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Publishing’s church-state wall is crumbling? Good riddance

The historical divide between editorial (church) and advertising (state) has morphed from publishing’s sacred cow into a red herring – a way to deflect the discussion away from an entrenched culture that can’t let go of outdated, unsustainable ways of doing business.

The issue has re-entered the spotlight following the release of the New York Times’ internal-yet-widely-circulated Innovation report, and also as Time Inc. nears its formal spin-off from Time Warner. Time CEO Joe Ripp, you may recall, caused a stir last fall when he announced, as part of the hiring of Norman Pearlstine as chief content officer, that editors would report into the group presidents of their respective divisions.

“We believe effective collaboration across business and editorial lines is imperative if we are to succeed as an independent company.  With the headwinds facing our industry, we must approach our business through a more entrepreneurial lens and break free from bureaucracy.  We are confident this new structure will create a strong partnership between business and editorial, promote creativity and result in a cohesive vision for each of our brands that will be essential to long-term growth.”

The pronouncement caused much angst among critics who promptly decried the death of the church/state divide or, heaven help us, of journalism altogether. Now it’s the New York Times’ turn under the microscope.

A call for collaboration

The 10 staff members who researched and wrote the internal report, which was originally published, somewhat ironically, by BuzzFeed, were frank in their criticisms of the Times’ slow transition to digital. While they did not recommend wholesale reorganization, they did strongly encourage better collaboration between editorial teams and business functions that are focused on what they call the reader experience.

At the Times, there’s no shortage of resources in those reader-focused functions: approximately 30 people in analytics, 30 in digital design, eight in R&D, 120 in product development, and a whopping 445 in technology. So how does the Times’ editorial staff leverage this deep digital talent pool? Not well, apparently.

The report cites “widespread concern” in the newsroom “that it is inappropriate to speak with colleagues on the business side’s payroll.” A leader in one of the Times’ reader experience departments commented, “Everyone is a little paranoid about being seen as too close to the business side.”

The barrier often results in duplicate work or work with “limited utility” for the newsroom – because designers and developers are simply guessing at editorial needs and priorities. “We can sit around and come up with ideas all day long up here, but they have no legs without editors,” Ian Adelman, digital design director, says in the report.

The authors’ recommendations emphasize better collaboration:

“We still have a large and vital advertising arm that should remain walled off. But the many business-side departments and roles that are focused on readers need to work more closely with the newsroom, instead of being kept at arm’s length, so that we can benefit from their expertise.

We are not advocating a huge new bureaucracy, disruptive reorganization, or a newsroom takeover of these departments. We are simply recommending a policy shift that explicitly declares that Reader Experience roles should be treated as an extension of our digital newsroom – allowing for more communication, close collaboration and cross-departmental career paths.”

A more radical approach

Not every publisher advocates such a measured approach toward a digital transformation. Zillah Byng-Maddick, the newly appointed CEO of UK enthusiast publisher Future, recently promised wholesale changes in order to fix a business model that she said “isn’t working hard enough, isn’t sustainable and needs to change.” From the Guardian’s David Hepworth:

[Byng-Maddick] said there would be redundancies and for those remaining promised a very different way of doing things. For a start the business would no longer be structured round content types. Instead a single content and marketing team would produce all content.

Centralizing editorial staff for such a diverse portfolio of brands – Future has titles that span technology, cycling, crafts and cinema – is a bad idea in its own right. This type of streamlining/cost-cutting rarely (never?) improves the quality of the editorial content. But adding marketing to the content mix will completely muddy the waters and erode any editorial independence that once existed. If Future heads down this path, expect its business to crumble as good journalists leave and readers lose faith and trust in the editorial product.

So why is all the concern about the crumbling of the church/state wall a red herring? For one thing, it’s not a new phenomenon. Advertisers (and, as an extension, publications’ own sales teams) have long tried to exert their influence on editorial coverage. From Hepworth’s post about Future:

“Like overheated suitors, advertisers used to lean against the wall between church and state. … hoping against hope that they would be the first one to punch a hole in that structure. … They wanted to be the one to get their brand on the cover, their product featured on the editorial pages without the pesky words ‘advertorial’ above it, their editorial credits more numerous than any of their competitors.”

Some publishers – especially smaller shops – have been more accommodating than others. In a recent discussion about native advertising, the head of a tiny niche publisher commented, “One advertiser asked me why should they buy a native ad when they can continue to pay us to write articles about them?”

Most editors with any chops, however, diligently guard against the unwanted advances of overzealous advertisers and salespeople. And they should continue to do so. But there’s a difference – a huge difference – between maintaining editorial independence and finding ways to collaborate with the business side to ensure that the editorial products they’re developing can actually make money, directly or indirectly.

Translating editorial into business value

A recent report about the lack of digital tools in news organizations, published by the DeWitt Wallace Center for Media & Democracy in the Sanford School of Public Policy, describes this problem and the way to resolve it:

Getting the full value of [editorial] work requires … that newsroom executives coordinate with their business counterparts to make sure the work gets the marketing, promotion and sponsorship it deserves, given its power to engage news consumers.

That’s a conversation that doesn’t always come naturally in organizations that have church-and-state walls between journalists and the business types. But it’s a conversation that many of the people who have done pioneering work in data journalism know needs to happen if the audience and stories their work generates are going to help the industry’s bottom line.

The Times report, unfortunately, highlights a newsroom culture that actively discourages any type of business collaboration:

“The newsroom has historically reacted defensively by watering down or blocking changes [suggested by reader experience departments], prompting a phrase that echoes almost daily around the business side: ‘The newsroom would never allow that.’”

For news and magazine publishers to survive in the digital age, we need to move beyond the tired church-and-state debate toward more productive discussions about the value a publication brings to its audience, and the ways in which all parts of the organization – editorial included – can work together to create a model for sustainable growth and profitability.

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Why print magazines endure

In a survey released this week by CXense, 37% of nearly 400 U.S. publishers said they believe print will continue to be the primary way readers access their content. Another 34% said print was the least important channel going forward, behind smartphones, tablets and PCs.

That bull-vs.-bear split nicely sums up the debate about the future of print. You either love it or hate it. It’s either driving your business or strangling it. Print titles are closing, and new titles are launching (or relaunching) – some from digital-native publishers. Magazine publishers toil in a world of contradictions and conflicting bullet points.

Beyond breathless romanticism for the “tactile feel” of a magazine page (which, thanks to low-quality paper stock, is far less gratifying than it once was), publishers have their reasons for maintaining a print franchise. Some are more defensible than others. I put them in two broad categories.

Revenues

Print subscriptions and ad pages may be flat or declining across the vogue-coverindustry, but for many publishers print still drives the revenue train. Digital traffic and ad sales are growing quickly but aren’t close to closing the gap with print revenues or margins.

Some magazine veterans continue to defend the power of print as an advertising medium. At a recent Hearst event, media critic Michael Wolff said that “advertising probably works better in print than any other medium; it represents the ultimate engagement,” and that “advertising is so significantly less effective in the digital world, we’ve created a world that can’t pay for itself.”

Vogue Publishing Director Stephen Quinn, speaking recently at Magazines Ireland’s Publishing360 conference in Dublin, said Vogue’s gross print revenues were 11 times that of its online revenues in 2013.  Vogue’s print ad pages and revenue have grown each year since 2009. “The money is still in print – that is overwhelmingly true for Vogue,” he said.

An iconic fashion magazine brand such as Vogue can feed the conventional wisdom that in print magazines, readers consider the ads nearly as valuable as the editorial. Many publishers – and their advertisers – still subscribe to this mindset.

“As much as some of my colleagues on the editorial side may bristle at this, I recognize that readers often buy a print magazine for the ad experience as well as for the edit experience,” Fast Company editor and managing director Robert Safian recently told Adweek. “As long as marketers continue to believe that, we’ll be able to support creating that [print] content experience.”

Fast Company recently was named Magazine of the Year at the National Magazine Awards.

Inertia/Fear/Denial

For a few iconic consumer brands, continuing to pour resources into print is a legitimate growth strategy. For the rest of us, including most B2B publishers, probably not so much.

Which brings me to the second main reason publishers hang on tightly to their legacy print business: They don’t know what else to do. Cultures are slow to adapt to a digital-first mentality, often because operations remain tuned to the legacy business. Sales programs and incentives are structured around print, with digital products offered as add-ons; editorial workflows and content management systems are based on weekly or monthly print cycles, with web/mobile/social tools bolted on, or maintained separately.

If the print business is not growing, this structure creates a downward spiral, often managed through cost-cutting in a feeble attempt to maintain profitability on the print side. Cost-cutting is not a growth strategy, unless those resources are being reinvested in growth areas.

Consider Meredith’s Ladies Home Journal, which last month announced plans to kill its monthly print edition. Meredith said the brand will live on as a “robust digital presence”and a quarterly, newsstand-only publication. That could be challenging, considering the entire editorial staff was laid off.

Print vs. digital does not have to be an either-or proposition. “The best way to tell a story is across multiple platforms,” Roy Schwartz, chief revenue officer of Politico, told Folio earlier this year in regards to parent company Allbritton Communications’ plan to launch a monthly print edition of Capital New York magazine. “The key to the success is to be able to offer clients a true cross-platform solution.”

The key is also to align costs so that you’re investing in the parts of the business that are growing. Some publishers are already taking steps to decrease emphasis on print – through reductions in frequency, for example – while funneling more resources to web and mobile development. It sounds fairly simple, but for legacy publishers that have been following a print-first path for decades, changing lanes can be painfully difficult.

A small publisher makes a big bet on native advertising

Many print publishers approach digital innovation in increments, preferring smaller, transitional experiments over big-bang transformations. The Daily Tea doesn’t fit that mold.

The Daily Tea is the newly rechristened publication formerly known as Tea Magazine. The rebranding is just one part of a far-reaching business model overhaul that also involved eliminating the bimonthly print magazine and embracing a combination of native advertising and paid content as a foundation for growth.

Graham Kilshaw, The Daily Tea’s chief media officer, believes the new model better positions the brand to capture a broader, younger audience – a new generation of tea enthusiasts, if you will.

“The print audience was extremely loyal – and very vocal about wanting to keep print,” said Kilshaw, who was part of a group that purchased Tea Magazine in 2012. Over the past two years, however, the subscriber base remained flat at around 1,000, while the digital audience – website visitors, email subscribers and social media followers – grew from virtually zero to 30,000.

“It didn’t take a genius to know where the audience was,” Kilshaw said. As importantly, engagement through the digital channels was strong – as much as 30% of the magazine’s Facebook fans, for example, were participating in conversations. “So it wasn’t just quantity – there was a quality component [to the digital audience] as well,” he said.

The-Daily-Tea-desktop

Educating advertisers

That was enough to convince the Daily Tea team to replace the existing business model, which was based on print subscriptions and display advertising, with a digital/mobile-first strategy built around a mix of sponsor and paid content. One important step in the transformation was educating existing advertisers about why native ads were a better way forward than traditional banner advertising.

“I believe there’s a desire among an enthusiast audience to be loyal to certain brands – they want to find brands they love,” Kilshaw said. “For this reason, sponsor content works particularly well for niche audiences. The advertisers understood that.”

The Daily Tea made the transition easier for its existing advertisers by locking in their display campaign commitments through 2014 – meaning The Daily Tea will produce all the content for each brand for the rest of the year at no additional cost. For new advertisers, The Daily Tea will sell native ads on a CPM basis, based on a minimum of 10,000 impressions.

Banner ads are still in the digital mix, albeit in more of a supporting role to the sponsor content. “There’s a visual connection between the banner ad and the sponsor content,” Kilshaw said. “It’s not so much to get people to click on the banner ad, but to get readers to more fully understand that this is sponsor content. It’s another way of branding the article.”

The early returns are positive. Open rates for the first round of sponsor content have averaged between 5-10% – far outpacing banner click-through rates.

“Clearly, that’s a very nice engagement metric to take to clients and say, ‘don’t run banner ads, run sponsor content instead,’ ” Kilshaw said.

Creative development for native ads

The Daily Tea is building a small marketing services team to help Daily-Tea-native-mobileadvertisers create native content. Jamie Santoro, hired 18 months ago as a “brand journalist” who reports to marketing, is part of a weekly brainstorming session to generate story ideas for brands, with an emphasis on content that makes an emotional connection with the audience.

“Emotion creates engagement – and conversely, dull material gets ignored,” said Kilshaw. “If [sponsor content] does not generate a clear emotion, we go back and start again. We’re also clear on what crosses the line – if it’s just a commercial, we won’t do it. That’s a very real part of our process.”

(One criticism I have is that disclosure of the sponsor content is not as clear as it should be. Home page posts are labeled as “presented by [sponsor name]” with the brand logo. Sponsor content on topic landing pages, however, is not labeled until you reach the article page.)

Rethinking paid content

The Daily Tea didn’t just shake up its ad model. It also revamped its subscription offering to reflect its digital-first focus. Subscribers used to pay $24.99 for six print issues a year; now, for the same price, they will get access to premium digital content along with the annual Daily Tea Guide, a 150-page “bookazine” that features longer-form articles, sponsor content, catalog pages and a few display ads. The first Daily Tea Guide will be released in September.

The “bookazine” is emblematic of a trend many legacy publishers are pursuing: transitioning print into a channel for specialized, premium content. Readers will also be able to purchase the guide separately for $9.99.

Kilshaw said about 10% of The Daily Tea’s web content will be behind the subscription wall, and producers are currently developing more original content for the site. A digital-only subscription will be $19.99 a year.

The Daily Tea’s transformation shows that innovation doesn’t require deep pockets – just a willingness to experiment with new models and allocate resources to where the business is going, not where it’s been. The moves carry no guarantee of success, but at least they’re pointed in the right direction.

Is native advertising a dead end?

Is native advertising a dead end for publishers and brands? Ad agency exec Kirk Cheyfitz believes so, calling native ads “a passing fad in the slow demise of traditional advertising.”

In an article for Chief Content Officer magazine, Cheyfitz, CEO and chief editorial officer of Story Worldwide, says that publishers “have talked themselves into believing that ‘native’ is the long-sought replacement for dwindling ad revenue.”

Cheyfitz argues that advertisers really don’t need publishers as part of their media mix and advocates that brands instead focus on their own websites or “neutral” sites like YouTube to distribute their content. In a digital world, he writes, “publishers and their audiences are not particularly valuable to advertisers” and cites research indicating that consumers trust brands more than they trust mass media:

Gallup tells us that last year only 44 percent of Americans trusted mass media. At the same time, Nielsen says that 69 percent of the global online audience trusts what they see on brand websites. In other words, Gallup and Nielsen find brands are roughly 1.6 times more trusted than publishers. So following the logic of the native ad argument, advertisers should be selling space on their brand websites for publishers to publish more credible news.

(For balance, Cheyfitz also could have cited a Forbes-commissioned study by IPG Media Lab, which found that consumers were 41% more likely to share branded content when they read it on Forbes.com vs. the brand’s own website. It’s all how you choose to spin it, I guess.)

Publishing brand content on a third-party media site, Cheyfitz writes, actually diminishes the value of the content:

Brand storytelling with rich content is powerful because audiences — the people formerly known merely as “consumers” — pay attention to valuable content and reward brand-authors by sharing such content with friends and strangers on social platforms. This social sharing increases impact (by two to four times, studies show) and reach (up to nine times, mathematical models show), reducing media spend and boosting efficiency (by as much as 100 times).

A story good enough to accomplish all that is actually rendered less effective (from the advertisers’ viewpoint) by appearing to be part of a publisher’s site. …  Why? A brand must be known as the provider of such content so audiences will see the brand as trusted ally, valued adviser, and inventive entertainer. No sane brand would spend money to create great content only to let some publisher or broadcaster get the credit.

Provocative, but Cheyfitz misses a couple of key points. First, a publisher doesn’t get “credit” for a native ad – the brand does. While much of the debate around how native ads should be labeled centers on ethics and disclosure from the publisher’s standpoint, clearly identifying the source of branded content also benefits the advertiser – by giving them proper credit for producing it.

Second, by painting all media with the same brush, Cheyfitz ignores niche publishers, which have cultivated audiences that advertisers most definitely want to reach. As publishers get better at using audience data to improve targeting tactics, their readers will become potentially even more valuable to brands.

Successful native advertising comes down to this: a collaboration that creates value for the brand, the publisher and, most importantly, the reader, by delivering high-quality, relevant, credible content.

Yes, brands have (re)discovered that storytelling is a powerful communications tool. They will continue to invest in content marketing as a way to make more engaging, direct connections with customers or prospects. But eliminating paid media as a distribution channel for branded content is shortsighted, because it ignores an important lesson that publishers and brands alike have learned over the past decade: that a good digital content strategy finds consumers where they are, not just where you want them to be.

Publisher sites – and the evolving native ad model – will continue to play an important role in the marketing mix for digital-savvy brands. The onus is on the publishers to convince brands that they offer enough added value – through their audience, their content development expertise or other services – to justify a paid program.

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.”

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.

msnbc

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.