses, allow paid businesses to manage their inventory through the same classifieds dashboard, giving them options to attach their ads to certain segments of audience. Allow them to purchase certain types of display and text advertising easily, as well. Give advertisers feedback through good reports (maybe paid classifieds users get data on how many people viewed their listing, for example).

The point here is that web forms don’t need a commission, they work on holidays and weekends and they don’t ever sleep. Obfuscating the various ways we can take money from advertisers is a horrible plan, all things considered. Keeping products clear and always available is key to any future success newspapers hope to expect online this year.

The end. Or is it?

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