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?

Are Silicon Valley companies only making products for people in Silicon Valley?

I have some issues with this piece by Nick Bilton for The New York Times:

Belshe and Bill Lee were continually running late for meetings and texting each other: “I’ll be there in 5 mins!” So they created Twist, a 10-person start-up in the city’s South of Market neighborhood. The company’s first product is a smartphone app that helps you tell someone you’re late by showing your location on a map. Investors liked the idea enough to give Twist $6 million in venture financing last year.

“We thought there had to be something better than sending a text message,” Mr. Belshe said in a phone interview. “We were trying to tackle that problem of meeting up and making it easier.”

Is Twist a great idea, or are Mr. Belshe and Mr. Lee falling into a local propensity for creating a product for technophile friends rather than the public?

Bilton’s point is that this seems like it would only benefit techie types. But who wouldn’t benefit from an app that can tell that you’re running late and messages those you have an appointment with? Seems like the kind of thing that could curb texting and driving.

That’s not to say there aren’t still people thinking about big markets. Elon Musk, the founder of Tesla, which sells electric cars that can cost more than $100,000, said last week at the D: All Things Digital conference in Rancho Palos Verdes, Calif., that he hoped to offer a $30,000 version of the car in the next five years.

No, that’s not what Musk is proposing. He’s not going to bring the Model S to market for 33-50% of the current price. Tesla’s going to introduce a new model in 2015 that will compete with the likes of BMW’s 3-Series, which is a totally different market and price category.

But besides these minor gripes, my main issue with the article is that as a society, the general trend is everyone becoming more technologically savvy over time. Someone has to lead that push, and it might as well be the people making the technology.

Imagine if Nick’s argument had been applied to smartphones: “People don’t need apps and mobile Internet and video cameras in their phones. They just want to make phone calls.” Where would we be if Silicon Valley thought like that?

News media needs to become more like Hollywood

How the New York Times can fight BuzzFeed & reinvent its future:

However, that is only part of the story. The trick is not to get married to just the oohs-and-aahs of the Snow Fall, but to think of it as a business opportunity, much like the way Hollywood studios creatively monetize their blockbusters. My question is why can’t newspapers and magazine companies take the same approach and build a business model that actually factors in various opportunities that something like Snow Fall can offer?

So instead of starting with a newspaper story and adapting it to different formats, the Times should start with the Snow Fall. If you look at Snow Fall closely, you can see a cohesive approach to content, one that adapts and morphs to not only the medium of access, but to diverse business models — much like the movies.

Om’s argument is that traditional news media has failed – with a few exceptions, like Paul Krugman and David Carr – to properly adopt the blog format on their sites. Instead, they have simply tried to post traditional news articles as blog posts.

As he notes, blogging is about tying together all kinds of media and sharing it through the lens of an individual’s take on the world:

Blogging is a way of editing the world and presenting it to my community, and that means everything from photos, links, tweets and videos, in addition to sharing my raw thoughts and fully packaged features, scoops and even basic news. Every act of sharing tells you what I am interested in and what I am willing to learn and talk about.

Rather than trying to shoot for tens of thousands of hits per short blog on their site, Om thinks that The New York Times should drop $25 million on making dozens of pieces like Snow Fall – long-form pieces with huge budgets that pack in tons of media and use fancy scrolling in the hopes that the spectacle will lead to millions of page views.

I think Malik is being a bit too optimistic here.

There’s a reason most blockbusters come out in summer – they’re a way to escape from the heat, relax, and keep the kids busy while they’re out of school. They have a reputation for being big dumb explosion fests because that’s what people want.

A long piece of excellent reporting like Snow Fall, however, is the opposite of that for most people: it’s thousands of words to read through with multiple pages and no indicator of how far into the story you’ve read. It’s work.

Now, I’m not saying  that making more pieces like Snow Fall would be a mistake in and of itself. It did get millions of page views. But to shift such a massive portion of the Times budget to making such pieces – even with the lower costs from already having the technology ready – would overestimate the demand for long-form journalism.

There’s a reason The New York Times has so many more readers than The New Yorker: people want news. Big stories are awesome, but NYTimes.com gets 35 million monthly page views is because people trust it to have the best reporting on the most important news happening right now around the world. Articles with word counts in the tens of thousands simply don’t meet that need.

Instead, the best thing the Times could do is to let the technology that came out of Snow Fall trickle down to average news stories. Just as CGI has become prevalent enough in Hollywood that even the lowest budget films don’t completely break the fourth wall whenever an explosion happens on-screen, The New York Times can move on from the shitty image galleries that most sites have for image-heavy articles and integrate videos more fluidly with text than the simple embeds used today.

As for Om’s point about using better native advertising (like including a Land Rover ad with Snow Fall)  – there’s no reason that doesn’t have to apply to almost every piece of news. The Times just need to put its sales and technology teams to work at making better software on the backend to let advertisers more accurately target individual articles related to their products.

The New York Times has a rough few years in front of it

The newsonomics of zero and The New York Times » Nieman Journalism Lab:

Without these kinds of new revenue products, expect circulation revenue growth to slow, perhaps dramatically. One reason is the legacy side of the business. While the Times has impressively priced up print subs, it’s losing about 6 percent of subscribers a year. In the short term, the money is good enough to make those economics work. Over a three-year period, it’s trouble. A potential loss of another 20 percent of print subscribers would result in both reduced high-dollar subscription revenue and a markedly reduced rate base for print advertising. Over time, it will get harder and harder to make up lost revenue by charging a smaller and smaller set of print subscribers more money. 

The paywall seems to be helping to make up for their falling revenue, but the collapse of the print subscription base is a problem that will only hurt revenue more over time. Denise Warren (in charge of advertising and digital at the New York Times) needs to figure out how to charge more for online ads and how to reach 1,000,000 digital subscribers. She has less than three years to do it.