Failure of ads leading to sponsored articles

Sponsors Now Pay for Online Articles, Not Just Ads:

Advertisers and publishers have many names for this new form of marketing — including branded content, sponsored content and native advertising. Regardless of the name, the strategy of having advertisers sponsor or create content that looks like traditional editorial content has become increasingly common as publishers try to create more sources of revenue.

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Publishers are largely being driven to support the use of sponsored content because of fewer people clicking on banner ads, the abundance of advertising space and other factors make it more difficult to make money from traditional online advertising. As advertising technology becomes more sophisticated, ads can be bought and sold at cheaper rates across the Web. Often they are ignored by the very customers advertisers are trying to reach.

It’s a pretty great deal for both advertisers and publishers. By having their advertisements appear to be regular content, people are willing to share the articles with their social networks. As opposed to banner ads, which people have learned to automatically ignore, this content actually has people telling their friends that they should give it a look:

An article on Google Glass technology was shared almost 2,000 times on social media, indicating that readers may not have cared, or known, if it was journalism or sponsored content, although the series was identified as such.

For publishers, it means less of a reliance on banner ads while still being able to offer content for free (though Forbes and the Washington Post are using both sponsored content and paywalls).

There hasn’t been any major backlash from readers against this rise in sponsored content, so perhaps they don’t care as long as the posts aren’t outright ads.

The big media monopoly on scoops is over

Big News Forges Its Own Path:

Traditional news organizations used to be free to break news — or not — in their backyard and on their chosen beats. Now they have to be looking over their shoulder — at everyone. And in virtually every aspect of culture, from business to technology to fashion, the big guys now compete with a range of Web sites that break their share of news through obsessiveness and hyperfocus.

The big news that Rupert Murdoch was getting a divorce after a 14-year marriage to Wendi Murdoch did not come from tabloid newspapers, gossip magazines or E!, but from Deadline Hollywood, the business entertainment site run by Nikki Finke.

The business disruption in the media world caused by the Internet has been well documented. But a monopoly on scoops, long a cherished franchise for established and muscular news organizations, is disappearing. Big news will now carve its own route to the ocean, and no one feels the need to work with the traditional power players to make it happen.

Being a big organization with sources at all the major players in every industry isn’t so valuable when other sites can take your big scoop and get as many or more page views by giving a more eye-catching headline and some photos or extra context.

For instance, yesterday the Wall Street Journal broke the story that Google is making an Android-powered game console. Here’s a Google search for “Google game console”.

80,500,000 results and the WSJ article doesn’t even get the top spot.

The New York Times brings metered paywall to mobile

The New York Times plans to limit non-subscribers to just 3 articles per day on mobile:

The restrictions mean that non-subscribers will have access to just three stories per day from across all sections of the site including blogs and slideshows, the company said, although video content remains free within the app. While in some ways it’s a reduction in the number of articles that people can read per day (currently, mobile readers can only view news from the ‘Top News’ section) it does at least provide a better choice of which three articles or sections those can come from. Subscribers get unlimited access to all the content from a mobile.

I’m glad that The New York Times is bringing its metered paywall to mobile. What with the relative success of its paywall on the web and its struggle to sell ad space, I’m hoping the company will do what it takes to keep its wonderful newsroom afloat (as long as quality doesn’t suffer for it, of course).

The New York Times is struggling to sell all of its ad space

The New York Times is making ads for the future — but where’s the money right now?:

According to Haskell, the New York Times‘ digital story-telling machinery is appealing to companies as a way to convey heritage and complicated brand stories. He adds that clients like Prudential say they have had tremendous response to their campaigns, including huge lifts from social media.

But despite the promise of such ad tools — and clever platform tools like Ricochet and Sparking Stories – the Times’ overall ad performance is limping. Recent earnings results show that digital ad sales are not just flat but actually declining — a troubling development at a time when digital revenue is supposed to stabilize the company as it faces a permanent decline in its print business.

Haskell says the company has been unable to pre-sell all its inventory, and attributes the overall ad challenges to two factors — “an explosion of inventory from social channels” (read Facebook) and the rise of automated or “programmatic” buying which lets advertisers purchase digital ads on real time exchanges.

Why isn’t The New York Times using programmatic ad buying? Haskell, the company’s VP of advertising, thinks that their reader data and performance metrics can woo companies over from more automatic ad placement options. Why not give advertisers access to those metrics as part of a programmatic buying toolset?

Journalists leaving media to work for start-ups

The Journalist’s New Escape Plan: Start-Ups:

Others, like former Wired editor Evan Hansen, who recently joined Ev Williams’ blogging start-up Medium as an editor, dismiss the idea that the switch has anything to do with job security. “This is not about finding a safe place to keep doing the same old same old, but about inventing something new and having a place at the table with tech innovators who have the capacity to actually build it,” he said.

And then there’s the money. While leaving a traditional newsroom for a younger tech company is still risky, there’s at least the promise of stock options and the lure of a grand exit, which are both exciting as well as rare opportunities in media, a field not known for its exorbitant salaries. In the not-so-distant past, a successful tenure as a reporter or editor could mean a corner office or a cushy columnist job at an elite publication — or perhaps an offer to “sell out” to a more lucrative job at a codependent PR firm. Today, it could very well mean a modest buyout as the company clears room for younger reporters with lower salaries.

I think that in the next five-to-ten years the news media is going to reach some kind of equilibrium, either through the use of paywalls or through better forms of advertising. What I’m hoping – for my own career’s sake – is that once that point is reached, sites will be able to slowly expand and we can go back to the days of stable careers at institutions that aren’t on the verge of failing.

Mostly because freelancing sounds incredibly stressful. 

Twitter Looks for a Head of News and Journalism

The official Jobs at Twitter site:

Twitter is playing an integral role in the evolution of the news industry — both as a tool for reporters and newsrooms and as a way for consumers to find news in real-time. Twitter has already changed the way news breaks and provided journalists new ways to connect with their readers. We are looking for a seasoned leader to shape and drive the next growth phase of Twitter’s partnership with the news industry.

The obvious assumption to make here is that Twitter has decided to act in the wake of the Boston bombings, during which the social media site was bombarded with a load “information” (rumors) regarding suspects and police events. Telling what was truth from the noise was impossible and Twitter as a platform was criticised after the events for the some of the irresponsible reporting that took place after the tragic events.

The job posting is affirms the idea that Twitter sees breaking news as a key part of its strategy: the posting says the incoming head of department should create a plan that increases “volume and quality of professional news content on Twitter, especially in breaking news”.

Is the posting of the job after a time when some sort of spotlight was on Twitter and its news strategy a coincidence? Probably. But it’ll be interesting to see what the new recruit will do to develop news strategy in the longer term.

We’re stuck with bundled TV – for now

More Cracks In TV’s Business Model – NYTimes.com:

Susan Crawford, a professor at the Benjamin N. Cardozo School of Law and the author of “Captive Audience,” says she thinks television bundles will be with us for a while — six to eight years — regardless of what the consumer wants.

“It’s like the picked-on kid who tries to get home to his front porch; he has to make it past all the bullies first,” she said. “We have a heavily defended, heavily concentrated programming industry and a monopoly in distribution, with none of the big players willing to act like a maverick. No one wants to break ranks because the current system has been so lucrative.”

Here’s how college students get video content, from most to least utilized:

  • Streaming sites
  • Netflix (usually family’s or a friend’s family’s account)
  • Hulu
  • YouTube
  • Torrents
  • Family cable/HBO Go account

The only people I know who have opted to get cable after graduating are sports fans. It they aren’t the kind that cares about March Madness, they aren’t paying for more than an Internet connection.

Six to eight years sounds about right for the amount of time it will take for the growing population of cable-cutters to disrupt the current TV business model. After all, it is a rather small portion of the total population, seeing as how there are over 100 million “households” in America and over 90% of them pay for some kind of television subscription.

Maybe that means we can get the last season of Game of Thrones all at once, House of Cards-style? *fingers crossed*

The rise of shared video streaming accounts

Streaming Sites and the Rise of Shared Accounts – NYTimes.com:

We were each going to use HBO Go, the network’s video Web site, to stream the show online — but not our own accounts. To gain access, one friend planned to use the login of the father of a childhood friend. Another would use his mother’s account. I had the information of a guy in New Jersey that I had once met in a Mexican restaurant.

Our behavior — sharing password information to HBO Go, Netflix, Hulu and other streaming sites and services — appears increasingly prevalent among Web-savvy people who don’t own televisions or subscribe to cable.

I use my a former dorm-floormate’s mother’s HBO Go account. I use my mom’s Netflix account. My friends use my Amazon Prime subscription. From Jenna’s article (and a high-ranking source of my own at the MPAA), it sounds like these companies prefer having many people share subscriptions over having no subscribers at all – and thus don’t plan on cracking down on this behavior. I think it’s a fair middle ground between stopping piracy and providing a decent customer experience. 

Felix Salmon: Henry Blodget “stuck in a world of banner ads and CPMs”

What will Henry Blodget do with Jeff Bezos’s millions? | Felix Salmon:

Business Insider has always been run on something of a shoestring; it made the entirely understandable decision, for instance, to hold onto a large chunk of the capital it raised in the past, rather than blowing through it and then suddenly being forced to cut back for the sake of profitability. This new round allows BI to increase the amount it’s investing while still retaining a reassuring cushion. But $5 million is not remotely enough money to allow Blodget to pivot to a very different business model, even if he wanted to do so, which he probably doesn’t. For better or for worse, he’s stuck in a world of banner ads and CPMs, and although he’s done well in that world to date, the future of that world looks pretty bleak.

Blodget is very smart to not blow through the money that’s been invested in Business Insider. While he can’t spend his way to a new business model overnight, it gives him plenty of time to experiment while the digital publishing industry figures out the key to sustainable success.

Paywalls: yet another symptom of a dying newspaper industry or the future of publishing?

Felix Salmon:

What’s impossible to calculate, of course, is the long-term opportunity cost of driving away people who want to read your content but aren’t willing to pay. MediaPass’s Mitchell told me that in most cases, the act of putting up a paywall is the act of “essentially harvesting revenue from a loyal long-term audience” — people who have been reading the publication for years, and have turned it into a habit they don’t want to give up. That’s fine, as a short-term means of maximizing revenues. But it’s dangerous in terms of getting new loyal readers. Which is one reason why online media startups almost never have paywalls: they want as many people as possible to discover them. My expectation, then, is that newspaper paywalls will become both increasingly sophisticated and increasingly expensive over time — but that paywalls are not going to migrate very quickly out of the newspaper world and onto the rest of the internet. In a dying industry, the sensible thing to do is to maximize your revenues before you die. Paywalls might well make money for newspapers. But that doesn’t mean that newspapers aren’t dying. Quite the opposite.

I don’t know if Andrew Sullivan or Paul Carr would agree that paywalls are a last resort – both The Dish (which has a “leaky” paywall) and NSFWCORP (which requires a subscription to see any content) seem to be doing just fine with small staffs, small subscription fees, and relatively small audiences. I guess it’s just a matter of outlook: the big newspapers are trying to be as big as possible, while Sullivan and Carr represent the movement to build sustainable and profitable small enterprises.