What We Know About the Business of Digital Journalism

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Columbia Journalism School | Tow Center for Digital JournalismFans, despite their small numbers, were responsible for more than 55 percent ofthe site’s traffic. Fly-bys—those people most likely to come from a search engineor a blog—clicked on barely three pages a month. Overall, each fan generatedabout 50 times more traffic per person than a fly-by.“When people talk about the size of an audience, that’s a sham,” Shanahan says.In his view, stated numbers don’t reflect how differently the varieties of users actin the way they navigate a site. Publishers mistakenly focus on “page views ratherthan length of time,” he writes on his blog, Digital Equilibrium. 8 Referring to ad“impressions,” which are appearances (not clicks) of ads, Shanahan adds, “Usingtoday’s standard, there is no difference between impressions that last 1 second, 10seconds, or 2 minutes.”“The digital world has changed the revenue dynamics for publishers,” he addsin another post. “In the print world, a publisher’s shipment of physical media wasthe basis for generating revenue. In the digital world, consumption of media isthe basis for revenue. ... In other words, engagement is the unit of monetization.” 9Shanahan says the benefit of more engagement isn’t just in higher ad rates,but in relationships that publishers need to build with their most loyal readers—something that has been lost in the drive to attract mass audiences. By chasingafter large audiences rather than deeply engaged ones, he says, news organizationsare sacrificing advertising revenue. Publishers who have a “direct relationshipwith fans can push better contextual advertising”—that is, ads that relate directlyto a user’s habits and interests. “A publisher can know which fans saw whichadvertisements in which context on their site.” Sites can use that information toprovide readers with targeted ads or offers.And, news organizations that hope to charge for online access need to locate—andcater to—fans, since engaged users are more likely to subscribe. Thatway of thinking is at the heart of the New York Times’ decision to charge foraccess to its digital editions. The Times built its pay scheme so light users of thesite won’t have to pay for access, while heavier users—defined as those clickingon at least 20 stories a month—will be charged. But the Times also sees aconnection between engagement and advertising. Michael Golden, vice chairmanand president of the New York Times Co., discussed the different kindsof online audiences during a speech at a March 2011 advertising conference,The Trouble with Traffic: Why Big Audiences Aren’t Always Profitable 25
The Story So Far: What We Know About the Business of Digital Journalismshortly before the pay strategy went into effect. Speaking of less committedusers, Golden said, “Their engagement is limited, but their numbers are impressive.… We have to balance engagement and reach. The higher the engagement,the higher the CPM.” 10 * * *Two media outlets with very different editorial missions—Gawker Media andPBS—have tackled this issue of trying to differentiate more and less engaged segmentsof their audience when pricing advertising.Gawker’s network of sites, started by British journalist Nick Denton in 2003,includes Gizmodo (for gadget lovers), Deadspin (for sports fans) and Jalopnik(for car buffs). In March 2010, Gawker began touting a metric it calls “brandedtraffic.” This was defined as people who have bookmarked the company’s sitesor arrived at them by searching specifically for the site by name—by, say, typing“Deadspin” into a search engine. 11Gawker found that roughly 40 percent of visits come via branded routes, ascontrasted to links from search engines. And such visitors are more devotedand engaged, spending 91 seconds more per visit than others. That is a meaningfuldifference with financial impact, says Erin Pettigrew, Gawker Media’smarketing director.First, the more engaged users are more likely to see highly profitable “roadblock”advertisements—ads that take over the home page of the site for severalseconds and then fade away to reveal the editorial content of the page. That revenuehelps compensate when advertising rates fall at Gawker and other sites. AsReuters’ Felix Salmon has noted, the number of online ads has been growing sofast that advertisers can demand lower rates. As a result, wrote Salmon, “Dentonsays that since 2008 he has been getting only half the revenue per page that heused to get in 2004.” 12One way to counteract that is to try to sell more “branding” advertising on theWeb—that is, ads designed to draw positive attention to a company’s name andimage, rather than to trigger a direct response to an offer for a product or service.26
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