What We Know About the Business of Digital Journalism

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Columbia Journalism School | Tow Center for Digital Journalismand appears online and in the magazine as “Forbes AdVoice.” 5 (If it’s for the printedition, Dvorkin reads it for tone, but says he does no more than that.) The printAdVoice column—limited to one per issue—appears in the table of contentsand may run next to a related story. An online column is featured near relevanteditorial content.Giving advertisers direct access to an audience without previously approvingthe message is a big departure for media companies. The American Society ofMagazine Editors’ standards, revised in January 2011, are strict about separatingad content visually from editorial content, but they are silent on the access issue. 6Eric Hippeau, who has gone back to being a venture capitalist, calls this approach“turning your customers into publishers.” Advertisers, he says, will notonly create content that will increase traffic, but this will represent “a great diversificationof revenues” away from advertising sold by the page view. Before Hippeauleft the HuffPost, the company had just launched a program that chargedflat fees and gave advertisers the opportunity to “have a conversation” with thesite’s audience through posts and responses. He believes that once companies startinteracting with the audience in this environment, they will be hooked. “Once abrand starts that process, they are not going to stop. This is a great benefit to themedia companies.” 7Managing digital journalism properties often means stepping away from rolesand job descriptions that were found in traditional operations. At AOL, executiveshave decided that content areas such as business or technology should becometheir own business units, or “towns” in the AOL patois. 8 And editors areincreasingly responsible for determining the revenue potential of stories.An explicit rendition of AOL’s strategy can be found in a 57-page internalPowerPoint called “The AOL Way,” which was leaked to Business Insider in February2011. The handbook outlines AOL’s plans to lower the cost of creatingcontent while increasing revenue, with explicit targets; it was written a few weeksbefore AOL announced its deal to buy the Huffington Post. 9The company’s rule of thumb is that the cost of acquiring a story should beno more than half the amount of ad revenue expected to come from that story. 10An editor who wants to pay for a premium freelancer must also estimate the sizeManaging Digital: Audience, Data and Dollars 121
The Story So Far: What We Know About the Business of Digital Journalismof the audience for the assignment—in other words, the editor must cost-justifyevery story. 11 In the chart below, the company shows average costs and revenueby story type. The first column lists the department or source of the story, andthe next column states the average cost of these stories. These figures are thenmatched with the “eCPM”—or effective cost (to advertisers) per thousand pageviews—and from that, AOL estimates the number of page views needed to breakeven on that story. 12Which AOL way for content?PV Targets By Content Type – Rules of ThumbSEED Network Article $25 Base Cost $5 eCPM 7,000 PVs to Break EvenStudioNow Video $340 Base Cost $20 eCPM 34,000 PVs to Break Even“High Gloss” Content $100 Base Cost $9 eCPM 16,000 PVs to Break EvenPhoto Gallery $50 Base Cost $5 eCPM 14,000 PVs to Break EvenPremium Article $250 Base Cost $9 eCPM 40,000 PVs to Break EvenPremium Video $5,000 Base Cost $20 eCPM 500,000 PVs to Break EvenExample: $100 Base Cost x 2 = Break-Even Revenue Target($200 Target ÷ $9 eCPM x 1,000 = 22,222 Impressions Needed22,222 Impressions ÷ 1.4 Impressions/PV ≈ 16,000 PVs NeededNote: Video is priced per view, so do not divide by 1.4.DEFINITIONS: PV = page views; eCPM = effective cost per thousand page views.SOURCE: Reproduced from leaked AOL document, “The AOL Way,” January 2011, page 17One method of building traffic is to hop onto hot topics, the document advises.“Use editorial insight and judgment to determine production,” the documentsays, offering as an example that if “Macaulay Culkin and Mila Kunis are trendingbecause they broke up,” someone should “write a story about Macaulay Culkinand Mila Kunis.” And editors are told to always keep expenses in mind. The costof content can run from $25 for a freelance article that needs 7,000 page viewsto break even, to a $5,000 video that will require a half-million streams to recover122
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What We Know About the Business of Digital Journalism

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