Publishing Executive
Cover Story : How to Monetize the Web
June 2009 By James SturdivantIf advertising trends follow a pendulum model, then we’ve swung quite a ways since the dawn of the decade, when venture capital money was being thrown around like tapioca, just to see where it would stick. Commercials like the famous “herding cats” spot during the 2000 Super Bowl sought to publicize brands by creating a generalized buzz, shooting for the widest possible audience regardless of cost. In today’s distressed economy, advertisers are watching every dollar spent, abetted by the Internet’s ability to take targeted advertising to a whole new level. Lead-generation strategies and measurable data are now top priority, and media companies are responding with a slew of new products designed to lure accounts with the promise of maximum return on investment (ROI).
Instant Gratification
Understanding how to make money on the Web today starts with understanding that it is essentially a buyer’s market. Ad agencies working with scant budgets demand measurable results and direct ROI. Strategies based on brand building have (temporarily, at least) been tossed out as inefficient relics of more prosperous times.
“What happens in a recession is people throw the brand out the window, and they want tactical campaigns,” says John McMahon, vice president and group publisher at Questex Media. “Obviously, the Web is set up perfectly for tactical efforts to drive transactions. Not that we don’t do it in print, but it’s not as robust or ROI-focused in print.”
For McMahon, the answer to this penny-pinching mood has been the ability to offer customized marketing “packages,” facilitating access to a target audience at key touch points. Such an approach drives the type of Web products the company is creating for its brands aimed at the travel industry: Luxury Travel Advisor, Five Star Alliance and the venerable Travel Agent family of publications.
“Tactical campaigns are digital programs geared toward common content,” McMahon says. “We’re not single-threaded. If you are in a company like ours where you have the ability to have a lot of different touch points, [you can] take a supplier’s marketing dollars and stretch them a lot further.”
Questex’s Travel Group has social networking products and sponsored e-newsletters aimed at travel crew communities and geographical market segments. The products allow the company to leverage its deep penetration in these markets to offer highly specific data built around lead generation.
The need for targeted penetration has led Questex to back off on the “more is better” philosophy epitomized by e-mail blasts. Hoping for a certain percentage of returns is not worth risking unfocused database oversaturation, and advertisers today are less likely to be dazzled by big numbers. “I go to a smaller audience, but it’s more attractive,” McMahon says of his company’s switch to an opt-in e-newsletter model—a platform more appropriate for clients interested in quality rather than quantity.
“[The future] is going to be lead-gen and data collection and market intelligence,” McMahon says. “If I can target travel agents that book the Caribbean in New York, and I go down to a client in the Caribbean and their big feeder market is New York, then they’re more likely to spend money with me than anyone else. In the old days, you’d say, ‘I can give you an East Coast split east of the Mississippi,’ and they’d be happy about that. So that’s the way it’s going.
“It’s a two-way street now,” he continues. “You’re not pushing an ad out for someone and hoping you can grab some eyeballs. They’re trusting you with their media spend, and you’re expected to come back with quantifiable data and, in some cases, transactions. You can’t hide anymore.”
The Web has forced new standards of transparency on media companies, McMahon says. “We used to do [general] reader surveys. Quite frankly, [today] a supplier can … go into Survey Monkey, send out 2,000 e-mails to an audience we reach, and ask ‘Do you use this [product]?’ It’s real. There are a lot of publishing companies that are falling off the radar because they haven’t made the turn. It can be a dangerous thing if you are just treating this as: ‘Give me your money and let me push this out for you.’”
To be sure it’s getting full credit for the reach it provides, Questex has opted to use Verified Audit Circulation (VAC) for its audits, because VAC audits audiences across multiple platforms. “It’s about your audience, and my audience is no longer just who gets my magazine,” he says. Out of 120,000 contacts, 40,000 might get the print product; 20,000 might use the Web site; and another 60,000 might be reached through other means, such as education and training, webinars or live events.
The Direct Approach
The new emphasis on actionable data should not obscure the very real benefits of an integrated approach to revenue generation, says Jim Roddy, president of Jameson Publishing Inc., publisher of a number of business-to-business publications in IT, business solutions and life sciences.
“One thing people have to realize is [that] print is the best driver of Web traffic,” he says. “We’ve seen that, our advertisers have seen that—we did a reader study, and almost every single person uses our magazine to go to either our Web site or the advertiser’s Web site for more information.”
Jameson has seen a great deal of success—both in revenue generation and audience building—with online videos and e-newsletters. Much of the publisher’s digital offerings are built into online “resource centers,” which feature a targeted combination of educational materials such as sponsored podcasts, video and white papers, and industry news updates. The resource centers are designed to dovetail with articles appearing online and in print, providing more in-depth looks at particular topics. Jameson plans further expansion of functionality and digital options to allow for greater customization of integrated packages.
Roddy believes that the fact that the benefits of print advertising are not easily measurable does not mean they do not exist. Once online, readers may come to an advertiser’s Web site because they clicked on an ad or Googled a name—but understanding the whole process requires appreciating the name recognition and brand association previously built up through print ads, Roddy says. “People have to recognize the whole funnel to figure out ROI—not just the last touch point. Print pushes them down the funnel. At least, that’s what we believe.”
Carine Roman, vice president of online operations at Ziff Davis Enterprise, believes advertisers are at a low point for appreciating the value of a brand-centered campaign. “There is a definite benefit to branding, demonstrated by a lot of research that shows that people who are exposed to an ad are more inclined to do a search around the brand that they saw in the ad. But, still, at the end of the day, if you are giving the choice to an advertiser between paying every time someone clicks or paying every time someone sees an ad, they will go with the click,” she says. Ziff Davis’ answer to this is ContextClicks, which leverages editorial material by generating ads most relevant to online content through sophisticated keyword tracking. “It returns an ad that matches the keyword density,” Roman says, “so the chances you, as a reader, will click on that ad are higher because this ad is exactly what you are interested in.”
Advertisers provide Ziff Davis with the keywords they wish to use, and ContextClicks matches ads to editorial content on any one of five high-traffic Web sites, such as eWeek.com, BaselineMag.com and CIOInsight.com. The ads feature a textual call to action and links to a registration page or Web site, and can include a client’s logo in one of two ways: in the bottom corner of the ContextClicks module itself, or bundled with other branding opportunities, such as a banner ad built around a topic also targeted by ContextClicks.
Other keyword-based features that have been successful for Ziff Davis are the popular double-underlined-word ad pop-ups, and a feature called the Island, which takes this concept to a new level by conjuring related internal content along with an advertisement when a reader clicks on a small magnifying glass located next to words in an article.
Roman says advertiser response to ContextClicks, which was launched in May, has been “extremely positive.” For Ziff Davis, keyword-based programs address what Roman calls the “double challenge” of finding a straightforward way to monetize content and satisfying advertisers’ desire for maximum ROI. By drilling down to subjects known to be of interest to readers, the system generates both a higher click rate and a higher conversion rate.
In the consumer world, where content tends to be digested by larger numbers of people in smaller chunks, higher click and conversion rates can be a matter of timing and packaging. While some publishers are focused on filling their Web sites with vertical categories targeted to reader interests, Atlanta-based Pink magazine has distilled its online revenue-generating strategy into a supplemental product called the Little Pink Book. Topping out daily at about 150 words, the success of the free e-note has surprised even the magazine’s management team.
Launched in February, the Little Pink Book had 60,000 daily readers by late May. According to Media and Marketing Director Kimberly Barnett, read rates were, at that point, at 21 percent and growing, and click through rates were so high—12.5 percent—that the product had become a primary revenue driver and “focus of the whole company.”
“I think we are really on to something here,” Barnett says. “To reach so many people daily is very powerful, and it’s also a way to drive people back to our [main Web] site. Daily e-notes are a trend you will see more of.”
The Little Pink Book features advice, products and helpful links geared to professional women, skewing toward business news in the beginning of the week and moving into lighter topics, such as fashion, as the weekend approaches. The product is opt-in only, which, as with Questex’s e-newsletters, helps ensure reader interest and ad-click conversion. Unlike newsletters, however, it is designed to be a quick read, and its target audience is younger—a median age of 28 compared to the mid-30s for Pink’s print magazine. The different demographic and daily updates has allowed Pink to expand its advertiser pool and opens up marketing strategies, such as offering coupons, that do not work as well in the print magazine or on the Web site.
Another surprise for the Pink staff was seeing the direct impact of Twitter on its bottom line. When Pink held one of its periodic events for businesswomen, The Winning Formula, on May 4, it found the majority of ticket sales came from its Twitter audience of 1,800. “I don’t think we expected that, not knowing exactly where our Twitter audience was located,” Barnett says.
When products or efforts seen as supplemental (like e-notes or Twitter) are unexpectedly primary revenue drivers, it may seem like a case of the tail wagging the dog. In this period of upheaval and Web experimentation, maybe herding cats is not far behind.
Yes, believes Carine Roman, vice president of online operations at Ziff Davis Enterprise—but it will take major moves by dominant Internet players to reverse the trend. The problem today is not pressure on cost per thousand (CPM) rates, she explains. It comes from the stark fact that people no longer want to pay for online advertising per se. “They want to pay for engagements. They want to pay for CPE [cost per engagement] or CPA [cost per action]— which means they are getting the branding, the impressions, for free,” she says.
“Can we reverse that trend? I’d love to, but I don’t have the power to do so,” Roman continues. “Unfortunately, if someone else is offering a lower CPM, I have to do so. There are dozens of ad networks out there that are also bringing the CPM down … [so] in the short term, I do not see the CPM getting any higher.”
She compares payment models based solely on guaranteed response to a TV advertiser demanding they pay only if they get a call in response to a commercial. “That’s what cost per click is,” she says. “The guaranteed response [model] is totally unfair. What if your ad does not bring anything interesting to the client? What if your creative is not good? If I’m bearing the cost of promoting the ad, and you are not giving me any money, that’s not exactly a win-win situation.”
Roman is hopeful, however, that larger players like Google will begin to collaborate more with advertisers, putting the emphasis on maximizing overall value for all sides rather than bargain-basement CPM rates, and she believes this is already starting to happen. She cites recent comments from new AOL CEO Tim Armstrong—who built Google’s advertising model from the ground up before joining Time-Warner/AOL in March—to the effect that ad agencies can be convinced both to pay more and try new forms of online advertising if publishers are willing to share data and strategy.
(Armstrong believes marketers are not paying enough to advertise on AOL, and that this is one of the Web portal’s big problems. “We have to prove to advertisers that our brand is above where it is … [by] giving ad agencies enough insights to actually move the brands to a different degree,” he recently told Ad Age’s Jonah Bloom.)
Questex Media seems to have learned this lesson in terms of dealing with advertisers. “It’s all transparent,” says John McMahon, Questex vice president and group publisher. “[The undervaluing] is starting to change as media companies become more sophisticated with their reporting.” McMahon believes the value of lead generation will serve to tip the scales back in favor of publishers being able to charge higher rates for what is essentially a premium service.
“It depends on the company,” notes Jim Roddy, president of Jameson Publishing. “Too many folks started off by just giving stuff away, and so probably folks that gave stuff away early on because nobody would buy it are suffering from that.” For that reason, Roddy says Jameson has intentionally not been an “early adopter,” instead waiting to embrace proven best practices.
“If you give something away for free rather than charge a nickel for it, they don’t want to pay. But if you’ve always charged them a quarter for it, you’re in a much better position,” he notes, a sentiment echoed by Roman.
As far as adopting a subscription model, “I don’t think we can go back,” Roman says. “For the last 10 years, no one has been paying for content … [so] it will be very hard to reverse to a paid content model. I would be delighted, but a publisher like us, I don’t think we have the leverage to do so.”