SimsBlog

Two Ways News Execs Will Have to Radically Change Their Thinking in 2012

Forgive me, I’ve been a shamefully negligent blogger these past few months.  

Between COO’ing at my own company and advising three others, I almost forgot how much I enjoy telling newspaper executives what to do! (Well, except for my role as a PostMedia Network digital advisor, but they actually want me to tell them what to do, which kind of takes the fun out of it).

So, here you go newspaper executives, the two things I think you will have to start thinking about in radically different ways in 2012:

1.  I’ve said it before and I’ll say it again: It’s not about ads, it’s about ROI.

As Newsosaur Alan Mutter pointed out on his blog last week, the big guys (and some littler guys too) are coming after your local advertisers.  

Google is expanding its GYBO.com (Get Your Business Online) program, Facebook is offering do-it-yourself extreme targeting and a CPC payment model.  Then there’s Groupon, Living Social et al, Foursquare and a zillion different mobile products.

What do all these solutions have in common?  They provide direct, measurable ROI to local advertisers.  And believe me,  that’s all local advertisers care about.

It used to be that an ad in the weekend newspaper would make the cash register ring.  That’s because newspapers used to be as much about shopping as they were about news.  Think about it - a news hole of only 50% meant that the rest of the newspaper was all about display ads, classifieds, special sections and flyers.  And because of that shopping environment, they delivered excellent results to their advertisers.

But now, shopping is a thing that is done digitally.  Even if we don’t always buy online, we’re most certainly doing our product research, feature comparing and deal hunting there.

And over time, newspapers have become less effective at making the cash register ring.  The old days of slapping up a display ad and not proving that its working are well behind us.  Just ask the folks at Patch.  Or ask your advertisers.  You'll quickly find that the more they know about which advertising vehicles are driving their sales, the less likely they are to buy display ads.

Asking print reps to sell digital display packages is a short-term solution that takes advantage of the knowledge gap of many retailers who have yet to learn the many advantages of digital advertising. This is not a long-term strategy.  Far from it.

News organizations are going to have to spend a lot more time studying what works and what doesn’t for their advertisers.  

Gannet, Tribune and the Tennessean are taking advantage of the knowledge gap in a different way. Through products such as Gannett Local, 435 Digital and 1100 Broadway they’re helping local advertisers navigate the digital advertising world.  They’re saving them time and providing proof of ROI.

The contextual environments of content verticals drive a much higher click through rate than running the same ads in an environment of unrelated content.  In my experience, behavioural advertising and re-messaging ads can out-perform even so-called “high-impact” display ads by a factor of 10:1.  Who in your organization is thinking about these and other ROI focused products?

It’s time to get serious about understanding the online advertising world.  Competing in this space is not a part-time job.  Nor is it for the faint of heart.  

Meeting the local advertising challenge can’t be done without great digital talent.  And that’s where radically different thinking challenge number two comes in...

2.  It’s time to get greedy about talent.

I don’t mean to be alarmist, but no one wants to work for you.

Let’s face it.  It’s all about supply and demand.  Great digital talent, especially at the executive level is very difficult to find and even more difficult to keep.

It’s not personal, it’s just that you’re not as exciting as other digital companies, nor do you offer the (even remote) possibility for your employees to become multi-millionaires as a result of an IPO.  On top of that, you’re old media, with old processes and old...well, you’re just old.

Actually, it’s not just newspaper companies that are challenged in the talent department.  AOL has had a 50% turnover at the executive level in the past 6 months and even the mighty Twitter is having trouble keeping engineers and executives.

Sites such as LinkedIn and PleasePoachMe make it easier than ever for your competitors to find and to start a nice chit-chat with your talent.  If you’re going to keep them, you’re going to have to start thinking very differently.

Give them control over their products and strategies.  You’ve hired them to do a job.  Trust them.  Don’t force them to keep explaining why the sky is blue - they hate that.  (I once had the CEO of a large media company ask me why digital people working for mainstream media companies are all so very bitter.  Constantly having to explain basic digital concepts is one of the reasons).  Get lots of great digital people, not just one or two.  That way they can collaborate, as well as push and energize each other.  And for Godssake, don’t have them report to non-digital people (and most definitely not the CFO).

And here’s the big one....Give them a piece of equity in the new products they create for you.  You heard me.  Equity.

Not willing to go there?  Well, feel free to sit back and watch as start-up after start-up start eating away at the local revenue you have left.

 

It's Time We Talked About Patch

A couple years ago, I visited the very groovy, very lofty Soho offices of Patch.com.  At the time, there were less than ten Patches in existence, all in the tri-state area but the team was hopeful that they were building something that would become much, much bigger.

They were very kind to me, a VP from a Canadian newspaper company who they didn't know, (and who had a nasty, snotty, sneezy cold to boot) and we spent an hour or so talking about each other’s businesses and possible ways we could work together in the future.  They even let me take pictures of their offices for my blog, which was at the time less than three weeks old.

My main memory from the meeting was that they didn’t appear to have any understanding of how challenging the local online advertising space was.  They seemed to have a blind faith that local advertisers would appear, with very little sales effort. 

Knowing how challenging they were going to find the local advertising space, I walked away thinking that although they were a great team, their business was likely to fail.  I never did write a post about them.

Imagine my surprise when only a few days later, it was announced that Patch had been acquired by Aol.  I was baffled then and I remain so now.  Especially since Aol seems to be counting on Patch to deliver them into the future as a digital content company.

But all is not well in Patch-land.  Recently, anonymous Patch editors and sales people have confessed that not only is Patch no picnic to work for, the model isn’t working.  Editors are under-paid and over-worked, sales reps are struggling to keep advertisers.

Let’s look at the facts:

There are currently around 800 Patches in the US and there are plans to have 1,000 by the end of the year. 

Each Patch has a full-time editor.  In addition there are approximately 100 sales people (way too few in my opinion).  I can’t imagine the herculean effort on the part of Aol’s HR department to fill all those positions.

In Q1 of 2011, Aol invested $40 million in Patch and total investment for this year is on track to hit $120 million.  Investment was $75 million in 2010.

Holy crap, that’s a big bet.

My estimation is that Patch needs at least 30 million UV’s per month just to break even (5 ads/page, $10 CPM, 65% sell through, 10 PV’s per UV).   But despite the heavy investment, Patch reached a total of only 6.9 million monthly unique visitors in April (fewer than 10,000 UV’s per site).  This dismal fact led to a “full-on course correction” which included an attempt to recruit 8,000 bloggers to make the sites more timely and interesting and perhaps boost traffic.

While aggregation may result in higher traffic for Patch sites, it still doesn’t address the fundamental flaws in the Patch concept.

First of all, most local advertisers are high-maintenance clients that are time consuming and expensive to acquire and difficult to retain (there’s a reason Groupon demands a hefty 50% of deal profits).

Small business owners are busy and it can be very difficult just to get a meeting with them.  If they are not digitally savvy (and most are not) they require a long and detailed education before committing to a digital ad campaign starting with how ad servers work and why they won’t see their ad every time they come on the site.  Most of them don’t have digital creative, many of them don’t even have a website.

Where small business owners are very sophisticated is in understanding what makes their cash register ring.  So while a Patch sales person may be able to convince them to try a Patch banner ad once, they are unlikely to get a renewal if that ad doesn’t generate significant store traffic.  And let’s face it, 10,000 UV’s per month is very unlikely to do that.

Second, the Patch business model is just plain old fashioned.  It ignores the fact that there has been an unbundling of news and advertising.  The reason that local advertisers bought ads around news content (primarily within newspapers) was not because they thought news led to sales, it was because news was where the eyeballs were (and there were very few other options).  This is certainly not the case online.

I'm not saying that it's unwise to seek to fund a website through advertising revenue from local businesses.  But I do think that you need to focus on helping your advertisers realize quick, measurable ROI.  I don't think Patch is delivering.

What works in digital brand advertising is context.  An ad for a bridal salon is out of context on a news site and is unlikely to be effective.  Put that same ad on a site for local brides and watch what happens.  My experience has been that click-through rates on relevant vertical sites are exponentially higher than on general news sites.

And that’s where Aol is missing the boat.

Aol already has dozens of vertical content sites.  If I were heading-up Aol, I’d dump the entire Patch strategy and move toward the evolution of the verticals so that they are both national and local in nature.  What if you could go on ParentDish, Aol Autos, KitchenDaily or Engaget and drill down from the national level to also see local content, listings and ads? 

That’s how you create reader value.  That’s how you create ROI for advertisers. 

Perhaps it's time for an even more radical course correction.

9 Things: My Keynote to the ACNA

The start-up world has kept me hopping these past few weeks and I've been a very bad blogger.  Time to get posting again!  And I'm starting with the keynote presentation I delivered to the Atlantic Community Newspaper Association on May 13th.

Slide-by-slide commentary is below the SlideShare.

 

Judy Sims ACNA Keynote Presentation

View more presentations from Judy Sims.

1. Title

2. My name is Judy Sims and my day-job is as the COO of a Toronto Internet start-up called CanSport LIVE where I’m busy revolutionizing the business of amateur sports.

3. But up until 2009, I worked at the Toronto Star where as VP Digital media, I was responsible for thestar.com and also launched 4 digital products in 2 years.  Though my day-job is no longer in the newspaper industry, I keep a toe in the water as a member of the PostMedia Digital Board of Advisors.   I’m going to set the stage for our conversation today with a few slides on the new economics of media.  My apologies, there will be some charts and graphs, but I’m a nerd and I can’t help myself.  But the truth is, I find that talking in scientific terms, rather than emotional ones is the most effective way to begin discussing change.

4. What we’ve seen happening over the past 15 years is a fundamental shift in the way the economics of media work.  The root of that shift is the move from a world where media content was relatively scarce to one where content is very abundant.  The barriers to entry are down and anyone can become a publisher.

5. And not only is there a lot more content available, that content has become “atomized”.  Media is now consumed in smaller and smaller chunks across a wider and wider range of media sources.  The average YouTube video is only 3.5 minutes compared to a 30 to 60 minute TV show.  A blog post is only 3 to 10 paragraphs verses 20 or more in a newspaper or magazine article.  Twitter has reduced this even further to only 140 characters.

6. And now we’re even seeing this happening in the advertising world.  Ads have become unbundled from news.  Flyers are becoming daily deals. 

7. Workopolis, Kijiji, Autotrader, Flyerland, Craigslist – the ads are the content.  They’re the prime attraction.

8. The result of this atomization is that economics of this new media world are the inverse of the old media world.  Where content was once scarce and attention was abundant. 

9. Now content is abundant and attention is scarce.

10. Okay, here we go with the charts.  The economics of media, like the economics of any product or service are based upon supply and demand.  Where supply is low, demand is high and where demand is low, supply is high.  Where the two curves intersect determines the balanced market – the quantity produced and price it sells for.  This applies to the cost of a newspaper or movie or the cost of advertising.

11. This is what supply and demand for media looked like before the Internet.  Because there were significant barriers to entry as a media company, i.e. you needed a printing press or a TV studio or movie camera, supply was relatively limited and demand was relatively high.  Thus prices were high.  In our case, that meant that we were able to charge high rates to our advertisers.  Looks good doesn’t it?  We could even do a little marketing or increase circulation by moving into a new town or subdivision and we could even grow our demand and increase the price we charge advertisers.  It was awesome.

12. This is Umair Haque.  He’s an Oxford-trained economist who has been studying the impact of the Internet on various industries.  He defines this media 1.0 world as the Age of the Blockbuster.  The blockbuster resulted in very high revenues and profits for media companies for decades.

13. But Media 2.0 changed all that.  Reduced barriers to entry have increased media supply exponentially.  All this new content has made it easier for us to find what we like online so we actually consume more of it, shifting the demand curve out.  Good news right?  Well, the problem is that the demand curve hasn’t shifted out nearly as much as the supply curve.  The result is a hyper-deflation of media prices.

14. And we are in fact seeing this in action in the online world where supply of advertising inventory is much higher than demand.  And, technologies are being created everyday that make the purchase of advertising inventory increasingly efficient and increasingly complex.  As a result, there has been downward pressure on advertising rates both online and offline.

15. Umair Haque believes that we are witnessing the end of the Blockbuster Age

How the NYT Paywall May Succeed in Spite of Itself

Here it is, the eve of the NYTimes.com worldwide paywall implementation.  As you may know, we here in Canada (the Great White Test Market) have been living with it for the past two weeks. 

I have made no secret of the fact that I am not at all a fan of paywalls:

• They keep newspaper companies and their employees focused on the company they were, not the company they’re going to be. 
• They distract senior executives and key staff from engaging in true innovation as they spend months working out paywall policies, prices and technologies. 
• They both literally and figurately put a wall between newspapers and their audiences, making it very difficult to build the kind of engaged audiences who can drive ROI for advertisers.   
• And, it pretty much sacrifices the under 30’s in a market – in the form of both readers and potential employee talent.  They simply won’t pay for content and they don’t want to work for someone who is charging for it.

So yes, I hate paywalls.

But something in the past two weeks has caught my notice.  Since the paywall (or is it a pay fence?) went up in Canada, I’ve seen a sharp increase in the number of Canadians in my social graph posting NYT links on both Twitter and Facebook.

Is this a new form of politeness?  If a link comes through social media, it doesn’t count toward the Times’ 20 article limit.  Could it be that folks are posting more NYT links to give their friends and followers more access to free content?

Could the paywall actually make the Times more social?  And even more interesting, could it be that the Times actually anticipated this when they created the strategy?

Nah…  It couldn’t be.  Could it?

 

Three Things Newspaper Companies Need to do Now

Tomorrow, I will join the digital advisory board of a very large, and, assuming they’ve read this blog, very brave newspaper company.  After almost two years of firing my unsolicited opinions at the newspaper industry, I must say, it feels nice to actually be asked for them.

 Here’s some thoughts I’ve been having about newspapers lately:

1.  Newspapers need to stop swimming against the current of the Internet.  It’s a sure way to drown.

Wikipedia lists one of the 8 behaviours associated with downing as “trying to swim in a particular direction, but not making headway.” 

Watching newspapers committing to strategies that are sure to fail is to stand helplessly on the shore as they thrash against wave after wave of inevitable digital upheaval.

Where the Internet is about openness and abundance, newspapers are attempting to recreate scarcity by moving toward the closed environments of iPad apps and paywalls.

Where the Internet is about receiving information anywhere, anytime, News Corp is about to release “The Daily”, an iPad app whose publishing schedule follows an old-fashioned, once every 24 hours news cycle.

Where the Internet is collaborative, many newspapers are continuing to engage in one-way conversations.  In fact, to some, community interaction is considered a “gimmick” rather than the fundamental factor that has lead to the development of the web as we know it.  As Clay Shirky said recently: “We have greatly overestimated the value of access to information and underestimated the value of access to each other.”

I’m not saying don’t ever swim against the current.  Sometimes it’s necessary.  But that kind of risk should be undertaken by only the very strongest of swimmers.

2.  Newspaper executives need to determine an audaciously awesome vision for the future of their companies, and then align their organizations to make it happen.

It’s simple.  To be controlling and defensive is to contract.   To be open and visionary is to expand.

Have you ever noticed that there much of discussion about “the future of newspapers” but no real conversation about “a vision for newspapers”?  We all talk about how the Internet is changing things and how uncertain everything is and how uncomfortable that makes us all feel, but not about how awesome it could be.

Ah, vision.  What happened to that?

Many of the world’s best newspapers were founded on a vision.  The New York Times, the Guardian, and my old workplace the Toronto Star were the products of visionaries who wanted to change their cities and nations for the better.

But somewhere along the way, that changed.

Perhaps newspaper executives are too focused on very real short-term economic issues such as crushing debt and shrinking revenues to form an inspiring long-term vision.  Or perhaps the day-to-day 24-hour news cycle has created a culture where long-term thinking is not required or valued.  Or perhaps newspaper executives have simply been unable to adjust to the ever-shifting world of new media, the resulting lack of understanding and fear leading to paralysis. 

Having a clear vision and aligning resources to it works, even for media properties in the 21^st century.  It resulted in the Atlantic turning its first profit in decades in Q4 of last year. 

What if newspaper executives imagined the best possible outcomes for their newspapers and then aligned their organizations so that they had the means to achieve those outcomes?

And what if they created that vision without ever using the words “still”, “once again”, “regain” or “recapture”?

Perhaps a newspaper could become:

A platform that facilitates the coming together of individuals, organizations and governments to solve a city’s great problems: poverty, education reform, joblessness, environmental degradation, transportation, budget deficits…

A platform that facilitates interactions between consumers and businesses –whoever, whenever and wherever they are.

An interactive and continuously evolving guide to living, working, shopping, playing, parenting and doing business in a city.

Who knows?  But it’s time to start thinking about it.

3.  Journalists need to stop looking at new Internet developments as frightening or frivolous trends and start looking at them as tools that can be used to achieve a vision.

You cannot succeed on the Internet without using the tools that it affords.  In my opinion, refusing to use these tools is the same as refusing to use a telephone, tape recorder or word processor.

Social Media.  Many a journalist hates Twitter because “it’s not journalism”.  I honestly don’t know if it’s journalism or not.  What I do know is that it’s a fantastic tool for disseminating information, rallying communities and tracking trends.

Aggregation/Curation.  I can’t understand why newspapers have not sought to create a Huffington Post – like aggregation site around not just news but also vertical content areas such as parenting, health, automotive, sports, business, etc.  These sites would attract loyal and engaged users and deliver advertisers a healthy ROI with minimal cost to the publisher.

Online Gaming.  Newspapers could use online game dynamics to engage a community in solving a city’s large problems.  Before you dismiss the notion outright, watch Jane McGonigal’s TED Talk on how “Gaming can Make a Better World” and then consider the implications of Cubeduel’s “Who would you rather work with” game built on the LinkedIn platform.

If I were a newspaper executive trying to align my resources to achieve an audaciously awesome future, my next hires would be community managers, curators and game designers.

What would you tell a newspaper company executive team if you had the opportunity?

 

 

Newspaper Execs: Still Denying, Still Crying and Still Lying to Themselves

A few years ago, I took a course at Harvard Business School where I was privileged to hear Clay Christiansen deliver a lecture on the “Innovator’s Dilemma”.  What struck me was how in case after case, the managers of disrupted businesses repeatedly made decisions that appeared to be sound – they focused on their best customers, reduced costs, etc – but actually hastened their own demise.

The assumption was always that the disrupters were creating cheaper, inferior products and were scraping the bottom of the barrel for the least desirable, poorest, most unreliable customers – and good riddance to them!  I mean, who wants to go in front of a board of directors and say “We’re going to invest millions to offer an inferior product to our worst customers!”

But the thing is, the disrupters always end up improving their quality and efficiency until they are able to offer something equal or better to that of the incumbent.

Sound familiar?

Last fall, I wrote a post about the lies newspaper executives were telling themselves.  The post was born out of the frustration I was experiencing as I watched a group of very smart people repeatedly do remarkably dumb things, killing their businesses in the process.  And now, more than a year later, as these same execs dilly-dally with pay walls and iPad apps, I can only say that things are getting worse, not better.

It seems to me that there are two camps of newspaper executives.

First, is the very small camp epitomized by the Guardian’s editor-in-chief Alan Rusbridger and JRC’s John Paton.  These execs aren’t afraid to face an uncomfortable reality.  The economics of media have changed.  What was once scarce is now abundant.  Large cohesive media products have become unbundled because the bundles no longer make sense.  The mix of news, information, advertising and classifieds were simply the result of an industrial age manufacturing process.  Or as Jay Rosen asserts, every process that is practiced at a newspaper can be traced back to the needs of the printing press.

The first thing a realistic news exec needs to do is understand their disrupter.  And once they understand the Internet, they will know that their survival rests on becoming of the Internet, not merely residing on the Internet. That means becoming a platform.  That means being open. The Internet is not just another content distribution method.  It is social.  It is collaborative.  That means accepting that they are no longer publishers or broadcasters having a one-way “Gutenberg era” conversation with the masses.

Next, a realistic news executive has to admit that they don’t know where the business model is going.  That takes guts.  Especially in the boardroom.

As Rusbridger put it in a recent lecture in Australia:

It's developing so fast, we forget how new it all is. It's totally understandable that those of us with at least one leg in traditional media should be impatient to understand the business model that will enable us magically to transform ourselves into digital businesses and continue to earn the revenues we enjoyed before the invention of the web, never mind the bewildering disruption of web 2.0.

But first we have to understand what we're up against. It is constantly surprising to me how people in positions of influence in the media find it difficult to look outside the frame of their own medium and look at what this animal called social, or open, media does. How it currently behaves, what it is capable of doing in the future.

It takes balls to stand in front of a boardroom of mostly old men (why aren’t Rafat Ali, Mike Arrington, Om Malik et al invited onto mainstream media boards?) and say that the future is still concealed behind a dense fog.

They can’t tell the truth because the truth doesn’t have an obvious business model.  Yet.

So instead, they do the easier thing, appeasing boards with business plans that look good on paper, especially to people who are not of the Internet. 

So along come the steering committees, working committees, pay walls and subscription models and the dream that consumers will be willing to pay for their rarified opinions despite the countless free alternatives.  And along come the $30 million iPad apps that attempt to recreate scarcity by rolling back the clock to when news was a once-a-day occurrence and the public didn’t expect to comment, contribute or find links.

It’s a colossal waste of time.

In the meantime, smart competitors are discovering new holes in the market and new needs to fulfill.  Bloomberg Government, Demand Media (love it or hate it, it’s growing) and Flipboard are all products that could have been created by mainstream media companies.

We are officially in the post-Gutenberg era.  A new kind of thinking is required.  That is where time and money need to be spent.  That’s where the media industry’s best and brightest should be.

One Weekend Was All it Took

My favourite presentation at Toronto’s DemoCamp this afternoon was by the guys at TaskAve.com.

TaskAve is a simple but brilliant web app that combines maps + tasks + alerts.  It allows you to set a mobile alert that will trigger when you are in a particular location.  The alert reminds you of a task that you should do at that location.

In other words, if you keep forgetting to pick up your dry-cleaning when you’re at the mall, you can set an alert that will remind you as soon as you enter the mall - or walk by the drycleaners.  The alert will appear at a distance from the target of your choosing.

There’s even a business model.  If it achieves a decent amount of scale, TaskAve will have loads of location and purchase intent information.  That would be of great interest to retail advertisers.  If Lowes knows that I intend to buy a new faucet at Home Depot, they can send me a special percent off deal on faucets.  Or, Home Depot can send me an add-on deal, perhaps for bathroom tiles or paint.

Love. It.

TaskAve has some potential.  But that’s not what was most impressive about the presentation.  What’s truly jaw-dropping is that TaskAve was created just two weeks ago at an event called Toronto Start Up Weekend.

A group of five, made up of developers, designers, and product and marketing people created TaskAve in about 48 hours.  48 HOURS!  Complete with a monetization plan!

Phenomenal.

Compare that to a newspaper I heard about recently that has been working for over six months on their iPad app.  They have not one, but two committees working on it: a steering committee and a working committee.

Pathetic.

Newspaper executives need to wise up soon and allow real innovation to occur, without committees, from the bottom up.

The barbarians are at the gate.

 

The Boston Globe’s Paywall "Strategy" Makes Me Crazy

Last week, the Boston Globe announced a rather bizarre digital strategy (or stragedy as I like to think of it). 

Next year, they will be launching a new paid site (free to print subscribers) called BostonGlobe.com, which will include “news and feature stories, commentary, analysis, photos and graphics”. 

The Globe’s existing site, Boston.com will remain free and include breaking news, weather, sports and entertainment guides.  They are calling it a “one stop source for all things Boston”.

Neiman Labs describes it as a “Doubleminty Strategy” – BostonGlobe.com is for the “niche/loyal” audience and Boston.com will be for the “mass/casual” audience. 

This is a terrible, terrible plan. 

First of all, who the hell builds a successful website by targeting a “casual” user base?  Online businesses need highly loyal and engaged audiences to succeed.

But of course, they’re not really trying to build a new business; they’re trying to protect an old one.  And that’s where the strategy gets really ridiculous.  While offering free information and services to “casual” readers, they’re going to punish their “loyal” online readers by charging them for what has until now been free. 

But of course, they don’t really care about the freeloading loyal online readers.  The real objective is to protect the old, dying, print business.

Forget the long-term.  Forget anyone under forty-five.  Print must be protected because that's where the profit is.  For now.

The limitations of their strategy are painfully obvious.  Why do newspaper executives continue to make such silly decisions?  

I’m not saying that paid content will never work.  But you have to stop and think about the products you are selling.  Non-targeted paywalls and metered systems are not innovative.  They are just a way of doing the same thing while expecting a different result.  And that definitely won't work.  

You have to create truly unique value.  It’s called product marketing.  And it’s the way most businesses generate revenue.

In January of 2011, Bloomberg will be launching Bloomberg Gov, a “comprehensive, subscription-based, online tool that collects best-in-class data, provides high-end analysis and analytic tools, and delivers deep, reliable, quick and unbiased reporting from a team of more than 2,300 journalists and multimedia specialists worldwide. It also offers news aggregated from thousands of the top trusted news sources from around the globe.”

Combining data, analysis and tools to create a product that is truly valuable to a large and moneyed potential audience - why that’s an awesome idea!  If a product offers utility and exclusivity people are much more likely to be willing to pay for it.

Could the New York Times or Washington Post have developed this product?  Absolutely.  But they didn’t.  Nor did any other newspaper company.  And I’ll tell you why. 

First, smooth seas don’t make skillful sailors.  Years of near effortless success have created a group of executives incapable of true innovation.  (Yes, there are exceptions, don't send me angry emails.)

And second, journalists don’t want to think about the content they develop as a product created to meet the needs of a buyer.  They believe they are above that.  Due to the church and state tradition, they’ve never had to think about how the bills get paid.  And because of that, they too are at a complete loss when actual business innovation is required.

For an example of how the Boston Globe should be experimenting with paid content, I’ll turn, as I often do when discussing newspaper innovation, to Scandinavia.

At Sweden’s Aftenbladet, newspaper executives are experimenting with a “freemium” model.  News and commentary on the site remain free, but users are also offered a “Plus” service, which can be paid for in micropayments or by subscription.

According to Media Shift:

“The Plus service includes lifestyle material, such as over 200 different travel guides, health articles, and reviews of cars, gadgets and other products and services. There are also instructional guides for everything from buying an apartment to dieting or owning a pet. The paper also charges for select news stories, such as those that have to do with the Swedish Royal family.

The service's most popular content are the health articles, travel guides, the yearly lists regarding taxation in Sweden, and the reviews.”

Ah!  Just like Bloomberg, they’re charging for utility and exclusivity.

A small group of editors select the material to go behind the paywall.  Product development manager Elsa Falk stated in an interview that, “We are very much entrepreneurs here at Aftonbladet, and it has been good enough so far.  Now we want to apply more strategic thinking in our plans."

Good idea!  If only they had applied strategic thinking to their plans in Boston!

But actually, the Boston Globe got it completely backward.  They’re charging for news and commentary and giving away the utility for free.

What if Boston.com truly was a “one stop source for all things Boston”?  What if they offered utility?  And what if one couldn’t get that utility anywhere else?

Well, they’d have to make significant improvements to their existing product.

Here’s some ideas:

• Help your readers cut through red tape.
• Help your readers find things that are hard to find.
• Use data, analysis and tools to create ultimate guides to things your readers care about
• Help your readers maneuver in a busy life in a big city

It will take time to determine what will be successful.  It requires experimentation.  It requires a product management philosophy. 

But it’s time to get started.  Don’t you think?

 

 

 

I Love You Earl, but Engagement is an Activity, not a Statistic

Newspapers are places where marketing and branding are not only given little value, they are often viewed with suspicion. I remember being told not to call the paper a “product” in front of people from the newsroom.  Unless it’s their face on a billboard or bus somewhere, many journalists believe that they are above marketing (though who can deny that a headline isn’t the same thing as a tagline).

As such, it is nearly impossible for a marketer to discuss the need for brand attributes, brand positioning and brand statements at a newspaper.  And 10 years ago, as a lowly newspaper marketer, I was growing increasingly frustrated with my inability to communicate the importance of doing so.

Then I came a across a speech given by INMA CEO Earl J. Wilkinson in which he stated that newspapers reflect and affect the communities they serve. 

I fell in love. 

No one speaks and writes more poetically and passionately about the power of newspapers than Earl.  Though as much as I loved the notion of newspapers reflecting and affecting the communities they served, I felt that notion was incomplete. 

Newspapers also connect the communities they serve. 

At one time, these connections abounded: politicians and voters, cops and witnesses, performers and audiences, buyers and sellers, landlords and renters, the unfortunate and the generous, the bereaved and the comforting.

The newspaper’s ability to reflect, affect and connect a city and the people who live there became my marketing mantra.  It was our purpose, our strength and our unique selling proposition.  I spoke of it whenever I could, and across the organization people got it.  It had resonance, clarity and authenticity.

Ten years later, we don’t speak of connection so much as we speak of engagement.  But really, they’re the same thing.

And this week, Earl posted a piece on his blog lamenting the newspaper industry’s current inability to measure engagement.  He focused on how old media metrics don’t apply online:

Metrics, metrics everywhere.  We’re drowning in data.  Research budgets have been cut, so there aren’t enough smart people around to make sense of it all.  Our instinct is that we’re reaching more people than ever before.  Yet instead of brand loyalty, we’re fighting for every second of attention with more and more granular pieces of content with sensationalized headlines which turn out to be our biggest marketing weapon (what did “sex” and “headless chickens” have to do with last night’s city council meeting?).

All we want to do is make a difference.  Yet we can’t sleep at night because we have no idea what level of engagement we have with an audience we can’t quantify or weave together in an adequate enough storyline to monetize.

Sigh.

While I’m thrilled that Earl agrees with me about headlines being taglines, I must admit that I’m shocked that a piece about digital engagement didn’t have a single reference to social media.

Engagement is not a thing to be measured, it is a thing to be practiced (well yes, and then measured – but first practiced).

Earl, I hope I can help you the way you helped me all those years ago.   This is all you need to know:

Old marketing is archery, new marketing is ping-pong.

(Though I would very much like to, I can’t take credit for this simple yet brilliant observation.  I found it on SlideShare in a social media presentation by Jay Baer.)

As I wrote last month, a failure to embrace community will become a leading cause of death for newspapers.  The potential for meaningful audience engagement has never been greater than it is right now.  But I’m afraid that convincing newspaper execs that ping-pong is necessary is even more difficult than teaching them about branding.

Here’s hoping Earl buys-in and becomes a social media evangelizer.

Then we can all sleep better.

If Newspapers Cease to Be, There Will be Two Causes of Death -- Part 2

Cause of Death #2: Failure to focus on ROI

Read Cause of Death #1

Mainstream media organizations have spent insane amounts of time and effort trying to teach traditional sales reps to sell digital ads (give up, they will never do it well).  

Instead, that time and money should have been invested in discovering what drives Return on Investment (ROI) for advertisers and then building new products and services that deliver it.  Relationship selling is nice, but an advertiser cares much more about making the cash register ring than they do about who walks in the door to sell the ad.

Let’s face it, in the past, newspapers really didn’t have to worry about ROI.  They were the biggest game in town and sheer mass reach created results for advertisers.  There was no way to accurately measure ROI because there was no way to know how many people saw an ad.  Besides, there were very few other options.  So advertising rates could keep increasing and advertisers would keep paying because they believed that their businesses depended on it.

Unlike newspapers, advertisers (particularly retail advertisers) have always been very concerned about ROI.  Until recently, there simply weren’t tools to provide an accurate picture of what was working and what wasn’t.  But if legendary retailer John Wanamaker were alive today, he wouldn’t be worried about which 50% of his ad budget was wasted.  He’d know.  And everyday, he’d be finding better, more efficient and effective ways to spend his ad dollars. 

Hell, he might not even need media at all.

PFI Western Wear are online retailing pioneers (no pun intended) who have taken to creating their own high-value content including 30 to 50 second product videos and a weekly ½ hour show.  The results have been phenomenal.  More time on site, higher order values and a 50% higher conversion rates on products that have a video.  You can learn more about PFI and commercial video here.

Media execs need to get obsessed with what drives ROI.  They need to create teams of advertising, marketing and product development staffers to focus on nothing but building now ROI-based advertising products.

The solutions don’t have to be overly complex or even original. The simplest things can make all the difference. 

The Starlight Theatre in Kansas City (another PFI venture) discovered that marketing emails that include video (of live performances, interviews, behind the scenes) increased ticket sales by 593%.

Group-buying service Groupon is a relatively simple product that not only provides direct, measurable ROI, but guaranteed revenue too.  It’s also highly replicable.  I must admit, I’m somewhat puzzled by the newspaper companies which have opted to partner with Groupon rather than go it alone.  Most of them already have the advertiser relationships and are sitting on HUGE customer email databases.  It could be a highly profitable business opportunity.

Contextual environments provided by vertical sites are another way to drive ROI.  Vertical sites create much more engagement, more time on site and a more receptive audience for appropriate advertising messages.   

Behavioural advertising drives ROI.  A March 2010 study by the Network Advertising Initiative revealed that behaviourally targeted ads are more than twice as effective at converting click-throughs into purchases than run-of-network ads.  These ads also generate significantly higher CPM’s – on average 2.68 times higher.

Yodle and ReachLocal both offer live up-to-the minute reporting so advertisers can see exactly how effective their campaigns are right now.  No waiting with fingers crossed for the monthly click-through report.  They will even provide a custom phone number and record customer calls so advertisers can determine the quality of leads produced and their sales rep’s responsiveness.

That’s proving your value.

By the way, this message is not just for mainstream media companies.  Pure plays such as Washington’s TBD.com and Toronto’s OpenFile.ca need to focus just as much (probably even more) on ROI if they’re going to support themselves with online ads alone.  TBD is off to a great start (along with the Journal Register Company) by partnering with GrowthSpur.  (Full disclosure, I'm on GrowthSpur's advisory board).

In an age where ad blindness is causing click-through-rates to continue to fall through the floor, banners and big-boxes are surely to die.

Then what?

Without a dedicated focus on ROI, I predict that the end will be near.