So, in an interview with Time Inc. CEO, Ann Moore, about the struggle to grow online revenue, Ann sums up the whole print conundrum:
Here is the strategy. First, build the best of product. Differentiate it. Second, build the big audience and by that I mean you need partnerships with everyone. Then third, worry about monetizing it, but you got to have a big audience to make money on the web because the CPMs are low. I have said this publicly: The magazine models is a beautiful model because you got high margins; two revenue streams, the consumer pays and the advertiser pays; beautiful cash flow, you get the money up front. The average reader of Sports Illustrated delivers about $118 to the bottom line in Time Inc. The average very engaged user of SI.com can generate about $5 in advertising contribution. I need many more online viewers to equal one magazine reader. That is why you have to go for big volume and that is why you got to have partnerships. You do not do exclusives with anybody. Yes, we would love to partner with Scripps, but, yes, we love to partner with Microsoft and Google and Yahoo. I think we have partnerships with everybody. Our content has to be everywhere.
The good news for Ann is that despite the increase in competition online, the strength of her brands and the wide appeal of her content should allow her strategy to pay off.
The bad news for newspapers is that their content has much more narrow appeal. Their strength in the past has been tied to delivery, and it is not not so clear how replicate that in an online environment.
So what can papers do? Given their more limited audiences, stickiness is incredibly important. Dumping a list of headlines on the home page isn't going to cut it. THe home page is quickly getting disintermediated by rss readers and aggregators. Instead, news sites are going to have to get as interactive as they can.
Just a few thoughts -- Focus on:
Those are probably pretty commonly accepted at this point. The question of individual tactics is a little more controversial. Newspapers know they have to differentiate themselves from the big national news brands, and so they focus on local. That's good, but it's not the only point of differentiation. Perhaps there are ways to exploit their relative smallness. What can big organizations NOT do because of their size? That's probably a fruitful area worthy of exploration.
So what are my thoughts on this? Well, it's interesting to note the 118:5 ratio and realize that you need to know your own ratios if you hope to improve them. I work on the tech side of this problem, but I suspect the ratio is worse for newspapers. In order to push the needle on this, I would focus on the CUE strategy ( Community, Utility, Entertainment ) and start with a reworking of the home page.
The home page is an interesting page -- it's the most hit page of most sites, it sets the tone for the site much like the cover of a magazine, and it is losing traffic to search users, aggregators and rss users. It's the cheer leader for your content ( hmmm: save the home page, save the site? ).
Tracking the value of your audience is imporant. It gets you to ask questions like:
The last question there seems especially important. If you aren't making more per registered user, then what value does registration provide? Following CUE, building community probably means raising the registered to unregistered ratio. Building community is going to require providing actionable content or functionality and amusement. In other words, Utility and Entertainment.
So when is this rambling post going to get concrete? OK, OK. One interesting thing about advertising on the internet, the ads themselves have never been as useful as their print counterparts. You have to click through before you get any real information, before you get to any truely useful information, before they become anything more than a distraction from the content -- and clicking on them generally means abandoning the content you were previously consuming. Why is that?
Online ads are less useful because, in order to put a lot of them on a page in a clearly-not-the-content-providers-opinion-or-endorsement, they had to be pushed to the edges of the page. Because they took up more bandwidth, they had to be made small. And because they had to made small, they had to be annoying.
And now that everyone does it, there are national standards. And these standards allow the national chains to advertise nationally. And because everyone wants to get the easy ads for the national sellers, there are so many channels for their ads, that the ads just don't pay very well for the sites delivering the ads. So what to do?
How about supporting an extremely large format ad spot on your front page? A spot that rewards local registered users and can act as a secret weapon for local businesses by way of providing them exposure that the national guys just can't be bothered with? What am I talking about? It depends, but my first thought is to cut the front page down the middle vertically, and put content on the left, and a local version of w00t on the right.
That should give users a reason to hit the front page, a reason to register ( registered users get first-dibs, or additional discounts ) and businesses get first rate exposure that is going to cost them, but is going to pay off in a very meaningful way, and the site operator are going to get increased traffic to a page that it basically impossible to target otherwise.
The large area gives the ad the realestate needed to do the kind of things otherise impossible -- interactive automobile inventories for those who previously visited the auto classifieds/vertical, job listings for registered job seekers, ( personal ads for those looking to get their freak on? ), auctions, etc. The point is to make it plug into the same page that promotes your best content and make sure that when it is plugged in, whatever it is is immediately engaging -- but not distracting. It should come from your community, be useful to your users, and somehow engage them.