The Washington Post is making money the new-fashioned way, by playing roulette
In the newspaper business, every year brings fresh buzzwords. Jockeying for the lead so far in 2011 are "new revenue streams" and its corollary "many small bets." But what does that mean, in practice, for a given paper?
I heard an answer in a talk by The Washington Post's Ken Babby at the International Newspaper Marketing Association World Congress in New York last month. Babby's title picked up one of my favorite metaphors for the exercise: "Emerging Digital Media Platforms: Past, Present and Future Roulette."
Babby was the top advertising executive at The Washington Post before he turned 30. And, in the 18 months since I met him at a Poynter conference on the future of advertising, his title has morphed to "Chief Revenue Officer" -- signaling that some of the best emerging opportunities are not advertising in a traditional sense.
Though I missed the conference, Babby brought me up to speed in a phone interview. He has both a theory of how to play the game so as to beat the odds, and a litany of unorthodox businesses the Post has launched.
Babby prefers the term "strategic bets" to small bets. Some, like mobile and tablet apps are likely to be expensive; some will have a payoff, if any, later rather than right now.
"The roulette wheel epitomizes how many choices we have," he said, "Our resources are limited -- not just dollars but also time."
So the Post is going for a mix of "short-term cash and long-term value." One of the successful new ventures is a non-digital one. "We have built a great conference/live events business," Babby said.
This revenue stream has required some persistence. "Washington Post Live," the events business, is the successor to the much-maligned "salons" on issues like health-care reform. That initiative ended before it started, after critics complained that the newsroom was being put up for sale to interest groups.
This time, Babby said, many of the topics are apolitical, such as "the future of food" or "business of the Beltway," though a recent event was a breakfast with Obama adviser David Axelrod. As before, the money comes not mainly from participants but from sponsors.
"They have a presence in the room," Babby said of the sponsors, "but they don't get involved in the planning of what is covered."
Another fast-growth, high-margin venture has been e-mail newsletters, Babby said. "We now have more than 50 products, some daily, some weekly."
The content is typically a reformatted mix of Post content, targeted by topic, ranging from an afternoon news update to a lifestyle "DC Scout."
The newsletters are free to those who sign up; the money again comes from sponsor/advertisers, with a limited number per newsletter. Because the Post can also document that the newsletters are well-read and many define a targeted audience, Babby said, rates are far higher per thousand readers than for generic online banners.
Mobile, deals, video ads
The Post portfolio includes some predictable elements. It offers both mobile and tablet apps, going through iterative improvements in news and ad presentation. As at most papers, there isn't huge money yet, but prospects a few years out are bright. The Post also jumped in with its own deal-of-the-day variant on Groupon.
In the try-try-again category, Babby said that he is "extremely bullish about video display and pre-roll advertising." He thinks improvements in devices and content "will lead to a higher level of engagement." But the Post has found itself ahead of the market with several earlier efforts, including hiring a dedicated staff of top videographers, and Babby conceded, "it hasn't happened yet."
Social, personalized, aggregation news and ads
Finally, the parent Washington Post Company has two 2011 launches that are mainly bets on the future rather than quick pays. It started Social Code in February, an agency/consultancy, managed by Chairman Don Graham's daughter, Laura, and aimed at helping companies with a Facebook advertising strategy.
Don Graham is on Facebook's board and had befriended and mentored Mark Zuckerberg before the company became a juggernaut -- so the venture draws partly on those ties. Already, Babby said, it has picked up significant clients, like Radio Shack and American Express.
This spring the Post took a double position in the burgeoning news aggregation space. It offers its own platform, Trove, for personalizing Post news and other feeds. It also is one of three lead investors (with the New York Times Co. and Gannett) in Ongo, a paid, ad-free, online display of news from legacy organizations.
Ongo, as I wrote last month, gives the companies a foothold against worrisome competitors like Flipboard and Zite, both iPad apps that deliver personalized traditional and non-media content in a readable format.
These moves signal, as Washington Post Managing Editor Raju Narisetti wrote June 10 for Forbes.com, that "we ought to create a drawbridge around our content -- not necessarily for readers but for aggregators."
Narisetti goes on to explain why the Post is sitting out another 2011 revenue stream favorite -- charging for online content. Nor has the Post raised print subscription rates as aggressively as some other big metros like the Boston Globe and Dallas Morning News.
Babby's final comment to me underscored the rationale: "We have a digital display business that is healthy and growing, and we will be getting the majority of our revenues from print advertising for some years to come."
Lessons for other news organizations
I offer this detailed description of the Post's choices with the notion that it is not a one-size-fits-all for any newspaper of any size. Quite the opposite.
I do think, though, that events, for instance, could probably help a great many papers. The opportunity for readers to get out to an event with some buzz and interface with newsmakers has been a big hit for such new media launches as MinnPost.com and Hawaii's Civil Beat.
For papers, there is a paradigm shift needed. In the prosperous good old days of 1970 to 2000, sponsoring a parade or community festival was a good deed and image builder for the newspaper brand. Now plenty of companies want in to the right sponsorship as part of a varied marketing plan. Well-targeted, well-promoted events move beyond goodwill and image -- they have revenue potential, too.
Conversely, the Post's decision to sit out online paywalls makes sense situationally. The Post faces the common challenge of metro papers: TV stations and others could become go-to sources for breaking news if users of the Post site charged for it. Also the Post gets a much higher than typical share of its ad revenues (16.6 percent in 2010) from digital.
The Post also offers a good example of the context in which this kind of experimentation is taking place. In one of many incisive essays this year, Paris-based analyst Frédéric Filloux wrote in his Monday Note that despite the Post's impressive stable of digital ventures, it has lost five times as much in print revenue in the last five years as it has gained in digital.
With print seeping ad dollars again so far in 2011, that challenge remains central for most newspaper organizations -- to innovate well and strategically, but fast too.