While it’s heartening to see news executives grappling with how to make money from journalism and ensure the survival of the profession, I am sometimes left with the impression (no pun) that news people are working on business models that lag the way marketing is moving. For just as journalists are learning new skills and methodologies to produce news, so, too, is marketing evolving and changing.
To be sure, journalists are becoming more sophisticated about the business side. Entrepreneurial courses in J-schools these days teach terms such as “impression” and CPM and concepts such as clickthrough rates and “cost per acquisition” (CPA). Journalistic managers at even the middle level are learning about ad rates and the difference between CPC (cost per click) and CPA.
Meanwhile, though, marketers — for whom the above terms are starting to look aged — are playing with new metrics such as cost per engagement, addressability and measured effectiveness, and they are starting to require more proof of increased sales before they spend money.
As an exercise in seeing how marketers see the world differently than editors and some publishers, let’s consider how a business owner might look at the advertising equation. She wants to reach people who will buy her products and services. While she might consider the local news blog as a vehicle, as a financially motivated businesswoman she wants to get the most bang for the buck, regardless of where the ad appears. (For the moment, let’s set aside emotions and the desire to help a friend or news product for other than financial reasons.)
What that marketer wants is to hit people at the exact moment they need their product or service and are willing to spend for it. A local business wants its results at the top of a search page when a potential customer types “chiropractor 90210” or “cleaners 10001,” for example.
An entrepreneurial journalist with a news blog might offer ad space to a business, discussing CPMs and clickthroughs and proclaiming that the advertiser can reach the right audience. The advertiser may then want proof that such an ad would be more effective than an ad on Google search or some other non-news property that promises more effectiveness, and new measures to gauge the effectiveness, for the same dollars.
If the publisher has no good evidence of effectiveness, he might lose the ads to the other opportunities.
Context matters, too. Many real-world examples have shown that if you place your ad next to content that is about the same subject as the ad, the ad will register with more people and more of them will click on it. Technology coverage begets computer sales, entertainment is good for movies, and so on.
And here’s an unfortunate piece of news about news, at least the news that we think of as needing the most support — impartial coverage of anything from town council meetings to disasters and war. Those consumers may be engaged with the content, but there are not likely to be interested in the high-priced ads next to that content. Ads in the hard news sections of sites tend to have lower pay levels and have lower performance in metrics of “engagement,” including interaction with ad applications, filling out forms and printing coupons.
There’s nothing wrong with the typical model: I have audience, you want to reach them, you pay me to place an ad. Yet, we’ve seen CPMs (the rate charged for ads on a page, purely for exposure) plummet, and I and others have surmised that that fall is due not only to the economic collapse, but also to mass availability of ad inventory, tools such as Twitter and Facebook and the new metrics discussed above.
Just as journalists are learning new ways to produce their work, in order to support their work over time they may have to find new models and be equally innovative in explaining the value their work provides marketers.