NP Refugee

Online Advertising: Stop Selling Scarcity

I usually agree, Jeff, but not this time.

Having spent a great deal of time in my career across various media, I can tell you that the notion you're exploring isn't necessarily new. Television has been acting on that for some time. There's a reason that USA Cable Network is heavily rated with viewers. They used to go after quantity with shows that were usually shoot 'em up, appeal to the masses sorts of stuff. They got the most viewers, and consequently demanded higher rates for advertising.

On the other hand, quality networks like Discovery had smaller audiences, but important audiences watching quality programming.

All of this translated into advertising rates. The same could be said for the advertising online. So much depends on what one is trying to accomplish with advertising--and that's the point. If everyone starts voting on advertising, it won't ever be effectiveness; it will become an exercise in populism. Some of the most effective ads I've seen don't make me happy, but they get me to move.

I know your background is primarily on the journalistic side. Trust me... having users vote on how good an ad is would be a recipe for disaster.

The Google model is a good one, however--at least relative to Adwords. It is commodity trading, for the most part. Bidding on ways to reach an audience sets a price for the ad. Let the market set the rates. And for what it's worth, most newspapers are out of step with a rapidly changing environment. Most BT nets are in the 7-10.00 range for CPMs while newspapers are taking advantage of ignorance in the marketplace and selling the Y! BT for nearly double that. Once the word gets out....

But I'm concerned that what you're proposing will promote actions to get votes, not to necessarily motivate the consumer to take action on the behalf of the client represented. That's what should motivate all ads. Those are two mutually exclusive objectives.

FT on the Future of Newspapers: Nyah, Nyah

Until there is a true introspective approach for the companies that own newspapers and produce/distribute content, I really doubt there will be a solution for them. And a solution may not exist--except to usher the old out the door in exchange for the new. Town criers really aren't in great demand anymore either, come to think of it (a wink to the Newspaper Nexters who run around talking about how no medium has ever fully replaced another medium--I beg to differ).

The real issue here is that there are readily available substitutes in a fast-paced information age that have quickly come into the market, at a pace no other medium has ever experienced. Newspapers are not only having to deal with better mousetraps, they aren't really used to even having to contend with another mousetrap at all.

But to lay it all at the feet of content points to just one problem. A true examination would find that the assault on the traditional newspaper model is coming from several directions. Delivery--the speed of news to a desktop is superior to someone driving by a house at 5:30 AM and dropping what's already stale in the yard (and entrusting the most critical customer relationship link to the weakest in the chain--another topic altogether); News--so many sources for what the newspaper used to claim as a local franchise are available in so many places. We're talking the exact editorial content--wire stories, comics, syndicated editorial. The newspapers have lost their exclusivity in the local market. Perhaps the FT can charge because a large volume of what they have as their franchise is exclusive. Exclusivity is a conversation that has to take place within every newspaper in the country, because that which isn't exclusive has far less value in the current environment. I've never heard a newspaper talk about their exclusive content, because to them, they've considered all of it exclusive to date. No longer the case.

And then, there's the substitution of their lifeblood: classified advertising. Craig Newmark may have done a lot more to damage newspapers than Google ever thought about in their news aggregation. Even in the mid nineties, we used to calculate and project the cost in operating profits from just a 15% loss in classified ad volume, were it to occur. As I recall, the loss in overall newspaper profits was calculated to be around 35%, since classified advertising was such a high profit margin sector of the business. Even then, we were contemplating the peril and knew trouble was brewing. Remember a little thing called "Classifieds 2000?" And what about Microsoft's Sidewalk project? They were just slightly ahead of their time but they got our attention. Craig Newmark, however, was right on time.

So the problems are, and have been coming from all sides, not just one, creating a perfect storm for newspapers. Jeff, while your primary focus is on the news/journalism/content side of the equation in your piece, the issues are far broader and more complex. Thus, any solution will likely be the same. But it really starts as a discussion in market microeconomics, readily available substitution, and exclusivity.

Dealing with those as fundamental problems are where the solution, if one exists, lies.

Google vs. AP: Saber-Rattling

I could SO tell this story from the proverbial "fly-on-the-wall" perspective. The assessment that it was always about premium placement was correct. Don't know that it is anymore. I hope they're talking about going to Gannett's tool as a group to create their own. For a newspaper website, 20% of the traffic comes through the SEs, or that used to be the case. Not having that content available on Google would hurt Google far more than the newspapers, especially if the members all committed to a promotion schedule (I know this sounds like NCN and AdONe all over again, but this is different--this is pure content).

Newspapers: Give Us More Creativity Please

I would agree that the the innovation of the newspaper industry will be a recreation from the outside. The newspaper industry itself likes to talk about innovation in terms of a new section and will pat itself on the back for having the smarts to do it. I've been advocating a search engine for several years that would be indexed by story age as a secondary parameter to relevance. The problem is that getting the newspaper industry to ever come together on anything is an utter impossibility. Lots of good ideas from the likes of Milstein at Hearst and others, but the dysfunction will keep it from ever becoming reality.

The AP deserves credit for herding the cats, but they also deserve criticism for having sold the newspaper industry's collective journalistic soul to the likes of Google and Yahoo!.

Newspapers Can't Compete with 'Us'

Think about this: the newspaper's content, most of which they don't own nor create is available in lots of places. The newspaper is under siege from all sorts of directions. I can get comics from comics.com; I can't get that on the newspaper's web site. I can get stocks from-what-1,000 different places? I can get the syndicated national stories from just about anywhere. Obits are available numerous places. I don't have any problem finding puzzles online from numerous sources. A great number of the published editorials are available on the commentators' web sites. All of that content used to be the NP franchise. So it's not just about Google, it's the cumulative effects of having commoditization of what the newspaper used to monopolize in a local market. Going from monopoly to commodity is a giant killer. I agree that the small town newspapers will be the ones that last. If you consider the papers closing shop thus far, most are in 2-newspaper towns (Seattle, Denver). But the small local papers seem to understand the need to drill down into the communities they serve--because they can, while big metros seem intent on being a national newspaper. Unless the big metros bust up their newsrooms and start small suburban bureaus that can go deep in communities while having a "most important" fill the main section, I'm pretty sure the erosion will not subside.

Think about this too: NPs don't put the local box scores and the other fine print online. To a local market, that's valuable.

I, for one, believe that Murdoch knows exactly what he's doing. If you've been following the latest moves by the NP industry, there's a bit of interesting news where most have signed on to work with a search engine directly. If I were Murdoch, I would start a news search engine and sign on all the NPs as true partners. I would add some things the SEs don't currently do. I would have wild cards in search strings, so if you don't know some characters, you can use *, I would also allow searchers to index the search results according the date the article was published. Then I would cut off the Google and Yahoo! spiders. Goodness knows, promotion wouldn't be a problem.

News flash. Only 20% of most newspapers' visits come through search engines. Most NPs are bookmarked.

It would take a giant to make it happen, no doubt. Goodness knows, the NP companies can't get along to make it happen.

And I could almost argue that the suburbanization has had almost as profound an effect as the Internet on the precipitous drop in circulation. Publishing the latest antics about which councilperson is taking a bribe in a large market? Most people in the suburbs are embarrassed and think it's pathetic, but beyond that, they really don't care. It may as well be 500 miles away.

My prescription for survival is what everyone keeps telling the NPs: start digging deep into the communities and quit trying to cover the world. My fear is that they cannot get out of their own way to do that and the new NP model will be reinvented by those outside of the NP industry today with a fresh perspective and no ties to legacy systems and processes that are outdated.