Native advertising’s attention-deficit problem

Native ads are shaping up as the equivalent of trees falling in the forest: If no one views sponsor-generated content, does it make a sound?

Chartbeat, a data analytics company, has found that just one-third of readers who click on a native ad engage with the content for more than 15 seconds, and only 24% scroll down the page. By comparison, two-thirds of readers who access editorial content stay on the page past the 15-second mark, and 71% scroll for more.

“What this suggests is that brands are paying for — and publishers are driving traffic to — content that does not capture the attention of its visitors or achieve the goals of its creators,” Chartbeat CEO Tony Haile wrote in a post on Time.com. “Simply put, native advertising has an attention deficit disorder.”

The Chartbeat data speaks to a challenge that goes beyond how native ad content is labeled. If visitors are clicking but not reading, that’s a quality problem. Either the content is poorly written or uninteresting, or it does not match the quality of the editorial around it. In either case, it’s not meeting a reader’s expectations, which reflects badly on both the advertiser and the publisher. Quality, more than any other factor, will determine the fate of native advertising.

Quality brand content, you say? Seems like a void that publishers should be able to fill. Mega-publishers such as Hearst and The New York Times have launched their own creative studios to help brands develop more compelling content, joining native ad pioneers such as BuzzFeed and Gawker. The Wall Street Journal joined the party this week, announcing a new division, WSJ Custom Studios, to help brands create custom content. A series of “sponsor-generated” articles for tech vendor Brocade launched on WSJ.com on Monday.

“The most trusted news source in the world is now creating best-in-class content marketing solutions across all platforms, globally,” the WSJ proclaims on the Custom Studios home page.

Trevor Fellows, the WSJ’s global head of ad sales, told Digiday that the company plans to be selective with its native ad partners, likely working with no more than 10 or 11 this year, to ensure the quality remains high.

“Sponsored content shouldn’t be commonplace. It shouldn’t be second rate,” Fellows said. “It needs to be high quality, not dull or predictable. And it shouldn’t be a pale imitation of editorial content that may be done better somewhere else. If done well, it’s more about giving insights than information. That’s what bonds reader and brand together.”

The WSJ is also doing some A/B headline testing with the Brocade campaign to refine the content. Posts on big data, software-defined networking and data centers each appear twice under different headlines.

Discussions about the quality of sponsor content inevitably leads to questions about what role, if any, a publisher’s editorial staff should play in native ad programs. The WSJ clearly states that its news team plays no role in the creation of brand content. Publishers such as Forbes are hiring “brand editors” – experienced journalists that report to sales or marketing and work directly on brand content.

Hearst sees its magazine editors filling a role as a type of content consultant. Todd Haskell, SVP and chief revenue officer for Hearst Magazines Digital Media, told eMarketer that Hearst’s marketing team and creative services studio will “engage with the editorial team to shape [native ad] experiences and help us think about the content. The editors can then tell us if it’s presented and thought through in a way that will engage and delight our reader.”

Haskell noted that magazine editors won’t be involved directly in creating or producing the content, “but we do actively tap into their insight and experience in terms of creating this content and how we should present it.”

“The most important thing is for a brand to be willing to engage with the publisher to understand what type of content is going to be the most valuable to the reader,” Haskell added.

Chartbeat’s Haile summarized the quality challenge more succinctly in his Time post: “Driving traffic to content that no one is reading is a waste of time and money.”

As digital media grows up, will profitability follow?

If you’re looking for a sign that online journalism is maturing, consider this: BuzzFeed is hiring copy editors.

In a lengthy feature for the Columbia Journalism Review, the Washington Post’s Marc Fisher examines how traditional and pure-play digital newsrooms are rebalancing the need for speed with the need for accuracy. He describes how digital upstarts like BuzzFeed are trying to add more checks and balances to their editorial process.

BuzzFeed has decided it’s no longer good enough to fix errors after publication, at least not on its most popular posts. They’ve decided it makes good journalism and business sense to assure readers that their posts are true, so BuzzFeed is embracing the ultimate symbol of the overstuffed print newsrooms of the pre-digital past.

BuzzFeed Deputy Editor-in-Chief Shani Hilton has built a three-person copy desk with more hires in the works. “I charged myself with bringing more old-school DNA to this place,” she told CJR.

[Hilton] tells skeptical producers that content can be checked and polished without unduly slowing the machine. “They have to feel like they’re not being held up or we won’t succeed,” she says.

Copy editors now review anything on BuzzFeed’s top 10 list—a palpable sign that larger audiences create more responsibility and caution. “If something’s going viral, we want it to be correct,” Hilton says. “But there are people here who don’t think of themselves as journalists, so it’s a learning process.”

Fisher suggests a subtle shift taking place, as legacy brands try to become more nimble and digital pstarts try to become more credible.

As the lines between old and new increasingly blur, are the two schools of journalism’s core values blending into a hybrid? … Despite utopian rhetoric about the Web as a self-correcting mechanism, getting things right from the start turns out to have considerable value.

Fisher focuses on accuracy in journalism, but more broadly it’s a continuation of the argument around quality vs. quantity. With the digital media ecosystem devolving into an endless stream of aggregated, curated, recycled dreck, many pure-play digital brands are realizing that the best way to differentiate is through quality, original content.

Legacy publishers have always believed this to be true – but unfortunately, many of their business models no longer support investments in quality journalism. The reason: Too many still equate quality with print, which is why it’s so hard to break out of the downward spiral they find themselves in as the legacy business crumbles beneath them.

The key to creating a high-quality – and profitable – media brand lies in melding the principles of good journalism with the efficiencies of digital distribution and the value added through visual, interactive storytelling.

Economist-Essay-Democracy

That’s why legacy brands such as The Economist are changing the way they develop long-form essays, embracing a digital-first model that operates beyond what Journalism.co.uk calls “the constraints of print.”

One of the key features of the Essays feature style is that the multimedia and interactive elements are part of the strategy and planning from the start. … When Essays are built, such content will be “baked-in from the beginning,” supported by a team – consisting of the writer, and multimedia, design, interactive and user experience team members – working collaboratively throughout the production.

Digital pure-plays such as BuzzFeed are addressing the challenge from the opposite direction: by adding editorial depth to their traditional listicles and other bite-sized media that fueled their early meteoric growth. BuzzFeed editor in chief Ben Smith offered some insight into the site’s long-form strategy earlier this year in a post on Medium:

Online, each story is at best its own magazine, sent out to find its own temporary audience. One article may absorb people who subscribe, or would once have subscribed, to Foreign Affairs; another might absorb devotees of Wired or Men’s Health or Glamour. The author and the story choose their audience, and the editor’s role is to begin the conversation over who will read and share the piece — not to rework it for the group of people who happen to subscribe to your magazine.

This is a wonderful insight on how long-form journalism is evolving. One can only hope that, as the pendulum shifts from quantity to quality, sustainable business models will follow. It’s good to see digital media growing up – but we still have a long way to go.

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Spanfeller: ‘Web advertising works’

Former Forbes.com CEO Jim Spanfeller believes the page view-driven, ad-supported model that helped build Forbes.com into a digital powerhouse for financial news will work in other vertical markets, beginning with the food sector.

Spanfeller’s media startup, Spanfeller Media Group, announced yesterday that it has secured funding for its first topic-specific website, covering “all things food.” The site is scheduled to launch in October; the company will announce the site’s name and editorial director next month.

In a phone interview, Spanfeller described a business model built around great content that attracts lots of eyeballs, which can be monetized through advertisers. It’s the same model that Forbes applied to rapidly grow its digital business over the past decade; Forbes’ digital properties were pulling in around 18-20 million unique visitors a month when Spanfeller left in mid-2009.

Spanfeller believes there’s still plenty of life in the ad-supported online model.

“The bottom line is, Web advertising works,” he said. “We can better define how it works and continue to push the boundaries to make it work better. But I don’t think it’s radically different than the way it’s been through the ages. First you have to generate attention and audience. That’s why advertisers will come to you.”

The food sector, he said, offers an opportunity to go “deep and wide” with coverage of everything from recipes and cooking tips to restaurants, entertaining, and food-related travel.

The site will offer a mix of original content, aggregated content, curated content, consumer content, and plenty of multimedia.

Spanfeller said paid content may be an option for specific, “high-value” content. “It won’t be a huge part of the revenue mix, but there’s an opportunity for it in all of our verticals,” he said.

The bulk of the revenue model, however, is being built around advertising. Because the food sector is more brand-centric than direct response-oriented, the new site will give brands “a more elegant solution for advertising, rather than spank-the-monkey-type ads,” he said.

Spanfeller did not specify other what verticals his company is considering, though he did note five areas that they will likely avoid: News, finance, spectator sports, entertainment and technology. “These are not impossible, but they’re harder to go into,” he said. “We’re a fledgling startup, so we want to go where it’s easier, not harder.”

The initial focus is on consumer topics, though he did not rule out B2B verticals down the road.

Death of the page view? How about the rise of the sponsorship

MSNBC.com’s new single-view article page, launched as part of last month’s site redesign, is being heralded as a milestone in the long-awaited “death of the page view.” But the strategy is less about what’s dying than what MSNBC hopes to give life to: a new sales model fueled by multi-unit sponsorships.

The changes come as MSNBC.com faces a challenge that all publishers can relate to: the commoditization of online advertising, driven in large part by ad networks.

“We’ve always been a premium brand, but over the past five years we have become more and more sponsorship-driven in order to differentiate ourselves,” said Kyoo Kim, MSNBC.com’s vice president of sales. “We’re under pressure to create better experiences. Page views are great, volume is great, but we need to be able to tell a better story from an advertiser’s perspective.”

Just as MSNBC.com is aggregating related editorial content – text, video, slide shows and interactive tools – into a single page experience, the sales team is pitching the ability to aggregate all of an advertiser’s campaign elements onto that story page.

“We’re offering the ability for advertisers to tell their story in a richer way,” said Kim.

Kim compares the strategy to a purchase funnel. Near the top of the page is a large-format ad to drive awareness. As the user scrolls down the page – indicating deeper engagement with the article – the creative may include more engaging rich media. At the bottom of the story page, when the user is exposed to related articles, videos, commenting and other interactive tools, the creative also can become more interactive.

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Viewable impressions and ad templates

There are two key elements to this approach.

First, the ads that are lower on the page are not served until the user actually scrolls to that portion of the page – virtually guaranteeing exposure and increasing the potential for engagement. The enabling technology, from a company called RealVu, tracks  “viewable impressions” – defined as “when the ad content is loaded, rendered and at least 60% of the ad surface area is within the visible area of a viewer’s browser window on an in focus web page for at least one second.”

Second, MSNBC.com is offering ad templates based on the same tools the web team uses to create interactive editorial content.

“We spend so much money running all this interactive content for editorial, we thought, why don’t we make those tools available to our advertisers for their creative?” Kim explained. The templates enable advertisers to integrate their creative and offers more seamlessly with editorial pages.

“The idea is to create an easy way to start pulling in real-time content from advertisers,” he said “We have the expertise for producing content, so we can help them do that.”

Kim said various levels of sponsorships are available, with campaign pricing ranging from $20,000 to $500,000 a month. Pricing, he said, “will still come down to some sort of CPM. But we’re trying to build around engagement. The story really is, how do we enable better storytelling?”

Ahead of the curve

Kim admitted that it will take awhile for the market to catch up with this approach. There’s a complex network of brands, media buyers and agencies that have built a supply chain around CPMs and page views. Very few of MSNBC.com’s advertisers are thinking “holistically,” he said. “Clients always want, want, want, but sometimes they’re not ready,” he added. That would explain why there’s still plenty of run-of-site inventory on article pages from the likes of lowermybills.com, Progressive and, yes, ad networks such as Pulse360.

MSNBC.com may need to make some internal adjustments as well. Kim acknowledged that, entering a new fiscal year, sales managers will be looking at ways to adjust incentive and compensation plans to better reflect the new sales approach.

Adobe’s secret e-reader weapon: Omniture analytics

Looking for a secret weapon in Adobe’s e-reader publishing technology? Think analytics.

Adobe still isn’t ready to lift the veil on all of the technologies behind its Digital Magazine Solution, which the company plans to release later this summer. We know that it includes Adobe’s InDesign CS5 publishing software, along with digital viewer and other technologies that transform InDesign files for use on iPad and, eventually, other e-readers.

What many overlooked in the initial announcement, however, are the integrated Omniture analytics that could provide publishers with new ways to measure audience engagement.

“One of our main goals is to enable magazine publishers to continue to have the direct relationship with the reader,” said Dave Dickson, Adobe’s product marketing manager for digital publishing. “These analytics are the bread and butter. We’ve seen other technology that doesn’t provide the visibility that we hope to provide.”

The move puts Adobe’s $1.8 billion acquisition of Omniture last fall into a new light. The built-in analytics will give publishers direct insight into how users are engaging with magazine content on an e-reader – their navigation through the magazine, which features they’re reading, how much of a video they watch, etc. Of course, those metrics will be able to measure engagement with the ads as well – hence Adobe’s reference to a “new advertising paradigm.”

“The analytic data will give publishers the ability to innovate around the business model,” said Dickson. “Advertisers will be able to create that same immersive experience for engaging with the ads as publishers can do with the content.”

Adobe has released a timeline for its e-reader technology. The first release, for the iPad, will be available this summer, followed by a cross-platform version in the fall. Both versions require Adobe’s InDesign software. Adobe also expects the technology to be integrated with existing editorial publishing systems such as VJoon K4 andWoodwing.

“The goal is to enable streamlined content production” for print and e-reader editions, Dickson said.

The technology will support embedded HTML5 controls for adding video, audio, slideshows and other interactive content. With its cross-platform versions, Adobe will also, of course, support its own Flash and AIR environments for creating rich Internet applications.

The Digital Magazine Solution is part of Adobe’s Digital Publishing Platform, which also includes the News Reader developers’ kit that Adobe is creating for newspaper publishers, along with new tools for e-book publishing.

What can we learn from the first iPad magazine editions?

The iPad frenzy continues, with Apple announcing last week it had passed 2 million in sales in the first two months since the iPad’s debut. Magazine and newspaper publishers continue to salivate over the possibilities of the breakthrough tablet as a game-changing delivery channel – one in which people pay real money for digital content!

But while many are eager to jump to black-and-white conclusions, I would caution that we really don’t know much yet about how publishers will leverage the iPad and how consumers will embrace this new mode of consuming magazine and newspaper content.

Two early entrants into the iPad publishing game are notable for popsci-ipadtheir different approaches. The June issue of Wired magazine is chock-full of video, audio, slide shows and other animations, tipping the scales at more than 500M bytes – which means you won’t be starting a digital archive on your iPad. Popular Science, by contrast, intentionally avoided videos and graphics-heavy features in order to keep the file size to a download-friendly 20M bytes. Both apps are priced at $4.99 per issue.

Notably, the Wired iPad app was produced with the help of Adobe, which today announced plans to make the digital viewer technology it developed with Wired available to other publishers. The technology converts Adobe InDesign files for iPad and other e-reader environments, and appears to Adobe’s latest answer to Apple’s banning of Flash from the iPhone and iPad.

Not everyone is enamored with this approach. While most reviewers are focusing on the knockout graphics, the site design experts at Information Architects took the typography to task for its poor resolution compared to the printed page. And InterfaceLab blamed the app’s bloated size partially on the design approach:

Similar to the PopSci+ magazine application, each Wired issue is actually a bunch of XML files that lay out a bunch of images. And by “a bunch of images” I mean 4,109 images weighing in at 397MB. Each full page is a giant image – there are actually two images for each page: one for landscape and one for portrait mode. Yes, I’m laughing on the inside too. There is no text or HTML, just one gigantic image. The “interactive” pieces where you can slide your finger to animate it are just a series of JPG files. When you press play on the audio file and see the progress meter animate? A series of PNG files.

Nevertheless, criticism over the Wired app’s size, typography and lack of social-sharing tools hasn’t tempered early sales. The app is a hit. Apple named it App of the Week, and it became the top paid app after its first day in Apple’s iTunes store. Wired.com’s New York Bureau Chief, John Abell, said in a blog post that 24,000 copies of the June issue sold during the first 24 hours of its release. For context, Abell added that Wired sells about 82,000 single copies on newsstands every month and has about 672,000 subscribers. At $4.99 a pop, that’s about $84,000 in revenue after Apple gets its 30% cut.

iPad editions from other publishers are priced similarly, causing some backlash among consumers who say the premium over print subs is unfair. (A year’s worth of Wired in print costs $10.) Said one reviewer on the iTunes store: “Just to be clear, I WILL NOT pay 4.99 an issue for this. I expect either 1.99 a digital issue, or a subscription that is the same as the print edition. Once the pricing is fixed, I will be a regular buyer of the magazine.”

Publishers are feverishly working on subscription models. Gregg Hano, VP of publishing for Bonnier Technology Group, said that an in-app subscription plan would be coming soon, with expected pricing for Popular Science of $19.95 for six issues and $29.95 for 12. (This is more than double the $12 annual subscription to the print magazine.)

Consumers may be gnashing their teeth over the pricing of these early editions, but Andrew Degenholtz, president at ValueMags, offered some perspective to Business Insider:

“[Readers are thinking, ‘We’re not knocking down any trees, there’s no ink being used, and there’s no truck being used to deliver it. But there are significant editorial costs, creative costs and research-and-development and production costs. It’s understandable that magazine publishers are going to charge a higher price for the subscription early. You can always lower the price, but you can’t raise the price at a later date.”

He’s right. Pricing models will continue to evolve, as will the design of these iPad editions. The most important lesson for publishers is that no one should jump to any strong conclusions based on these early apps. The iPad magazine model 12 months from now will be markedly different from the ones we see today. More than anything, publishers are beginning to understand that they’re not releasing finished products, but works in progress that will evolve based on the technology and audience feedback. The general consensus among the publishers who are leaping first is that they’re willing to experiment in full public view.

“We’re in the 1.0 stage of this,” Hano said last week during a panel discussion on mobile technologies co-sponsored by the Magazine Publishers of America and eMediaVitals. “Our back end is not even 50% of where we want it to be.” (Hano acknowledged the possibility that Bonnier will license the back-end production system to other publishers.)

In this month’s editor’s letter, Wired Editor in Chief Chris Anderson offered a similar perspective:

The arrival of the tablet represents a grand experiment in the future of media. Over the next few months, we’ll integrate social media and offer a variety of versions and ways to subscribe in digital form. We’ll learn through experimentation, and we will watch closely as our readers teach us how they want to use tablets. There is no finish line.

The experimentation applies to advertising as well. Popular Science, for example, is only running full-page ads in its iPad edition, with Hano acknowledging that fractionals are currently a challenge to produce. But the ad model certainly holds promise, and could provide the revenue stream publishers need to reduce their app pricing down the road.

MediaDailyNews touched on the potential:

Because the iPad alters the way that consumers engage with content, it will also affect they way they engage with advertising. Yes, the novelty of this interactivity will wear off, but will the way consumers think of advertising stay the same once they experience it through this platform? Will they “experience” advertising in a manner they have never before? Will it help make advertising almost as anticipated and desired as content itself?

It could, if the reaction of a colleague is any indication. As he scrolled through the current issue of Popular Science on the iPad, he sounded surprised as he commented, “I found myself actually looking at the ads.”

Revenue shift: An inflection point for B2B publishers

Business-to-business publishers have struggled mightily over the past decade to decrease their reliance on print revenues, but the transition has not been easy. The margins and incentives for selling in the digital space were never enough to drive wholesale change in the way B2B publishers approached the market. While everyone knew the transition to digital was happening, the fact was that print still drove the majority of revenues for many B2B publishers. So sales teams continued to milk it.

The recession changed all that, because it took the legs out from under print advertising. American Business Media recently announced that B2B print revenues fell 24 percent in 2009, to $7.5 billion from $9.9 billion in 2008. According to ABM, print accounted for just under 36 percent of all B2B revenues, trailing trade shows ($9.4 billion, or 45 percent) but still ahead of digital revenues ($4 billion, or 19.1 percent). Last week, Folio offered a slightly different perspective, generating some headlines by citing survey results indicating that print will drop below 50 percent of B2B publishers’ total revenues this year for the first time.

Larger publishers seem to have made the transition more quickly. Last year, market research firm Outsell surveyed “the top 44” B2B publishers and found that print revenues made up just 40 percent of their aggregate revenues.

IDG, a leading technology publisher, made the “crossover” in 2008, when online revenues surpassed print revenues for the first time. The current split at the tech publisher is about 50% online, 35% print and 15% from events – quite a change from 2002, when 86 percent of revenue from IDG publications came from print. I worked at IDG from 2004-2006, during what was arguably the most difficult part of their transition, both culturally and fiscally. It was not pretty, but the company is now viewed as a shining example of a B2B publishes that “gets” digital.

IDG’s digital transition has been led not by online display advertising, but by the wild success of its lead-generation business. It has also continued to diversify –  creating its own vertical ad network, for example – while continuing a sometimes painful restructuring of the organization to align with its Web-centric approach.

Compared to some B2B publishers, particularly in the tech space, IDG was actually behind in adopting a “Web-first” business philosophy. But it made a successful transition because it combined innovative thinking with some hard decisions about the makeup of its organization. For other B2B publishers that have continued to lag in their transition, the current advertising landscape underscores what most have known for some time: It’s time to give up the print binky and develop a more balanced revenue mix. Your future depends on it.