By: Heidi Kulicke
What if newspaper executives thought like Yahoo! and Google? Kirk MacDonald, executive vice president of The Denver Post, thinks it could make a big difference in the way a newspaper executes its digital offerings. “Think like a digital company would. Look very closely at what Yahoo!, MSN, and ReachLocal are doing and become followers,” he said.
By becoming a student of digital media, newspapers can understand where the revenue opportunities really are. MacDonald recommends that newspapers pay attention to search engine marketing and the different ad types and sizes that sell, becoming highly aware of any fast growth and finding a way to repeat the success.
As more and more newspaper publishers watch their former local clients advertise with big names such as Google and Facebook, a deep understanding of what works in the digital world and what doesn’t becomes critical. Many companies are available to help newspapers navigate the murky waters of online advertising. With some research, newspapers can implement these ideas in their online business model and see the dollar signs stack up.
Focusing on Content
For years, advertisers and publishers have pushed direct response advertising through banner ads, hoping to entice readers to click and purchase. But if the user is in read-only mode, click-and-buy strategies are useless, said David Sasson, chief operating officer of Outbrain. Instead, he recommends publishers consider the promotion of content first, focusing on what is most appealing to the reader. With so much content available online, it’s easy for stories to get lost in digital outer space. “We concentrate on how to surface interesting content so people are likely to engage in it,” Sasson said.
When people read content, they’re not in “buying mode,” so putting a flashy ad in front of them when they’re in reading mode is really difficult, Sasson said. “Our model with Outbrain has shifted to focus on readers and what is valuable to them.”
Outbrain’s model pushes content of predicted interest to the reader based on what previous readers who clicked on the same story clicked on next. There are two categories presented to the reader: check out other articles by the same publisher, or click on recommended articles of interest from around the Web and a new window pops up. The good part about redirection, however, is the host publisher receives compensation every time a reader clicks on a suggested story from an outside publisher.
Ultimately, it creates reader loyalty, as readers trust the site as a source of good, relevant content, and it benefits publishers by creating a way to monetize that good content, Sasson said.
Sasson believes ads should be useful and blend in without being distracting to the editorial content — the same way print magazine ads are aesthetically pleasing and complement the glossy pages. “The challenge for Web publishers is to make an ad useful to someone without distracting them from reading mode,” Sasson said. It should be more about brand building and less about the click-and-buy, he said. “It’s an industry shift that needs to happen, and it’s still evolving on the digital side.”
Social Search Advertising
A question-and-answer service falls into the broader niche known as “social search” and is a subject of much interest to researchers. Yahoo! Answers, Mahalo, Ask, About, and Google’s acquired Q&A-site Aardvark — founded by a team of Google engineers — all capitalize on social search. Google boosted its product offerings with the launch of Google Buzz, its real-time communication product. Facebook and Twitter tap into this as well.
When people use a search engine, they’re looking for information. Once found, it can directly or indirectly lead to a purchase. A Q&A site can offer an even more precise scenario for targeted advertising, because consumers readily divulge exactly what they’re looking for. On top of that, the people offering answers to the posed question can become additional targets.
Q&A is an asset to any big social media power. The key is to get people to provide quality contributions; if questions are nonsense, nobody will bother responding. Likewise, if no one’s providing quality answers, people won’t bother asking a question.
Kantar Media announced in April that it would create a new service, measuring paid search as an advertising category. Kantar will also track keywords purchased and the number of clicks keywords receive, validating search as a very real consideration in most ad buys.
Interclick, established in 2006, is a digital advertising network that generated $23 million in 2008 by buying groups of websites for its advertisers. Interclick posted $55 million in 2009 and grew 83 percent year-over-year in 2010 to $101 million, according to its website.
If newspapers found a way to tap into the Q&A search market, monetizing social search on their own sites, a valuable stream of revenue could be in store. However, search advertising alone may not be enough to tap into the immense advertiser demand for users.
There are a number of ways newspapers can deliver on advertisers’ demand for user data. They can run signup ads in areas of their site where users are logging in or have logged in with their contact information — such as the registration page, the comments pages, or the email-a-friend pages. They can also incorporate signup ads on user paths where users can log in with the Facebook Connect function.
In a signup ad, advertisers collect the user information of the consumer (such as name, email, etc.) within the ad itself. By creating mechanisms to help newspapers and advertisers connect with real people, both groups are able to significantly increase revenue. With signup ads, publishers can deliver on the demand for users in a way that is completely respectful of user experience and 100 percent opt-in, said Zephrin Lasker, CEO of Pontiflex.
In short, advertisers simply run signup ads on top sites and apps, and users sign up for emails from an advertiser with products of interest to them — without leaving the original site or app. Advertisers only pay when someone signs up, and in return, they grow their email and social media presence.
“Online marketers don’t want to buy abstract metrics like impressions and clicks. Instead, they want to acquire the contact information of interested consumers so that they can engage with them in a relevant way,” Lasker said.
Pontiflex is pioneering the online signup sphere and getting the attention of several big companies. Advertisers that have adopted signup advertising include Tommy Hilfiger, Kimberly-Clark, Heinz, Disney, Nickelodeon, BabyCenter, Adidas, Lily Pulitzer, Ouidad, Hotwire, Dockers, and more. Sites that use Pontiflex to connect with these advertisers and increase revenue include Monster.com, Evite.com, Cafepress.com, Brisk Mobile, Demand Media, and thousands of other mobile, content, and e-commerce sites.
With signup ads, marketers pay only for qualified and new-to-file signups. There’s no money spent on wasted clicks or impressions. Signup ads work alongside existing banner ads and search inventory. “There’s no need to redesign your site or displace current advertising inventory,” Lasker said. The bottom line is by using signup ads, companies can increase ROI — giving publishers the ability to tap into unused portions of their website for new areas of revenue.
“Groupon is going to destroy the newspaper coupon business. Unless you are willing to completely transform yourselves, I don’t have a lot to say to you today,” said Clark Gilbert, president and CEO of Salt Lake City-based Deseret News, speaking before more than 470 newspaper executives at the Multimedia Key Executives Conference in St. Petersburg, Fla. earlier this year.
Indeed, Groupon’s popularity is exploding, but that doesn’t necessarily mean the demise of newspaper advertising. If publishers can see daily deals as an opportunity, they can create new strategies to help them stay in the game.
Building a robust user base is key for newspapers starting their own local daily deals program. By segmenting their database by personal preferences or ZIP code, newspapers are able to offer relevant daily deals from local businesses via email marketing. Local businesses are able to connect with consumers through the trusted medium of a local newspaper, a media vehicle with years of credibility that a daily deals site would be stretched to match, Lasker said.
Southern California is a recent poster child when it comes to success with a daily deal program. At the end of April, the San Diego Union-Tribune experienced a record-setting deal for a summer camp offer that brought in $366,035, making April the highest-grossing month since the paper started its deal program a year ago.
The deal, which was offered by Mission Bay SportCenter, was a week of children’s summer camp for $95, originally $235. The deal was promoted through ads in the Union-Tribune’s print edition, a banner on its website, via email, Facebook, and Twitter, as well as radio.
More than 100 newspapers have daily deal programs, made popular by companies such as Groupon and LivingSocial, but the Union-Tribune has devoted significantly more resources to developing its program as part of its revenue diversification strategy. It is now the top-grossing such program nationwide, according to the newspaper’s website. The Daily Deal is part of the Union-Tribune’s efforts to broaden its revenue base beyond traditional display advertising and other sources, according to Tanya Mannes of the Union-Tribune.
The Orange County Register had similar success when it sold 5,457 deals and generated approximately $188,000 in revenue this March. OCRegister.com uses Analog Analytics’ white-label Bigger Better Deal program, promoting the deals via on-air radio promotions, in-house media, Facebook, and Twitter pages.
The record-setting Deal of the Day featured a Catalina Flyer catamaran deal that sold 5,457 round-trip tickets to nearby Catalina Island for $34 in 24 hours, with additional sales generated from its side deals.
Make It Local
Local advertising dollars represent a big opportunity for digital media publishers, but finding and connecting with premium local businesses is a challenge. Businesses need a way to connect with prospective consumers online, and ReachLocal has risen to the occasion. Local businesses are looking for ways to get their ads in front of local customers through top local sites — which is where newspapers come in.
ReachLocal was established in 2004, generated revenue of $147 million in 2008, grew to $203 million in 2009, and grew 44 percent more to $292 million in 2010 by targeting small- and medium-sized newspaper and yellow page advertisers with search (and display) campaigns, said MacDonald of The Denver Post.
ReachLocal Xchange is a platform where media partners can access ReachLocal’s marketplace of sponsored listings or create advertising offers that generate value for advertisers and more revenue for newspapers. Regardless of search, display, directory, or other valuable digital advertising inventory, ReachLocal Xchange grants access to local businesses with ease.
By creating a local-centric hub for advertisers and readers, newspapers can continue their reputation as the go-to place for information and services. Newspapers need to grow revenues to not only reduce print declines, but to remain competitive with the digital marketing companies now operating in local markets. MacDonald said he believes publishers have a unique opportunity to support these sales models by capturing audience data to bring more targeted media campaigns to client partners.
MacDonald lists several advantages newspapers could gain by adopting and supporting a local-first sales model. First, the opportunity to sell premium inventory on a newspaper’s own website that ad networks can’t buy (unless the newspaper allows them to); next, the ability to effectively bundle a range of digital products into a cohesive campaign that includes the “out of network inventory” beyond the newspaper’s dot-com reach (this could be display, email, mobile, and so on); and finally, data from user behavior that builds a foundation for more effective digital ad buys and higher advertiser retention levels.
Listen to Teacher
Like every good student, newspapers must look at their success stories as well as failures. Learn from mistakes and vow to not repeat them. Don’t be afraid to try something new. It could pay off in a big way. Now more than ever before, innovation and originality is being praised and revered.
Whichever route is taken to tap into new online revenue outlets, it’s important to remain transparent. By promoting transparency, newspapers and advertisers can protect brand integrity, acquire interested customers, optimize ad campaigns, and follow up in a relevant way through social media.
Readers may often get left out of online advertising discussions because they aren’t the ones paying the bills directly, but they do pay indirectly. “We always think of what will appeal to the end user, so we trust our human intuition and test it through real data. When publishers pay attention to the long-term effects of pleasing the readers with relevancy and gear product development to that end, they’ll be more successful,” said Sasson of Outbrain. Keep reader satisfaction in mind, remembering it truly does affect the bottom line.