The world has changed a lot since I began my media career. As recently as 10 years ago, media distribution meant putting a branded package of information or entertainment onto the right newsstand or the right airwaves. Publishers made money by renting the eyeballs of their audience to advertisers who wanted to reach them. It wasn't easy, balancing circulation or ratings versus ad rates and staying abreast of what people wanted to read or view or hear.
But it was nothing compared to the calculus of inputs that media marketers face today. So, in coming months, I will dissect the changes and layout ways of analysing an online media business to optimize the business model. How to balance all the new ways of generating audience (search, mobile, and social media marketing) and the ways to make money from content products that can be delivered online. The calculus is to optimize the mix.
A special characteristic of the traditional online media market is the traffic surge. That's when totally unexpected events dramatically expand your ad audience for a few days. These types of events can often be disasters (like the Manila hostage crisis), but not always. Sometimes local political events, celebrity news, or a scandal creates a surge. Ask Kompas, one of Indonesia's largest online news operations, whether sex videos and pop stars make for a good traffic recipe.
Unpredictable events drive big traffic spikes. Below is an illustration from a Southeast Asian online news publisher, illustrating what a little local political chicanery can do for traffic.
Source: Google Analytics, 2010
How do you create value from these news surges? It is impossible for advertising to forecast these events. The usual impact is that ad inventory surges, sell through percentages collapse, and effective CPMs (define) get hammered. So these surges are a bad thing right? There are often costs on the operations as traffic strains capacity and there is limited upside in advertising.
Not so fast. Creating value from these online traffic surges requires a SWAT team approach. You must prepare a game plan. First, you need to be able to identify an abnormal traffic surge as it starts. News organisation should have a system of continuous traffic analytics. As part of continuous traffic analytics, develop a detailed traffic forecast incorporating day part trends, seasonal trends, and some impact of natural growth. Then based on that forecast, your continuous traffic measure will compare actuals to the forecast. As long as the traffic is within a band of plus or minus 10 or 15 percent, you will be fine. The illustration above is typical. Most traffic surges were over 20 percent and the four or five of the events were 50 percent to 100 percent over the forecast line. You have identified a surge. Now what? Back to the game plan - audience growth or advertising.
From an advertising standpoint, it's almost impossible to plan for this using traditional CPM sales methods. Sales teams mostly sell blocks of ads at a set price per thousand. Which means after the contract has been fulfilled, then the only revenue opportunity on the page is generated by click-through on a performance unit, like a Google AdSense Box, or some other ad network unit. If you have planned your ad serving well, then once the sold CPM programs are complete, ad serving should switch to the next highest yield ad. If you haven't optimized the site's advertising for this, then be prepared that at some amount of pages views, to run a performance unit into every open opportunity on the site. Other than following the story through more site activity or developing a more engaged relationship with viewer, every other activity should generate a dollar or more likely a few cents.
So, a few things to remember:
1. Traffic surges on a particular news event are an important feature of online news media
2. Be prepared for them:
3. Develop ways to continue to engage this audience after the event has passed:
4. Think through your advertising infrastructure to be sure that as the page views begin to expand, the ad units quickly heavy up on performance based units. Frequency capping for traditional CPM online advertisers will mean that they are quickly exhausted and the site is running house ads or remnant. Be sure it is the right mix of remnant.
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Ross Settles is an International Committee for Journalists Knight Fellow. He currently works with the leading Malaysian news site, MalaysiaKini, to develop sustainable models for online journalism in Southeast Asia. Most recently, Settles managed online business operations for Hong Kong's South China Morning Post. Prior to SCMP, he directed marketing and business development efforts for Knight Ridder Digital, the online subsidiary of what was once the second largest U.S. newspaper publisher. During his tenure at Knight Ridder, Settles led efforts to invest in and implement strategies using new online technologies: social networking (Tribe Networks), vertical search (ShopLocal), news search and aggregation (Topix). Settles worked closely with local news and business operations to develop new business and distribution models for these new investments. He also held leadership positions at technology media company Red Herring Communications, The Baltimore Sun, and the Open Society Institute-funded Open Media Research Institute in Prague. Settles has spent a decade in China and East Asia. He speaks, reads and writes Mandarin Chinese. Settles holds an MBA from the University of Chicago and a BA in East Asian studies from Princeton University.
December 12, 2013
1:00pm ET / 10:00am PT