“A guy took an ordinary box of crayons…and proceeded to blow everyone away. What he did = Epic.”
“Here’s what happened when six corgi puppies visited a college campus”
I don’t know about you, but I’m sick of all the clickbait. We fall for those sensational headlines that get us to click through dozens of slides, only to be disappointed by the content’s low quality. When we foolishly click, our wasted time turns into ad dollars that go right into pseudo-“publishers” pockets.
Although I’m glad Facebook is trying to crack down on clickbait, it still leaves me wondering – given all the noise out there, shouldn’t quality content be in high demand? Shouldn’t people be willing to pay for valuable content that cuts through the clutter? Why are publishers, 16 years into the 21st century, still having a hard time figuring out digital? It seems like the opportunity is ripe for producers of quality, curated, targeted content. The online competition’s value proposition, i.e., tricking you into clicking on garbage, is not exactly compelling.
Publishers are not filling the void because they keep going back to what worked in print
While one could argue that print advertising reached an equilibrium and won’t be falling much further, I think we can all agree that depending on print advertising revenue for growth is reckless. From 2009 to 2014, the share of global advertising spent on newspapers fell from 22.4% to 14.4%, and for magazines, it fell from 6.7% to 4.5%. Researchers at McKinsey expect newspaper and magazine advertising to continue to decline at a rate of 0.6% and 2.4% per year over the next five years, respectively.
Publishers are hesitant to depend on digital subscription revenues, and many point to the fact that consumers are not willing to pay for content online. Content creators cite a 10% rule of thumb, meaning that about one out of ten print subscribers pay for a digital replica. Instead of developing an innovative digital product that consumers want to pay for, many publishers turn back to a business model they know well: monetizing print content online with advertising. However, digital CPMs are only a fraction of those on the print side. One study by Morgan Stanley showed newspaper and magazine CPMs averaging around $17 while internet CPMs are only $4. Publishers complain about trading print dollars for digital dimes (and mobile pennies). Growth in ad blocking exacerbates the situation. Over the last five years, the average number of monthly ad blocker users grew from 21 million to 198 million, and ad blocking cost publishers $22 billion in 2015 alone.
Consumers will pay for exceptional digital content
While publishers experience some moderate success with digital magazines and maybe even with gated content, very few manage to maximize their potential. All hope is not lost: the data show consumers will pay for the right digital content. In fact, last year, overall spending on online content access increased by 31%. The New York Times exceeded one million paid digital subscribers. So why do many still claim money can’t be made in digital? Here is the disconnect: web and mobile offerings need to go beyond converting print to a digital replica.
How is this done? Having spent decades in media, I observed that these five things work when creating new revenue streams to counteract the challenges in advertising:
- Narrow your focus on a specific niche. Slice off a piece of your audience and help them solve a particular problem. Focusing on a sub-segment helps you make better tradeoffs given limited product development and marketing resources. Start small and corner the market. Then move on to adjacent markets and repeat the winning formula. NetShelter did this well. The technology-focused digital media publisher managed more than 150 vertical sites, and Ziff Davis acquired them in 2013.
- Only use exceptional content. In the long run, you can’t fool smart people (or Google) with low-quality digital content. Does your content reflect an understanding of your target niche – their needs and wants? Does your content solve a real problem for them? Does your content have emotion or personality that appeals to them? If not, you most likely won’t be successful.
- Expedite development with new technology. Many publishers are tethered to legacy systems. I’ve seen good ideas killed because executives were concerned about long-term integration issues. Use off the shelf tools to get something out there. New technology makes it easier and cheaper than ever. Don’t let perfection get in the way of progress. Speed should be the name of the game. You can always integrate later.
- Sell something besides advertising. I’m not saying you should turn down advertising. I am saying a new product’s business model should survive without advertising; otherwise, you’re not providing enough value to your consumers. Customers will pay for something that solves a problem for them, and your job is to figure out the best way to do that. Here’s the bonus: the more value you provide, the more you can command from both consumers and advertisers as you’ll be able to build a larger, qualified, and committed audience.
- Keep iterating until you get it right. Don’t expect overnight success. Set goals. Measure progress against those objectives. Listen to your customers. Make improvements. Evaluate again.
Sounds good, but we’re too busy
To launch new revenue streams, executives need strong change management skills. A recent article in the Harvard Business Review chronicled the difficulties of trying new things at The New York Times. Publishing is complex, and many CEOs I’ve talked with say they can’t get out of the day-to-day to work on new lines of business. There is too much pressure to hit short-term targets. Teams can get buried in long, tactical “to do” lists instead of focusing on a small set of strategically important initiatives. We’re all human, and change can be hard. It all eventually comes down to leadership, making new revenue streams a priority, and setting the right cultural tone.
So please, join me in the quest to eliminate clickbait and get more outstanding content in the hands of those who need it!
About the author
Rob Ristagno is the founder of The Sterling Woods Group, a firm that builds new revenue streams for content creators. Prior to creating The Sterling Woods Group, Rob served as a senior executive for several niche media and e-commerce companies. He most recently was the Chief Operating Officer of America’s Test Kitchen, considered to be the gold standard in the niche media world for building diversified – and often digital – revenue streams. Rob started his career as a consultant at McKinsey and Company and holds degrees from the Harvard Business School and Dartmouth College.