Category Archives: advertising

08.21.13
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Clark Gilbert’s five business model ideas that are changing the news industry

After writing about how print-digital integration was absolutely the wrong response to digital disruption, I’ve been going back to more of the ideas of Clay Christensen and Clark Gilbert on how the news industry should respond to disruption. I would strongly encourage you to take an hour and a half of your time and watch Clark Gilbert speak at Harvard University’s Nieman Foundation. I had read his ideas, but he’s even more forceful and compelling in person (or via video).

http://vimeo.com/65150395

Clark Gilbert, Deseret News – April 25, 2013 from Nieman Foundation on Vimeo.

He quotes the president of an online newspaper division:

Overall, the newspaper industry’s involvement in the internet has been one where it had a lot to lose and it’s been trying not to lose it, as opposed to starting from scratch and having a lot to win.

Gilbert has created a disruptive division that is all about winning digital opportunities. About 47 minutes in, he lays out five business model ideas that are changing the news industry and are helping his digital division grow at 40 percent year-over-year.

  1. Digital revenue should a third of your business in 2012 and half of your business by 2015
  2. A digital buyer needs a digital seller
  3. New channels are the difference between Transformation A and Transformation B
  4. Digital marketplaces (Not Digital Publishing) will win
  5. Dual transformation requires new organisation

And he says that number 2 is non-negotiable, and watch the video at 51 minutes to see why Gilbert is even more adamant about that now. Your jaw will drop. Seriously, this is worth your time.

They have four digital advertising channels:

  1. Companies that want a legacy-digital bundle
  2. Large local digital only
  3. Small local digital only
  4. National advertisers that do a significant amount of targeting and re-targeting.

He said that he recently noticed that the legacy-digital bundle sales had plateaued, but one of his other channels (he didn’t say which one) is growing by 70 percent year-over-year, which is just one reason why they have 40 percent year-over-year digital revenue growth.

Number four will interest everyone who is in local media. He says that digital marketplaces are winning local.

Gilbert makes an even more forceful case than he did in Austin where I saw him in April that integration, especially on the business side, was absolutely the wrong idea. When the Washington Post integrated its print and digital, digital revenue growth stopped. When the Dallas Morning news integrated print and digital, digital revenue growth stopped, Gilbert said.

Contrast that with Gilbert’s company. In 2009, legacy revenue accounted for 90 percent of the business and digital came only from 10 percent. In 2012, he said that legacy revenue channels would account for only 33 percent of overall revenue. Digital revenue is now bigger than revenue at their TV station and their radio station, and it will soon pass print.

I’ll just finish with this comment from Gilbert:

News is not a business model. It’s a public good.

However, you can build a business around the brand that you create with this public good.

Fellow journalists, you should be fighting for this kind of thinking because Gilbert plows back a third of all the profit from the digital division to fund the newsroom.

09.09.12
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Digital advertising does pay, just not for newspapers, yet

Last week, WAN-IFRA said what many of us in digital journalism have known for a while, that we’re losing the battle for attention. They said that digital news audiences lack the same “intensity” of print audiences. Put simply, digital audiences are less loyal and spend less time with each digital news source. WAN-IFRA CEO Christoph Riess has put the problem this way:

We are not losing readers, we are losing readership. Our industry challenge is engagement. Because someone is a subscriber does not make him a loyalist.

Several people in the industry have been trying to raise the alarm for years now. Two years ago, Ken Doctor pointed out that audiences were spending 7 hours a month on Facebook versus 20 minutes a month on the New York Times or 8-12 minutes on the average US newspaper site. US digital journalism pioneer Steve Yelvington has been talking about this for years, speaking about the problem with audience frequency. As Steve said earlier this year:

Forget all the newspaper industry puffery about how we’re reaching more people than ever. Frequency and time spent are the important metrics.

And the reality is dismal.

From a business standpoint, this has meant that while digital advertising spend has increased dramatically, news organisations’ share of that digital revenue still remains piteously low. As WAN-IFRA noted:

Overall digital advertising market rose from US$ 42 billion to US$76 billion from 2007 to 2011. Only 2.2 per cent of total newspaper advertising revenues in 2011 came from digital platforms.

What you will continue to hear over and over and over, from the likes of former Guardian editor Peter Preston, is that print still pays the bills. They will tell you that you can’t make money online. Preston cherry picks figures from the recent Journal Register bankruptcy filing in the US, pointing to that fact that print revenue is down 19% but still represents 50% of the group’s revenue. However, he conveniently leaves out that digital revenue at the news group is up 235% from 2009 to 2011. Yes, they probably started from a low base, but it is pretty impressive growth. Many news groups in the US have seen their digital revenue growth slow or stall this year, and at least the Journal Register team can point to 32.5% growth this year alone.   

The reality is that you can make money online but that newspapers are not competing effectively for digital advertising. As WAN-IFRA noted, “Search advertising accounts for 58 per cent of all digital advertising and 13 per cent of all advertising expenditure”. US news analyst Alan Mutter noted in April:

The share of the U.S. digital advertising market garnered by newspapers shrank to the lowest level in history in 2011, according to newly published data.

With the growth of digital formats like highly targeted search, mobile and social advertising vastly outpacing the ability of publishers to develop competitive new products, newspapers sold only 10.3% of the $31.7 billion in digital advertising purchased in 2011.

When the Newspaper Association of America first started counting online sales in 2003, newspaper websites carried 16.7% of all the digital advertising in the United States.

There is money to be made online, but newspapers aren’t the ones making it. That’s the problem and, unless newspapers focus on creating not just large audiences but loyal audiences, that problem won’t be solved. Newspapers also need to build up knowledge about those audiences to better serve them journalistically and to provide better targeted advertising.  Those are the challenges we need to meet, and we need to ignore the voices in journalism that say we can’t make money with digital. They have ruled the debate for far too long and have delayed us from meeting the real challenges of digital. 

10.29.10
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News business models: ‘No silver bullets, just shrapnel’

I’m at the Online News Association conference in Washington. The first panel was of editors from a new regional news website in Washington,TBD.com. Jim Brady, general manager for TBD.com, had an excellent response to the question of how the site would make money. He said:

There are no silver bullets, just shrapnel.

What he meant by that was that they were pursuing multiple revenue models to build a sustainable business. They have launched with a traditional ad-supported model with a few twists including selling advertising through a network of local blogs. In the future, they are considering a range of products and services including mobile ads and a mobile apps development service.

07.30.10
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KPMG: UK readers far less willing to pay for digital content

Normally, I’d just add this link to Delicious, but the data is worth highlighting. KPMG has found that 81% of UK “would go elsewhere for content if a previously free site we use frequently began charging”. Only 19% would be willing to pay in the UK, while globally (the same research looked at consumer behaviour in a range of countries) 43% of consumers are willing to pay for digital content.

However, there are possibilities for publishers to pay for content that “almost three quarters of  UK consumers are willing to receive online ads in exchange lower content costs”. They are also more willing to have data collected if it would result in lower content costs. “48 percent of UK consumers would be willing to accept profile tracking, up from 35 percent in the 2008 survey.” Publishers and marketers need to take care though as 90% of consumers also expressed concern about their privacy and security online. That is high, although a slight reduction in the figures from 18 months ago.

A key finding from the report shows how consumers would like to balance privacy and targeted advertising. Tudor Aw, Head of Technology, KPMG Europe LLP, said:

(UK consumers) do see the value in allowing service providers to have access to the information necessary for more tailored services, but they are only prepared to do this if the risks are controlled and, crucially, if there is some value in it for them.

The research is well worth a look, especially for those whose revenue strategies are tied to advertising, but also for any business looking to deliver better targeted services to their customers through better use of data.

06.23.10
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The Click-Through That May Be Hurting Your Brand – Advertising Age – DigitalNext

Kevin: An interesting article on Advertising Age about click through rates. One thing that's important beyond the narrow focus on this article is that sometimes the easiest to measure statistics aren't necessarily the most important statistics. Indeed, it might say something just about that ease of measurement rather than its relevance. The take-away from this research: "While click-through rates showed a strong positive correlation with interaction rates and brand favorability, only a minor positive correlation could be demonstrated between CTR and purchase intent. "