Search Results for: "brand content"

Lessons from a good vertical: Skift.com

 

For digital media companies, creating good verticals that breed small but valuable audiences has become essential. On that subject, here are my takeaways following a conversation with Rafat Ali, founder and CEO of Skift.com. In 20 months, Rafat’s company has become a reference in the travel intelligence business. 

There is no excuse for not trying to build a vertical digital service (web site & mobile app) for a strong media company shifting to digital. As long as you have a powerful (not to be confused with profuse) newsroom coupled with a well-structured contents system, trying a foray in a specific domain is worth considering. As an example, see Atlantic Media, one of the most innovative media brands, as it deploys a series of verticals nested in its Government Executive Media Group. These units all generate small but extremely valuable and loyal audiences — and enviable revenue per user (more on the Atlantic in a future Monday Note).

Building a vertical is a mere matter of implementation, you might say. But a look below the surface shows how such process demands much more than merely putting a small group of good writers in a digital stable, and asking them to gather news on a specific subject.

That’s why Skift.com drew my attention. In less than twenty months, manned by only 9 people crammed in an mid-town Manhattan office, Skift.com has become a strong voice and a reference in the travel industry: airlines, booking systems, hotels, tour operators – and all the the sector’s disruptors.

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I met Rafat Ali five years ago in Hyderabad, India; we were both of speaking at the same conference. Rafat was about to exit his first and remarkable startup, PaidContent.org (a terrible name he now laughs off), one of the first blogs decoding the media industry’s transformation. After building it from scratch and spending eight exhausting years producing and editing stories, Rafat sold it to the Guardian for a reported $30m – right before the 2008 crisis. (Last year, PaidContent was acquired by GigaOm).

After a short transition, Rafat was free to go. So did he. In 2010, at the age of 36, he left for a two-year series of trips to Oman, Iceland, Burma, India (where he has family), radiating from his bases in New York and London. At last out of PaidContent’s trenches, he took the time to read a hundred books during his journeys. Following @rafat on Twitter, you could feel his excitement, and also his growing interest in the travel sector.

‘You have to remember, it was 2010, the iPad had just been launched, everyone was thinking about what to build on it’, said Rafat. His first idea was to re-invent the travel guide book for the iPad. But he soon realized how crappy the whole travel industry’s information ecosystem was: ‘I was blown away.’ While the transactional part of the travel business had been completely broken apart by a massive, unprecedented disintermediation — benefiting the customer, trade information remained frozen in the past, with its sets of professional printed publications perpetuating a jargon-filled verbiage offering little or no actionable intelligence, nor useful data

Nature (and digital business) abhors vacuum, so does Rafat Ali, who decided to fill the void. When asked to define Skift in a nutshell, he said this: ‘In late 2011, we wanted to build the Bloomberg News of travel’. (When it comes to business information, this is quite a goal. Never aim low, I can’t agree more.) Rafat’s wanted to build something based on a few concepts: rely heavily on data, capitalize on the open-web, use APIs aggressively (to connect with third party data sets), aim at professionals, consultants, experts, and — last but not the least — prosumers who often know more than merchants. (Read Rafat’s post on the “Mediata” Startups).

The other key to Skift’s concept — which means shift in Danish — was tearing apart the silo culture that plagued the travel industry for decades: ‘You have airlines, airports, cruises, hotels, technology… All of these silos have collapsed in global interconnected megatrends, and we knew we could make our voice heard across all…’, explained Rafat while pointing at this graph:

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Graph ©
Skift.com

As far as editorial is concerned, Rafat believes journalistic content is needed to create addiction, daily use, while-data related products generate usefulness, stickiness, loyalty and, ultimately, monetization. Content-wise, at the beginning, the site was built on four “legs”: aggregation (collecting headlines); curation (with a tweet-length phrase to describe a story); licensed content (full articles brought from news providers); and originally produced articles. Today, Skift is down to two items: 40% of articles are licensed (mostly Newscred) and 60% are original content — about 15-20 short business stories (produced by a staff of three…)

Business-wise, Skift positioned itself primarily as a B2B company, then secondarily as B2B-2C. Its traffic is still modest (1m UVs/mo), but growing fast; so does its newsletter business, expected to reach 75,000 subscribers by year end. No mobile apps in sight as the mobile web works well for Skift: mobile users account for 35% of web traffic and 50% of newsletters readings.

Skift sells few but high yield ads, to the point that Rafat is about to create a tiny studio to create bespoke brand contents. (Maintaining the mandatory Chinese wall could be tricky in such a small structure.)

But Skift’s true gem is its industry dashboards and data collection system, a well-structured tree that leads to scores of statistics and rankings. Inside, you’ll learn that AirBnB — whose valuation is now higher than Hyatt — has a Skift Score (a combination of indicators) roughly twice the “bookings & tools” industry average. Or that Dutch airline KLM scores way better than the hippest Virgin Atlantic. Or that Hertz masters the social ecosystem way better than the trendy Über.

Using data analytics, Skift produces reports — short and updated twice a month (as opposed to quarterly “bibles” prone to quick obsolescence.) ‘We will focus mainly on marketing, strategy and technology to produce competitive intelligence’, said Skift’s CEO. Rafat’s intense focus on doing few things but doing them well extends to the obligatory conference business: Skift intends to do just a single event about the Future of Travel, in a similar fashion to Quartz’sThe Next Billion conference (see the #qznextbillion hashtag for a list of tweets linking to videos). In both cases, these events are built on strong editorial concepts, ‘We want to make a conference about leadership instead of a vendors-to-vendors type…’ said Rafat.

What’s next for Skift? First, an off-site staff meeting in Iceland. Actually, Rafat Ali is considering a global franchise set in Reykjavik. Less anecdotal, Skift founder wants to apply his news and contents formula beyond the travel industry to what he feels are interconnected sectors — at least in discretionary spending — namely food & beverage and retail sectors.

One final note. Looking at the state of travel information, I can’t help but discern a complete failure of traditional, legacy journalism. Too cozy with the main players and their corrupting PR machines, too filled-up with press junkets and freebies, the mainstream media coverage of this $6.5 trillion/260 million jobs sector has become mostly illegible. This leaves a large open field to new players.

frederic.filloux@mondaynote.com

 

News Media Revenue Matrix: The Bird’s Eye View

 

Publishers struggle with newer and more complex business models. Some appear stronger than others but, above all, a broad palette is a must. It is a means to capture emerging opportunities and to compensate for the drying up of older revenue sources.

Today, I submit the following revenue matrix for a modern, content-rich news outlet. As I see it, in the news business “modernity” mean this:

A proven ability to produce original content in abundance and under multiple forms: news reporting, investigation, analysis, data journalism, long form (for ebook publishing), enterprise-like journalism, live feeds; all of the above in the form of text, images, graphics and videos.

A cultural mindset to produce contents for the platform with the best fit: a news story for a newspaper, an interactive piece on the web, live coverage for mobile. The collective publishing mindset should no longer allow first- and second-class news products. Every piece of newsroom output must be designed as a contribution to a cascading revenue system in which each element empowers every other one.

– A newsroom equipped with the best tools money can buy or — even better — build. These include a powerful Content Management System (CMS) aimed at dispatching production to every platform. The CMS must be connected to a semantic analysis system that makes all pieces of information — from a feature story to the transcript of a video — compatible with the semantic web’s standardized grammar. In order to extract more value from a piece of content, the CMS must also connect to multiple databases. For example, the name of an obscure city must be able to generate a map – through the Geonames base; a Board Director must be tied to a high value database of business leaders such as The Official Board; the name of a company must lead to open-source corporations listings.

Mastering the semantic web is indissociable from acquiring information gathering capabilities such as aggregation and filtering (see a previous Monday Note: Building a business news aggrefilter ). Such feature is a prerequisite to building high-margin products as well as exploiting the social media echo chamber. After collecting contents through RSS feeds, the combination of semantic news analysis matched against the taxonomy of, say, Twitter, will yield a trove of information on what audiences like or dislike — not only for a news media but also for its competitors. It is a complex and expensive endeavor but, in the long run, it will be worth every penny.

– And more importantly, a global editorial thinking. Too often, newsroom management suffers form what l’ll call “mono-product bias”, focusing on what is seen as noble — namely print. At a very minimum, modern editorship must embrace a widespread digital strategy. But it also must envision a sustainable game plan for a complete lineup of ancillary products that also deserve editorial coherence and strength.

Having said that, let’s have a look at the following matrix. No rocket science here, I simply made a list of 14 products that many news outlets already operate. I then tried to assess the outlook for each revenue stream. (My original idea was to assign a estimated ARPU for each cell, but there are too many parameters to be taken into account).
Click to enlarge the table:

310 table revenue

Now, let’s focus on specific products and revenue streams.

Daily Print Edition. I’m very bearish on print. Granted, it still brings the most substantial chunk of revenue – but also most of the losses. And prospects are bleak: copy sales, subscriptions, even ad sales deteriorate fast. Some light can come from ads – when they are components of customized campaigns. Daily newspapers need to be vastly simplified in order to free up resources for the wide array of other revenue streams — especially digital. I’m a big supporter of Financial Times’ Lionel Barber “Memo on reshaping the newspaper for digital age“.

Weekend editions will do better than dailies for several reasons. First, their function — long formats, portfolios, reading habits — makes them better armed against the digital tsunami that devoured news. Second, they remain a great vector for pricey advertising: on some anglo-saxon markets, weekend editions accounts for half of the print ad revenue. The New York Times understood that well as its full digital access + weekend edition bundle is a hit among customers.

Advertising revenue stream. Let’s face it, traditional ads ormats, print or digital, are dying. The conjunction of programmatic buying and ad saturation/tracking/targeting will seal their fate for good. The best outlook seems to be for customized operations and brand contents (or combinations of the two). They can spread on every platforms, including on mobile where, so far, users massively reject ads. In addition, these customized operations carry high value (huge CPMs or hefty flat fees.)

Event & Conferences. The segment is crowded and success depends on a subtile combination of attendance fees vs sponsorship, but also of editorial content. A conference is indeed a full editorial vector that needs to be treated with the same care as any other publication, i.e, with a precise angle, great casting and first class moderation that favors intellectual density over speakers flogging cheap sales pitches. News media are well positioned to deploy an efficient promotion for a content-rich, sustainable, conference system.

Intelligence & Surveys. Attractive as they might sound, these products require a great deal of expertise to make a difference. Very few media can fulfill the promise and justify the high price that goes along with such offerings.

Training and MOOCs represent an interesting potential diversification for some business publications. They carry several advantages: by addressing a young readership, MOOCs can create an early attachment to the brand; the level of risk is low as long as the media company limits itself to being a distributor (quality MOOCs production is very expensive). For a business publication, such activities represent a great way to increase its penetration in the corporate world where the need for training is limitless.

Premium Subscriptions. Some large, diversified media companies are already considering complex subscription packages for a small number of high-yield clients. In addition to print and full digital access, such packages could include access to conferences & events, MOOCs, market intelligence, and other publications. Testing the concept is a low-risk proposition.

The Business to Business segment remains the province of specialized publications. But the potential is there for general-audience media: corporations are hungry for information. The era of the bulky corporate intranet that no one watches is gone; today, for their staff, companies want apps for mobile and tablets that will save time while being precisely targeted and well-designed. Not an easy market – but  a very solvent one.

Sketchy and questionable as it is, the above matrix also illustrates the complexity of designing and selling such a wide range of products to individuals or corporations. Only a small number of news organizations will have the staff, skills and resolve to address such a broad range of opportunities.

frederic.filloux@mondaynote.com

@filloux

What’s the Fuss About Native Ads?

 

In the search for new advertising models, Native Ads are booming. The ensuing Web vs. Native controversy is a festival of fake naïveté and misplaced indignation. 

Native Advertising is the politically correct term for Advertorial, period. Or rather, it’s an upgrade, the digital version of an old practice dating back to the era of typewriters and lead printing presses. Everyone who’s been in the publishing business long enough has in mind the tug-of-war with the sales department who always wants its ads to to appear next to an editorial content that will provide good “context”. This makes the whole “new” debate about Native Ads quite amusing. The magazine sector (more than newspapers), always referred to “clean” and “tainted” sections. (The latter kept expanding over the years). In consumer and lifestyle sections, editorial content produced by the newsroom is often tailored to fit surrounding ads (or to flatter a brand that will buy legit placements).

The digital era pushes the trend several steps further. Today, legacy media brands such as Forbes, Atlantic Media, or the Washington Post have joined the Native Ads bandwagon. Forbes even became the poster child for that business, thanks to the completely assumed approach carried out by its chief product officer Lewis DVorkin (see his insightful blog and also this panel at the recent Paid Content Live conference.) Advertising is not the only way DVorkin has revamped Forbes. Last week, Les Echos (the business daily that’s part of the media group I work for) ran an interesting piece about it titled “The Old Press in a Startup mode” (La vielle presse en mode start-up). It details the decisive — and successful — moves by the century-old media house: a downsized newsroom, external contributors (by the thousand, and mostly unpaid) who produce a huge stream of 400 to 500 pieces a day. “In some cases”, wrote Lucie Robequain, Les Echos’s New York correspondent, “the boundary between journalism and advertorial can be thin…” To which Lewis DVorkin retorts: “Frankly, do you think a newspaper that conveys corporate voices is more noble? At Forbes, at least, we are transparent: We know which company the contributor works for and we expose potentials conflicts of interests in the first graph…” Maybe. But screening a thousand contributors sounds a bit challenging to me… And Forbes evidently exposed itself as part of the “sold” blogosphere. Les Echos’ piece also quotes Joshua Benton from Harvard’s Nieman Journalism Lab who finds the bulk of Forbes production to be, on average, not as good as it was earlier, but concedes the top 10% is actually better…

As for Native Advertising, two years ago, Forbes industrialized the concept by creating BrandVoice. Here is the official definition:

Forbes BrandVoice allows marketers to connect directly with the Forbes audience by enabling them to create content – and participate in the conversation – on the Forbes digital publishing platform. Each BrandVoice is written, edited and produced by the marketer.

Practically, Forbes lets marketers use the site’s Content Management System (CMS) to create their content at will. The commercial deal — from what we can learn — involves volumes and placements that cause the rate to vary between $50,000 to $100,000 per month. The package can also include traditional banners that will send traffic back to the BrandVoice page.

At any given moment, there are about 16 brands running on Forbes’ “Voices”. This revenue stream was a significant contributor to the publisher’s financial performances. According to AdWeek (emphasis mine):

The company achieved its best financial performance in five years in 2012, according to a memo released this morning by Forbes Media CEO Mike Perlis. Digital ad revenue, which increased 19 percent year over year, accounted for half of the company’s total ad revenue for the year, said Perlis. Ten percent of total revenue came from advertisers who incorporated BrandVoice into their buys, and by the end of this year, that share is estimated to rise to 25 percent.

Things seemed pretty positive across other areas of Forbes’ business as well. Newsstand sales and ad pages were up 2 percent and 4 percent, respectively, amid industry-wide drops in both areas. The relatively new tablet app recently broke 200,000 downloads.

A closer look gives a slightly bleaker picture: According to latest data from the Magazine Publishers Association, between Q1 2013 and Q1 2012, Forbes Magazine (the print version only) lost 16% in ads revenues ($50m to $42m). By comparison, Fast Company scored +25%, Fortune +7%, but The Economist -27% and Bloomberg Business Week -30%. The titles compiled by the MPA are stable (+0.5%).

I almost never click on banners (except to see if they work as expected on the sites and apps I’m in charge of). Most of the time their design sucks, terribly so, and the underlying content is usually below grade. However, if the subject appeals to me, I will click on Native Ads or brand contents. I’ll read it like another story, knowing full well it’s a promotional material. The big difference between a crude ad and a content-based one is the storytelling dimension. Fact is: Every company has great stories to tell about its products, strategy or vision. And I don’t see why they shouldn’t be told  resorting to the same storytelling tools news media use. As long as it’s done properly, with a label explaining the contents’ origin, I don’t see the problem (for more on this question, read a previous Monday Note: The Insidious Power of Brand Content.) In my view, Forbes does blur the line a bit too much, but Atlantic’s business site Quartz is doing fine in that regard. With the required precautions, I’m certain Native Ads, or branded contents are a potent way to go, especially when considering the alarming state of other forms of digital ads. Click-through rates are much better (2%-5% vs. a fraction of a percentage for a dumb banner) and the connection to social medias works reasonably well.

For news media companies obsessed with their journalistic integrity (some still do…), the development of such new formats makes things more  complicated when it comes to decide what’s acceptable and what’s not. Ultimately, the editor should call the shots. Which brings us to the governance of media companies. For digital media, the pervasive advertising pressure is likely keep growing. Today, most rely on a Chief Revenue Officer to decide what’s best for the bottom line such as balancing circulation and advertising, arbitraging between a large audience/low yield or smaller audience/higher yield, for instance. But, in the end, only the editor must be held accountable for the contents’ quality and the credibility — which contribute to the commercial worthiness of the media. Especially in the digital field, editors should be shielded from the business pressure. Editors should be selected by CEOs and appointed by boards or better, boards of trustees. Independence will become increasingly scarce.

frederic.filloux@mondaynote.com