Shoptalk: Does the News Business Need Bezos’ Midas Touch to Save It?

By: Dr. John M. Lervik

Few can dispute that Amazon’s Jeff Bezos has the Midas touch, but his purchase of The Washington Post last year certainly raised some eyebrows. Is this web entrepreneur the savior who can breathe new life into a newspaper industry that’s been gasping for years? Or can publishers simply take a page from his Amazon playbook and make Bezos-like moves on their own? I say it’s the latter.                

Bezos was well ahead of the curve in understanding the business potential of leveraging massive amounts of raw customer use data (now commonly known as Big Data). He mined the data to better understand and accurately target Amazon customers, and, by knowing them inside and out, made Amazon the vanguard of e-commerce.                

Using predictive models, Bezos and Co. take the data “straw” they collect from the vast and active Amazon user base, and spin it into gold. The system collects and analyzes data to predict consumer tastes and behaviors, enabling well-targeted recommendations based on user history and preferences. This personalized relationship fosters trust, loyalty, and the perception that Amazon knows what a customer wants and can recommend it when—or even before—s/he needs it.                

Bezos’ purchase of traditional media stalwart, The Washington Post, set the media and non-media world abuzz with theories about how he might save—or hammer the final nail into the coffin of—modern newspaper publishing.                

It’s no secret that the newspaper industry has stagnated; even a veritable publisher like The Washington Post has lost 44 percent of its revenue since 2007. The industry’s decline began as it failed to innovate fast enough to keep pace with online media outlets. In fact, the Newspaper Association of America reported there have been 26 consecutive quarters of revenue losses for the newspaper ad industry since 2006. Newspaper ad revenue in 2012 was the same as in 1950 when adjusted for inflation. Revenue projections show the decline will continue well into 2017, with or without paywalls, unless something dramatic happens.                

Bezos’s entry into the publishing sphere may be that dramatic something; it is both encouraging and frightening for big publishers who may gain in Bezos both inspiration and a fierce competitor. Arguably, both are needed in an industry that has seen Google overtake the entire magazine and newspaper industry in revenue earned—almost all from the sheer force of its advertising might. How? Google used data, and applications that leverage the data, to engage and monetize the consumer.

While Bezos says he is not involved in the day-to-day operations of the newspaper, there is no doubt he embraces principles that have made Amazon such a sensation: harnessing Big Data and using it to target newspaper customers with relevant ads and content.                

The good news is that you, as publishers, can do this, too, by drawing on your vast swaths of largely untapped data about the people who visit your site(s) and engage with your content. The technology and know-how is available to let you take control of your own data and direct the insights into targeted communications, advertising, and promotions to increase engagement around your content, as well as your click-through rates and subscription numbers.                

Publishers, fight back! Tamedia, Switzerland’s largest news publisher, wanted control of its own data rather than feeding it to Google. Using analytics and advertising solutions from my company, Cxense, Tamedia gathers deeper insight into its audience and provides more precise ad targeting. The result? A 56 percent increase in advertising yield in just a few months.                

By giving advertisers the opportunity to maximize their spending by reaching the right person at the right time, publishers can increase their ad revenue and charge premium rates. When visitors see content that truly interests them, page views increase, visitors stay on the site longer, and publishers start building the same kind of trust and relationship Amazon has created with its customers.                

Japan's Yomiuri Shimbun, the world’s largest newspaper by circulation, also used audience insight to increase its page views tremendously. By analyzing data and segmenting the audience accordingly, newspapers can also target the readers who are most likely to subscribe with timely, subscription-related messaging, which increases the paid subscription base.

Clearly, digital natives like Amazon and Google have already made the Big Data jump. Bezos may be leading the way, knowing that the only future for news companies is online. With the data you already have, you are ahead of the game. It’s time you start using your own data to learn about your audiences.  

Dr. John M. Lervik is founder of Cxense (cxense.com) a company that helps publishers succeed in the digital world. Cxense uses audience data and advanced Big Data analytics to create hyper-relevant content recommendations, targeted advertising and predictive search that help increase digital revenue for publishers and provide users with a better experience. Contact him at john.lervik@cxense.com.