Archives for June 2011

Newspaper comeback? It’s all about the money

After years of complaining about disruptive forces hammering content, newspapers have finally begun focusing on the real problem, according to local online revenue expert Gordon Borrell. In a wide-ranging email interview about the topic this week, Borrell told me that attention in newspaper front offices has shifted from news content to protecting the one kind of content they have that others don’t. “Newspapers,” he said, “contain the only daily compendium of the Big Sales in a local market, and it’s that franchise that they’re worried about losing — not the local news franchise.”

“They’ve pretty much stopped hand-wringing,” he added, “over companies like Patch infringing on the low-value ‘community news’ turf and have drawn sharp focus on protecting that wildly valuable advertising franchise.”

It’s a good thing, because while the debate has raged about such irrelevant things as whether bloggers are journalists, mixing facts with opinion, hyperlocal news, and personal branding, pureplay Web companies have been decimating the business side of things. Look, the Web didn’t hurt newspapers by taking away their readers; they did so by taking away their money, and I’m happy to see a shift in the numbers this year.

For those of you who still believe it has anything to do with content, here’s an image I put together using data provided by Borrell. Pureplays have been taking local dollars out of the system since the earliest days of the Web, but newspapers were clearly the king. Now look what has happened:

market share by medium, 2002-2010

Borrell points to the slight drop in pureplay share and the uptick in newspaper share in 2010 as a sign that newspapers are really beginning to get it.

The big share losses for newspapers were the result of them being lulled into believing they didn’t need to hire extra staffing and that it was all about putting news online and selling ad adjacencies around it. It’s a niche medium where the other half of newspapers’ content — advertising — should be driving the boat. I think they’re well aware of that now, and I think you’re going to see more share growth as a result.

newspaper circulation and onlineThe drop in market share for newspapers has been precipitous during the past five years, and while there are those who would argue that declining circulation is the problem, the reality is that people consuming newspaper content online come close to making up the difference. Moreover, a direct correlation between newspaper circulation and revenue is assumptive, at best, for the only thing we really know for sure is that money has shifted dramatically within the local sphere. Given the realities of companies like Groupon, Facebook, Google and a myriad of others sucking cash from the marketplace, can we really assume that if newspaper circulations were where they used to be that advertising still wouldn’t have moved? I don’t think so.

This is why I’ve been harping so long on the truth that our “business” is actually advertising, not news content. Surrendering the idea that ads adjacent to scarce content is dying is perhaps the hardest thing for newspaper executives to accept, but that’s the reality. Money is money, and the people formerly known as the advertisers are finding highly efficient and effective online methods to spend theirs.

But all is not lost, and Borrell believes the evidence shows a newspaper comeback, of sorts, and he’s optimistic. “Instead of trying to managing everything under one umbrella,” he told me “they’re actually plowing additional resources into the Internet.”

“Their editors or print sales people are less in control,” he added, “allowing their Internet staffs to move more independently and aggressively.”

And, he notes that we shouldn’t forget to examine history, because newspapers can’t be easily written off.

When you look back on any new electronic media — like radio in the 1920s, TV in the 1950s and cable in the 1960s and ‘70s — you see that newspaper companies were among the first to seize the opportunities and make them their own. That’s why you have call letters like WCPO (Cincinnati Post), WBEN (Buffalo Evening Newspaper), and KMST (Minneapolis Star-Tribune). They have a lot at stake, and they leverage themselves into any new business that looks like a threat to their core business. I think you’re going to see newspapers — and perhaps TV stations — basically “own” the local Internet. They have local promotional capabilities to brand a new product, and the feet on the street to develop the content and sell advertising.

That’s a bold statement, and I certainly don’t disagree. The thing that’s different about the Local Web, however, is that it’s ability to generate revenue is outside the mass media box that newspaper companies know so well, and which is also the core business model of radio, television and cable. It’s taken awhile for papers to figure that out, but I agree with Gordon that a shift in the local online market share is at hand.

The Internet is a three-way communications medium. I don’t think anybody has figured out the killer app in terms of enabling commerce, but I’m betting on it happening first at the local level. Will it come from newspapers? I’m not sure, but if it does, it’ll only happen through independent thinkers, those who can separate the making of money from the creation of content.

Advancing the second-day lead

Advancing the 2nd day leadThe rapid growth of real-time news and information has turned the news world on its ear. We’ve been talking about what we call “Continuous News” for almost five years now, and many of our clients have embraced the concept. I don’t need to go into a big review, but the essential nut is this: the Web allows us to make the news-gathering process public, so that our followers can participate in it throughout the day. Twitter is an ideal tool for this, but so is Facebook, Tumblr and many other applications. We believe it should be the central focus of any media organization during the prime time for online news reading, Monday through Friday, 8 a.m. to 5 p.m.

As that strengthens, it becomes clear that the challenge for “finished product” news BEGINS with the acceptance that the audience, whether readers or listeners or viewers, is already aware of the news-of-the-day. To publish “the news” as it has always been done, therefore, insults the intelligence of a potential audience for that news, and again, it doesn’t matter whether this is in print or broadcast. A simple shift in our language alone would do wonders at enabling the trust we have lost by, among many other things, pretending that there’s a market for information people already have.

I still am convinced there’s a market for finished product news. The morning paper still has appeal for many reasons, although none of them are associated with ink on paper. It’s the summary of news and its associated serendipity that has appeal. At AR&D, we are absolutely convinced the evening newscast has considerable value, although we think the time period needs reinventing. Passive participation in “the news” may not be for everybody, but it certainly is for a large enough group for it to be profitable. The problem is we won’t mean a thing to that potential audience unless we do something other than what we did that drove them away.

The key to unlocking finished product news is recognizing that its audience already knows the basic facts of the news of the day. That shifts the entire enterprise forward and advances the second-day lead to the forefront. The fire itself is the first-day lead. Reaction to it is often the second-day lead. That story moves to the front in a universe where the audience already knows the who, what, why, where and when. Tom Snyder used to say that it was the “how come” that needs exploration, and that, too, is a second-day lead.

The second-day lead is often where the real practice of journalism begins. Anybody can stand in front of a fire and describe what’s going on, and we already know that this is increasingly being done by amateurs with a curiosity and, by chance, happen to be on-the-scene before anybody else. Word spreads fast, and before you know it, the Web knows it, and so it goes. The second-day lead requires thought, and so the job of the journalist may be harder in this world, but we can adapt. Frankly, it’s a challenge that’s worth exploring, for the benefits are obvious.

The entire cycle of news has accelerated. Whereas our production cycles used to determine everything about us, including our invention and distribution of “the article” — see the work of Jeff Jarvis — today’s news is dictated by the events and coverage itself. We’re at the dawn of the Age of Participation, and that includes the news gathering process. Real-time is where it’s at, and while we need to be the curators of record in the new world, we must also be the analyzers and advancers of the news as well. That is best done via finished products, because real-time can (and will) lead to errors. Oh, the network can correct them, but the market for the vetted advancing of stories will always be with us.

Even if real-time news is taken over by others, media companies can still make significant contributions to the industry by owning the second-day lead and, thereby, advancing the issues and stories of the day. This is no small assignment, and it should give everybody in the business — from journalism professor to the experienced practicing veteran — something to shoot for downstream.

Sharing Analytics

Sharing analytics accessPrecision in advertising has always been seen as the central benefit of online advertising. Whereas ratings and circulations can be (and are) manipulated, that isn’t possible with online metrics that don’t lie — assuming everybody uses the same set. Well, they can be deceptive sometimes, but the truth is that the advertising industry as a whole is drifting in the direction of dead-on accuracy when it comes to spending money.

On the TV side, set-top boxes are capable of providing real-time data about usage, and companies selling such have an advantage over those who cling to Nielsen. We live in a data world, and he who owns the data owns the world. Every bit of data is useful and has value. Mix that with the ever-approaching blended world of broadcast, cable and Web, and the possibilities for incredibly precise data expands exponentially. The hope is, of course, that people won’t skip ads they view as relevant. We’ll see.

Online technology today allows us to market directly to specific browsers, and those who’ve yet to begin playing in this arena are falling farther and farther behind. There’s no reason, for example, that a man and a woman have to see the same ads unless the advertiser is pitching to both. Behavioral cookies, registrations, IP addresses; they all form a neural net of specificity that not only makes marketing more efficient, but it also puts more relevant ads in front of people. Oh some of the examples out there today are pretty silly, but we’re learning and getting better at it.

In an online environment of 50% men and 50% women, if an advertiser had $1,000 to spend to get a message in front of the women, he could buy the whole environment and hope they all saw it. If, however, the owner of the environment had the ability to deliver that message to just the women — by individual browsers — the advertiser might still be willing to spend $1,000, but his guarantee is set. The ads are only being served to women! This is more efficient than serving ads based on so-called “women’s content,” like the old women’s sections of the newspaper.

The problem with analytics, however, is that media companies especially play them close to the vest. When a client wishes to see data, the account exec prints off a page of their proprietary counting system or directs the client to a protected Web page where the data is stored. There is nothing wrong with this, but there will always be the necessity of trust when this information is shared, because, well, it’s proprietary. Trust carries with it the possibility of mistrust, because we’re all human, and a big part of the sales game has always been the “tilting” of data to make a sale look better than it really is.

Enter Google Analytics (GA), the overwhelming favorite of the masses. Google is in the business of providing free tools to The Great Horizontal, and GA is perhaps its greatest tool. Powerful, accurate and reliable, GA will provide deep analysis for those who wish to explore their own websites, and it’s plenty popular. We need to note at this point, too, that the real growth in money being spent online by local merchants is on their own efforts to become a form of media company themselves. GA is their friend.

We have been recommending for years that media companies switch to GA, because we would then be providing familiarity to the clients we serve. Google’s definition of “unique visitor” would be the same for everybody. The time has come to take that one step further and share our analytics completely with those we’re asking to spend money with us. That’s right. Anybody who advertises with us should have unfettered access to our data.

Our automotive client in North Alabama, the Damson Automotive Group, is the largest auto dealer in the state and THE top advertiser in the Huntsville market. Ben Boles runs their marketing, and his work has been featured here often. Boles “forces” the sharing of Google Analytics with the media companies in the market, because they won’t get any money from him unless they do. I’m not talking about a page here and there; I’m talking about online access to their Google Analytics where he controls the looking.

Boles, a former TV station Web sales executive, feels strongly that sharing GA is an overwhelming win-win, and that media companies need reports from the car stores just as badly as the dealerships need theirs.

Ben BolesI quickly agree to share our analytical data as long as you let me equally invade your privacy. I’ll initiate the swap. I promise you simple glances will yield usable information that will make everyone better.

For example, I represent the largest advertiser at my former station. I knew everything about their analytics, because I installed them. I knew what ‘worked’ on the TV station site and what did not, as you would expect a good number cruncher to know. Now working for the 5 mega dealerships, I take that knowledge and apply that to our purchases TODAY.

Presuming we all share information, we actually get the complete picture. I know what is driving traffic, clicks and engagement on the TV station’s site. And they know from me how productive their users are on the dealership’s key rooftop website. The end result is no guessing when it comes to rates and expectations. And isn’t that 90% of the sales battle?

Because of our collaboration, and because we both rely on Google Analytics, the numbers match and there are no make goods. Because we are such a large advertiser, our presence lends credibility to their site as a viable advertising medium. Because I know so much about their users, they are crucial to my agenda.

The biggest benefit to sharing analytical data, though, is as true as one of the oldest sayings in business. Two heads are better than one. Presuming someone of like mind is the vendor-half of this analytical equation, it’s much easier to identify trends. Much easier to share best practices. Much easier to… well… analyze the analytics.

Sharing is easy and is nothing to be afraid of. The numbers are what they are. So few people actually look at them with the correct reference perspective that the savvy advertiser takes way more away from meetings like this than one would expect.

The idea of sharing isn’t something easily accepted by people who are used to playing cards close to the vest. In fact, it’s downright counterintuitive, and perhaps even insane. Welcome to the networked world, where the values of speed, transparency and authenticity matter most, and business manipulation ‐ the “managing” of one’s business — takes a back seat to the attraction of simply making a better mousetrap or outserving the competition.

The Great Horizontal challenges all of our history and experience-driven expertise, and the only thing worse than ignoring it is to not to be honest with ourselves about it. The ability of marketers to “watch” as their efforts result in moving the rock for their clients is so satisfing that it probably includes lighting up afterwards. But such efforts are usually manipulative — marketing “warfare” against people who didn’t use to have a say in being so conquered. That’s all transmogrifying into a strange and different universe with rules that seem foreign and out-of-place.

“We sell cars,” says Boles. “We get a thousand users per day. TV stations get tens of thousands per day. Both data sets are rich. Both communicate to the same geographic area.

“Sharing analytical data,” he concludes, “is the key that unlocks the kingdom.

Desperation? Aol moves to consolidate

aol logoTechCrunch is reporting that its parent company, Aol, is consolidating brands, which is contrary to its previously stated “anti-portal” strategy. This smells to me, but let’s look at what TechCrunch is reporting. Aol is moving from 53 content brands (the company originally wanted over 100) to 20 “power brands.” Here’s the nut of the story:

“More and more stuff is moving towards well-known brands,” says (CEO Tim) Armstrong. “Unless human nature is going to totally change, the Internet is going to end up in a branded environment.”

The Huffington Post will be absorbing many of the former stand-alone AOL editorial sites, and in the process expanding from 28 sections to 36. Armstrong believes that simplifying AOL’s content portfolio will make it easier to sell ads and attract readers. Instead of “300 different things that sales people could sell, now they can focus their sales efforts against key categories.” (emphasis mine)

A couple of things to point out. “More and more stuff” is hardly empirical justification of anything, much less such a big strategic shift. Tim Armstrong is a man with a big gun at his head, and it’s name is “immediate revenue needs.” So he needs money, and he needs it now. What he really needs is easy money, and that’s what’s dictating this strategic move. I don’t think it’s smart, but then I don’t need lots of money quickly.

The admission that consolidation will make things “easier” for sales people is absolutely true. Madison Avenue likes things simple, because Madison Avenue is interested in, well, Madison Avenue, not necessarily in the people footing the bill. Efficiencies gained in doing deals puts more money in the pockets of the agencies but have nothing to do with actual commerce. An agency representing, say, Nissan wanting to “buy” inventory in Baton Rouge will usually grab the top two media properties in terms of reach, so size matters. It’s the way things generally work, and Armstrong is just helping that process. Madison Avenue is the world of commodified ads, inventory and mathematics. Innovation tosses a sizable monkey wrench in the mix, and that will ultimately be its doom.

The problem for everybody is that advertising is changing. Old formulas for mass marketing don’t work online, because, among other things, not all inventory is created equal. Then there’s the no-so-tiny issue of banner blindness, something Madison Avenue can ill afford to even consider. Aol’s anti-portal strategy was smart, because it recognized targeting as king. It’s many brands provided unique data to offer highly-targeted advertising, but selling that is more difficult than selling simple reach to people who don’t care about anything other than making their numbers and doing so efficiently.

As long as that’s the central mission of Madison Avenue, moves like this will be rewarded. I believe, however, that this is only temporary, and that smart media players need to be investing in other forms of commerce-enabling advertising concepts.

The whole mass media marketing machine is a house of cards that will one day collapse under the weight of its own self-interest.




A lawyer in a boxRevolutions often begin as the unintended consequence of some action on the part of the ruling elite. I need you to put your imagination caps on this morning, because I want to share something that I see, and it’s directly tied to a burgeoning unintended consequence.

GigaOm’s brilliant observer/writer Mathew Ingram published a piece yesterday about a copyright infringement settlement that is incredibly troubling, one that points out a significant cultural weakness of the legal system. Go read his piece, because it needs reading by all. In the case, wealthy and famous photographer Jay Maisel sued blogger Andy Baio over his (clearly) fair use of a photo of jazz great Miles Davis for a project of Baio’s that benefited Davis’s friends who performed on the original works. Baio cleared all rights, altered the cover picture, and made the project available. He failed to get Maisel’s clearance, because the work was “transformative” under fair use provisions of copyright law. Maisel disagreed.

But the real story is that Baio and his lawyers settled — for $32,500 — because it was cheaper than taking it to court. 32-grand is a LOT of money to a guy like Baio, but it’s pocket change for a man who lives in a 72-room New York landmark valued at $35 million. We all know this is wrong. We all know Baio would have won the case, but the economic reality is that it was cheaper to fork over extortion money than to challenge the issue in the courts.

Enter technology.

Many years ago, as I sat alone in my little apartment in Nashville, I had revelation after revelation about how technology could and would impact the future, both short term and long term. I wrote the stuff about media, because it’s an industry I knew, but my biggest interest was culture. I put together a lecture that I’ve given at many colleges and universities, and I will one day share here with you. The very essence of the lecture is an explanation of why the West is ripe for a revolution in the wake of the second Gutenberg moment, the introduction of a “third way” in communications. We’ve had one-to-one and one-to-many. Now, we have many to many. This is entirely new, and it’s what Jay Rosen calls “The Great Horizontal.” It forms the essence of postmodernism, “I participate, therefore I understand.”

Western culture is entirely self-centered, which is where everyone of its institutions has drifted. Each is based on the promise of success and happiness, a bargain for permitting their selfishness. The institution of “Finance,” for example, says, “You need cash to bring you what you need to be successful and happy, and you need us to give it to you.” That is a lie.

No institution ranks higher in this than the legal profession, and it’s ripe for disruption by the culture it’s supposed to serve. That it costs more than $32,000 to defend yourself against a frivolous lawsuit is absurd, but it is the system that allows it.

How will we fix this?

We will somehow build a piece of software that contains all legal knowledge, can crank out responses to highly complex situations, can create forms required for the courts, and will enable people to defend themselves against bullshit like this. It’ll be a lawyer-in-a-box, perhaps a robot, of sorts. Granted, it may be years before we see this, but we WILL see it, just as we’ll see a similar doctor-in-a-box, which will dramatically reduce health care costs. The legal profession will fight this with everything they have. After all, our lawmakers are themselves members of this institution. But the people will prevail, because the second Gutenberg moment enables government of, by and for the people even more so than the first.

You don’t think this is coming? Why do you think the American Medical Association formed a new lobbying group in the mid 90s to insure that medical information on the Web would be kept under its purview? If you think it’s not about money, think again.

Any institution whose basis for living is based on protected knowledge is doomed. The cultural disruption of Gutenberg (and John WyCliffe) was in bringing the knowledge that governed the governors to everyday people, and that’s exactly the threat today. As a 15th-Century priest said, “The jewel of the elites is in the hands of the laity.”

Here’s the thing. There is zero incentive for reformation from any institution, but then, the media didn’t disrupt itself either. That was done by the Great Horizontal and funded by upstarts with a vision. The media has fought it tooth and nail, because its fatted calf is getting slain. Want more money? Shove another commercial in front of people, audience be damned! Well, we aren’t so damned anymore, and we’re taking over a culture that badly needs reforming. Look around.

When Gutenberg had the audacity to print a Bible, it gored the fatted calf of the Roman Catholic Church, who immediately demanded a right to license such activity. After all, THEY were the keepers of the good book (and ruled as a result of it). A few years ago, we had journalism school deans ban together to request licensing for journalism. It is eerily similar, isn’t it?

I don’t know when all this will happen, but I promise that there are more cases like Baio’s out there. As word of these spreads, and smart minds grasp that there’s money to made, we will respond.

We are the people. We will be heard.

Borrell: Stop selling “against another channel”

Gordon Borrell“If change spawns opportunity,” Gordon Borrell told me by email, “then the automotive category is very pregnant.” Indeed, things are changing in the automotive world, and media companies everywhere need to take notice. As I told you yesterday, Borrell Associates has released a new study of the industry, and it acutely addresses the truth about what’s happening with local media companies’ biggest advertisers.

“The whole marketplace has changed,” said Borrell, “to the point at which they’ve been manipulated into thinking they need to spend $50,000 to $100,000 on keyword advertising and — bingo — hordes of buyers will walk in the door.”

“Dealers need to look,” he continued, “at an appropriate mix of advertising as they look across the car-buying funnel, and I think every medium — from TV to newspapers to the Internet — plays a role.”

But, he adds, local media companies are going to have to think differently.

If media companies can help them determine that mix instead of vehemently trying to sell against another channel (as they have for so many years), they’ll be in a better position to sell those offline+online packages that work so well.

This concept (selling against the other media) is what has gotten us in a bad spot with all advertisers. That industry has gone in a different direction, while we’ve been mired in the past. It is simple — yet profound — advice.

Borrell also advises that the mobile space looks particularly interesting, because dealers have such a high interest in it. “That’s where I think local media companies might find some big opportunities,” he told me. I would add here that only selling against the other channels via mobile isn’t going to get us anywhere either.

This is one study that everybody should read. The automotive industry hits our bottom lines more than any other category, and we need to understand where it’s headed.

(Click here for the free Executive Summary)