Posts about newbiznews

Native advertising: Another false messiah?

I’ve been waiting for this: the leak in the native advertising balloon.

Tablets were going to save the news business. Not so much. Paywalls were our salvation, damnit. Nope. Native advertising is our future. Think again.

Digiday reports on the latest problem with the native advertising strategy:

Digital ad sales intelligence platform MediaRadar said the average renewal rate for sponsor content this year is 21 percent. Meanwhile, native ad tech company Polar recently described renewal rates as “weak,” with 40 percent of the publishers it surveyed showing renewal rates below 50 percent.

Native advertising isn’t going to cure all our problems because:

1. The ROI is debatable. Says Digiday: “Behind the low renewal rates is the fact that advertisers are uncertain about the return they’re getting on native advertising.” This has been my worst fear. We give the advertisers what our standards and ethics forever forbade — confusing our readers about the source of content — and then the advertisers wake up and say, ‘Well, that was fun. But we’re bored with that. What can you sell us next?’ Except with badly done native advertising, we’ve already sold our brands, our souls, our seed corn. We have nothing left. Jack, you gave away our only means of support for what? Magic beans?

I have long wondered whether native advertising would do what advertising is supposed to do: drive sales. What is the efficacy of replacing five-word banners with 500-word stories? Perhaps we are beginning to find out.

2. Competition is rushing in. Digiday: “Three years ago, there were about 15 companies helping brands produce sponsored content, according to MediaRadar CEO Todd Krizelman. Today, there are more than 600, and the number is growing.” I have long said that in media need to compete with creative agencies but we can’t imagine that they won’t fight back. Content is a commodity. Anybody can make it. That is the key lesson of the internet for media. So we surely couldn’t believe we’d hold onto the business of “telling brand’s stories” for long.

3. It’s expensive. It takes a lot of resources to make content for finicky advertisers.

4. It’s no longer enough to write a “brand’s story” and put in in our editorial space (barely camouflaging it as an ad). Media’s audience is insufficient. So media has to spend money (a) placing ads elsewhere to drive traffic to our native ads, (b) placing the native ads we make at other media sites, and (c) trying to buy social traffic. That, too, is expensive.

So what is the profit margin on native advertising after we are left marketing our services to replace the clients who churn out, after spending a fortune on making native advertising, and after spending another fortune advertising the advertising? Native ad distributor Polar says it’s a high-margin business still and that’s good. But where do those trend-lines fall given the news above?

This is the moment where you say, “Goddamnit, Jarvis, you shoot down tablets, paywalls, and native advertising, not to mention programmatic advertising (because it commodifies media) so what do you expect us to do?”

Mind you, I am not against doing native advertising well. See Quartz, for example. I am in favor of media companies competing with ad agencies for both creative and media business. What I object to is the idea that this could have been our sole salvation, any more than our earlier magic beans, without embarking on the much harder work of reinventing ourselves.

Our only salvation will be to question *everything* about our mass-media business models as we enter a new reality, starting with the value of reach in an age of abundance and endless competition. Yes, reach matters but only if we have something of value to convert all those folks to. We have to shift from reach to relevance, volume to value. We have to rethink the essence of what news and media are. That’s why I wrote this: to begin questioning and exploring.

That’s also what I said to our incoming students at CUNY’s J-school last week. At the end of our week together, the students listened to voters about their needs in this election and their proposed solutions didn’t look like content-based mass media at all. They’re all journalists but they are learning to question their assumptions. We need to do the same with business people and reinvent what they do. Instead, we’re grabbing the deck chairs on the Titanic hoping they will act as flotation devices.

* * *

Content.ly — a reputable native advertising company (with whom we are doing at study at CUNY) just released some further data on media’s behavior. 68% of publishers have editorial staff make native advertising. Nooooo! 45% think the biggest threat to native advertising is the lack of separation between church and state. Jeesh.

Advertising sucks. Let us listicle the ways.

From my Observer column (read the whole thing here):

Advertising sucks, let us listicle the ways:

1. Advertising is almost always irrelevant.

2. Advertising is oppressively repetitive. That is only worse now that so-called retargeting advertising will note when you look at a pair of pants online so those pants can stalk you across the web for months.

3. Even with all its newfound data and artificial intelligence, advertising is still stupid. It doesn’t know that you already bought those damned pants and keeps selling them to you.

4. Advertising interrupts—first radio, then TV, and now our Facebook streams.

5. Advertising is intrusive of privacy. I will argue that the humble cookie has been unjustly demonized by the Wall Street Journal, for cookies do useful things like reducing the frequency with which ads are served to you (see complaint No. 2). Still it’s true that the advertising, media, and technology industries gather much data without giving their users any control or transparency into the reasons and consequences.

6. Advertising is irritating. It always has been. Go to anyone over the age of 50 and whine, “More Parks Sausages, Mom,” then watch them cringe.

7. Advertising is tacky, a glaring, blaring blight on the visual and auditory landscape. On most sites, there is just too much of it.

8. Advertising in inefficient. The only advance on the net is that marketers now have a better chance of determining which half of their dollars is wasted.

9. Advertising lies.

So how do we fix it? Not with native advertising. That is just another lie, designed to make us think an ad is not an ad. But we’re not as stupid as advertisers—and media companies—take us to be. As online metrics company Chartbeat has learned, users engage with a web page—that is, they scroll through it—71 percent of the time when the page contains real content but only 24 percent of the time when it carries so-called native advertising. And that leads me to one more complaint to fill out this listicle:

10. Advertising is an insult to our intelligence.

The column is devoted to fixing this.

New video powerhouse

mode

The amazing Samir Arora, CEO of Mode (née Glam), called with some impressive numbers on his company’s new platform and aggressive push into video.

A two-minute video illustrating 100 years of fashion gained 1 million views in six days, 10 million in 21, and now — a bit more than eight weeks out — has 58 million views. Almost three-quarters of those views came on Mode’s own network — where they can prioritize users based on relevance and influence; the rest on Facebook, YouTube, et al.

In two months, Mode is now the 13th video property according to ComScore; it was already the 7th web property.

Through this, Mode is building two big video revenues streams: half from prerolls (YouTube’s territory), the other half from distributing brands’ video content and from sponsorship of its own video content. Video, of course, has enviable CPMs running $20-$45 for this kind of content.

Note well that with Mode, creators always get paid for their content — whether as revenue share or for hire. Importantly, under certain circumstances, distributors also get paid.

Glam started as a network; that is what brought Samir and me together. It then set about building tools for content creation, curation, and distribution. Samir’s big lesson, he said, is that an ecosystem needs a platform.

Mode still is under the radar for many in media. I’d reset your radar.

Here’s VentureBeat on the these numbers; and Scoble, too.

Exploding our ideas of membership: A CUNY summit

We are holding an important event at CUNY on August 26 exploring membership strategies for media — beyond pledges and paywalls.

Let’s be honest: In most news organizations, membership is just another word for subscription or for hawking tote bags. At this event, I want to see us push far beyond the present state of the art and challenge ourselves to reimagine what membership can mean for news organizations and their relationships with the people and communities they serve.

We will start with sessions led by two innovators in membership: public-media genius Melody Kramer (who just released a superb report with her latest ideas) and local media’s best friend, Josh Stearns, who is working on membership experiments in the New Jersey news ecosystem. We will learn about best practices in membership from outside the media industry (what could the frequent-flier miles of news be?). And — this is the critical part — we will take all that information and inspiration and then, in the best spirit of the unconference, brainstorm new opportunities for membership for news organizations of various types and sizes.

Here is the sign-up for the event.

I see three frontiers for innovation:

* New tribes: A person might feel an urge to join a club called the Guardian because it takes on causes or NPR or even The New York Times out of patronage. But does anyone really want to belong to — will they feel an affinity and loyalty to and want to brag about their special relationship with — say, Columbus Dispatch? Not so much. But one might well want to belong to the Columbus pissed-off commuters’ club or the Columbus school improvement society or the Columbus environment alliance or the Columbus senior club. My point: communities are internally, not externally defined; they are not built outside-in or top-down under brands. The premise of our social journalism program at CUNY is that we must begin by listening to communities and understanding their needs before we can serve them well. The same goes for membership. The opportunity is to build membership from the bottom up by serving many communities with many affinities, loyalties, and needs that we can answer.

* New currencies for contribution: We can extract value from our relationships with the public we serve in so many forms other than just cash. Indeed, we must learn to value our people — our users, our readers — beyond just their circulation dimes or CPM pennies. We must value them as individuals rather than as members of an anonymous mass. To join a community, we should value and credit the public’s effort, expertise, contributions of content, volunteer marketing (i.e., social media love), commerce (buying things through us or from our advertisers), and showing up (coming to our events). I explored some of these notions in a long-ago post that speculated about a reverse pay meter; Melody explores many more in her report.

* New currencies for reward: When we give our members nothing more than access to our content, then we are merely putting a new label on an old business model: the subscription. We can reward members in so many more ways: with access to events and our journalists, with some voice in the allocation of our resources, with social capital, with discounts from our advertisers….

Out of these ideas and more that we will explore on August 26 will come many new models for membership. The product of the day will not only be potential new business models but also new ways to look at–to quote my friend Jay Rosen–the people formerly known as the audience. When our members are our collaborators, the recipients of our services, experts, and our friends, then the nature of our product — our service — called journalism changes fundamentally. If we have any hope to compete with Google, Facebook et al for the attention and affection of the public we serve — and for the first-party data that will rescue us from advertising commodification — we must reconsider our essential relationship with them. We must become members of the same clubs.

If this is of interest to you and your news organizations, please sign up now.

The state of hyperlocal

newsTow-Knight just released a new survey of the state of business at hyperlocal sites, conducted by Michele McLellan, creator of the authoritative Michele’s List.

The bottom line remains: This is a tough business. A third of them bring in more than $100,000 a year; the rest under. Almost half are profitable and another quarter have a steady flow of income. Most are heavily dependent on advertising. The good news, as far as I’m concerned: Many have hired business and sales help.

This is important work, for as I wrote in Geeks Bearing Gifts, I believe that beat businesses can be a building block of broad new news ecosystems in communities. This is why we now support Michele’s List at Tow-Knight. This is why we just held training for new beat businesses here. This is why I work with the Dodge Foundation in New Jersey on helping to support and build the news ecosystem in my home state. We need more training in business to bring these journalists running beat businesses to sustainability. But as Michele shows, this is also hard work, damned hard work.

Michele suggests possible areas for further research. I will argue to foundations that care about healthy news ecosystems that they should help support their growth by giving seed grants and funding training for new beat businesses. I hope other journalism and business schools will help train these brave entrepreneurs who care about their communities.