December 10, 2009
In the most-awaited session of the afternoon of Day 1 at LeWeb, Michael Arrington (from TechCrunch) sat down with Marissa Mayer, Vice President, Search Products and User Experience at Google to discuss a series of hot topics like recent Google innovations, mobile and the newspaper industry.
On recent innovations:
- Mayer says Google is focused on future of search and they expect different modality of search, not just through keywords. That’s why they launched Google Goggles this week which is basically image recognition (you take a picture and Google tells you what it is). See this example. They also expanded voice search to Japanese and added the “What’s nearby” mobile functionality. Mayer thinks that people will eventually talk to their phone or take a picture to make a search. They also added real-time results (from Twitter, blogs, Facebook, MySpace, etc.) to regular search results, which drastically increases the relevancy of Google search results.
- On Google Chrome, she mentioned the release of Chrome Extensions which allows anyone to add functionalities via plugins in the Chrome browser (like Firefox). She said there are “tens of millions of Chrome users”.
- On Google Wave, Arrington stated “there’s something there” but wondered if we needed more “training”. I think most people are unsure of the value of Wave today and that’s why the Techcrunch founder asked the question.
On mobile searches:
- Mayer says they’ve grown tremendously on smart phones. Asked by Arrington if their total share of mobile searches over total searches was in the 1 to 5% range, she answered “slightly higher than that”.
- Arrington started by saying we all understand the dire situation of print media and mentioned Eric Schmidt recent vision piece in the Wall Street Journal. He then asked Mayer: “What’s your vision?”. The VP from Google answered with a question: “how do you get users more engaged with news online?” She continued by stating that if we could build a news site from scratch today, it would probably look very different than what we have today. She then mentioned The Living Stories experiment they’re doing with the New York Times and the Washington Post. “What if the story was alive? Not just the print version posted online.” She added that the Web ”puts pressure on the atomic unit of consumption. The article is the atomic unit.” She then suggested we could aggregate all news story on the same topic on one page, like Wikipedia, to help with discovery in Google.
- She closed that topic by suggesting “personalized stream of news”, probably on your mobile phone, would be interesting. The stream would be filtered according to your social circle, location, the news brands you like, the writers you like, and the important news you should know about (she called them “veggies”).
- Asked if newspapers will move fast enough, she thought so and mentioned the New York Times and Washington Post are very progressive partners and very interested on how they can reinvent themselves.
- On Murdoch, Mayer mentioned the partnership with MySpace. Asked if she thought News Corp would pull their content from Google, she answered ”I hope not” as it would impact comprehensiveness of their results set. She added ”we have to respect the content owners. We would respect his will.”
- Finally, Arrington asked if Google would consider paying for content, Marissa Mayer proposed that they already have programs for content monetization through Google Adsense and their display ads network.
See more on Techcrunch.
“The New York Times Company Reports 2009 First-Quarter Results” via Yahoo! Finance.
Internet businesses include NYTimes.com, About.com, Boston.com and other Company Web sites. Total Internet revenues decreased 5.6 percent to $78.2 million from $82.9 million and Internet advertising revenues declined 6.1 percent to $67.6 million from $72.0 million. Internet advertising revenues at the News Media Group decreased 8.0 percent to $42.2 million from $45.8 million. In total, Internet businesses accounted for 12.8 percent of the Company’s revenues compared with 11.1 percent in the 2008 first quarter.
In addition, The New York Times Company had the 13th largest presence on the Web, with 52.3 million unique visitors in the United States in March 2009 according to Nielsen Online, up about 4 percent from 50.4 million unique visitors in March 2008. Also according to Nielsen Online, NYTimes.com had 20.1 million unique visitors in March 2009 versus 18.9 million in March 2008, up about 7 percent, and was the No. 1 newspaper Web site in the United States, a position it has long held.
What it means: the excerpt above shows online results from the New York Times Co. Traffic is still growing but revenues are going down, clearly impacted by the tough US ad market. I suspect the online display ad market is not doing so well. Overall advertising revenues at the group are down 27%, lead by a drop of 45% of classifieds revenues.
Before I talk about the New York Times Company results, a quick note. As we plunge deeper into a recession, online and offline media companies are impacted but it’s difficult to tell what will be the overall impact of this economic slowdown. Since last week, I’ve started discussing quarterly conference calls from media companies in this blog as I feel this is where we can extract the most valuable information in the short term (and I’m a bit tired of Techcrunch covering every little new Twitter application out there… ) Hope you like this direction!
Now, back to the NYT Q4 results unveiled yesterday (transcript at Seeking Alpha). Here are some interesting insights from Janet Robinson, President and CEO and Martin Nisenholtz, Senior Vice President, Digital Operations
On advertising revenues:
The NYT saw “a weakening of revenues as the economy declined and advertisers pulled back on placements.” (…) “Total revenues for the company declined 10.8%, with ad revenues down 17.6%”
“Classified advertising declined in all three major categories; real estates, recruitment and automotive.” (…) “Half of the declines are attributable to one category across the company and that’s help-wanted, so it’s a very targeted decline.”
On circulation revenues:
The continued strength of our brand was evident in the willingness of our readers to pay higher prices for our newspapers, which in turn is reflected in the growth of our circulation revenues.” Circulation revenues were up 3.7%
On digital revenues:
“Digital revenues decreased in the quarter, as online marketers reduced display ads in response to deteriorating business conditions.” (…) “For the year, our online ad revenues at the News Media Group grew 8.7% with NYTimes.com significantly outpacing the industry in the growth of its display advertising.” (..) “At the About Group, total revenues decreased 2.9% to $29.8 million, as display advertising softened. Cost-per-click advertising rose in the mid single-digits.” (…) “In total, internet businesses accounted for 12% of the company’s revenues in the fourth quarter versus 11% in the 2007 fourth quarter.”
On display ads:
“The notion that we’re seeing or we have seen an increasing amount of inventory on the marketplace and we’ve seen that pouring on for the last year or so through the social networks and through other what I would call, non-traditional content companies. And then the second thing that has happened this year has been the real onslaught of the advertising network business. There are over 300 ad networks in the space now. And so, the combination of those two things has put some pressure on rate.”
On the future:
“To-date in January, the greatest decline in print advertising has accelerated from what we saw in December, while that of digital is similar to last month.”
What it means: classifieds and display ads revenues seem to be very soft in this economy. Cost-per-click seems to be holding (we saw the same insight from the Yahoo Q4 call). Online might be holding its own better than print. The increase in circulation revenues makes me think relevant content from trusted brands is still key.
February 20, 2008
Continuing our series on the atomization of content and business models, today I look at the newspaper industry.
First, from the user point of view: online (vs. the print version), it’s much more difficult to find the glue that will make your news container (your URL) stick together. if you have a strong brand (the New York Times, for example), people will navigate directly to your site but readers can now access your content via RSS readers, blog posts and news aggregators like Google News. These have been flourishing, reorganizing newspapers’ articles (the new content atoms), into flexible reading formats. For newspapers, it’s a catch-22. You want to be indexed by news aggregators to drive traffic back to your site but you wonder if you’re losing brand equity at the same time. Efforts at trying to get readers to register to newspapers’ sites (to generate potentially valuable socio-demographics information) have been a major failure. Clearly, the only strategy now is building a strong brand online while allowing readers to access your atomized content via a variety of vehicles but that creates problems from a monetization point of view.
Traditionally, the newspaper business model has been found in these three revenue categories: reader subscriptions, traditional display advertising and classifieds. Except for a few exceptions (the Wall Street Journal comes to mind), experiments in paid online user subscriptions have been failures as digital content is much more difficult to sell as an aggregate than print content. Classified revenues are being nuked by free sites like Craigslist or Kijiji, or aggregators like Oodle. Newspapers have been also forced to offer free classifieds, managing to generate some priority placement /enhanced content revenues but not to the previous print level. Online display advertising is working but it does not monetize as well as print advertising.
To better monetize their destination site, newspapers have been looking at various new solutions. One is in-line text ads (double-underlined sponsored keyword ads appearing directly in the article text) delivered by companies like Vibrant Media but, as I mentioned yesterday, the blurring of the line between editorial and advertising content has created ethical issues within news organizations. Already in 2006, in an article called “Is It News…or Is It an Ad?”, the Wall Street Journal exposed the various issues around the product:
“This type of online advertising within the text of an article, known as in-text advertising, has been around for a while. But it used to be relegated to niche sites like the videogamers’ haven IGN.com and ScienceDaily.com. Now it is appearing on some mainstream journalistic Web sites, like those of News Corp.’s Fox News, Cox Enterprises Inc.’s Atlanta Journal-Constitution and Hearst Corp.’s Popular Mechanics magazine. That marks a departure from a long-observed tradition in the print medium of keeping editorial content separate from advertising. “Journalism ethics counselors decry the trend. “It’s ethically problematic at the least and potentially quite corrosive of journalistic quality and credibility,” says Bob Steele, the senior ethics faculty member at the Poynter Institute, a journalism school in St. Petersburg, Fla.”
More recently, Tim McGuire from the Walter Cronkite School of Journalism in Arizona wrote about its use in the Arizona Central web site:
Michael Coleman, Vice-President of Digital Media for AzCentral, told me late Friday that the site has been using Vibrant Media for “two or three weeks.” Coleman described the relationship as a test and said this is not a “Gannett roll-out” of the concept even though some Gannet papers are using the system. “We’ve got a pretty non-committal contract with them, Coleman said. “The publisher made the call, and we decided to try it and see what happened.” Coleman said the experimental aspect of the deal explains why nobody has announced this deal.
Business Week wrote about the phenomenon in December:
Many journalists believe that selling the words in a story blurs the line between editorial and ad content. Some worry it creates an incentive to insert ad-linked words or order up certain types of stories. Forbes’ online arm caused a ruckus in 2004 when it rolled out in-text ads. After an outcry among the editorial staff and negative media coverage, Forbes ended the practice. (…)
Publishers are paid by Vibrant and other marketing companies based on how many times readers scroll over a word. Advertisers only pay Vibrant for how many times a reader actually clicks on an ad. In-text ads draw a higher response than traditional Web ads: About 0.2% of Web users click on posterlike ads known as banners; Vibrant CEO Douglas Stevenson says 3% to 10% scroll over and click on in-text ads, depending on the category.
I think the use of in-line text ads might be problematic thus far because newspapers have been using the technology to better monetize their destination site. I would suggest that the better use of this new ad vehicle would be to monetize a smaller atom of content, i.e. the news article, decentralized from the destination site. Embedding in-line text ads within RSS feeds or other distribution mechanisms might be a small price to pay to allow readers to access news article outside of the newspaper’s site. Another option would be to have RSS ads, like the Feedburner Ad Network.
I think the general takeaway here is that newspapers shouldn’t look at the same business models to monetize centralized and atomized content.
Update: The Kelsey Group discusses “Newspaper Next 2.0, a “progress report” by the American Press Institute on the evolution of newspaper companies beyond the print edition.” I took a quick glance at it (it’s a 110-page document) but it does not seem to address many of the business model issues that newspapers are facing. As my friend Peter K. says in the post, “The report has a better fix on consumer-oriented solutions than business solutions. But that’s not surprising for a newspaper industry (i.e. editorial-driven) product. If the Yellow Pages Association commissioned similar research, it would probably be the other way around.”
According to the New York Times article, even though the magazine has a circulation of 623,000, there’s a couple reasons why this might happen:
Aside from the overall downturn in the magazine business, current and former Time Inc. employees point to what appears to have been an ill-advised move this year to combine the advertising sales teams of Time Inc.’s finance and business publications, which include Fortune, Money, CNNMoney.com, Fortune Small Business and Business 2.0. Consolidated under a single banner, Time Inc.’s Business and Finance Network (or Tibfin, as it is known inside the company), Time sales representatives stopped pitching the distinct appeal and audience of Business 2.0 to focus on the larger titles like Fortune. That often turned Business 2.0 into an afterthought; big advertisers like Microsoft and Intel were offered discounts on other Time Inc. business titles if they would also buy pages in Business 2.0.
I’ve been a reader for many years and even though I read multiple blogs and online news sources daily, I always find interesting stuff in the magazine. It also helps me synthesize what I’ve read on the Web in the last few months. I’ve also found it’s a great media vehicle to introduce non-web business people to new web initiatives.
I then posted a short status update in my Facebook micro-blogging feed that said “Sebastien is sad to think Business 2.0 magazine might fold in September…“
45 minutes later, I get an e-mail from one of my new “friends”, Colin Carmichael, who’s inviting me to a new group he’s created to save Business 2.0. He told me I had tipped him off to the demise of Business 2.0 and he wanted to do something. I obviously joined the group and invite you to do the same if you like the magazine.
What it means: it’s my first opportunity to experience first-hand the power of micro-blogging, those small atoms of information written in new communication tools like Twitter, Jaiku, Pownce and Facebook (via the status update section). Very powerful tools. On another note, I believe print magazine usage growth (and by extension revenue growth) will come from specializing, not becoming more generalist. By consolidating their sales force, publishers run the risk of abandoning their specialty titles and future growth. The same debate takes place all the time in the directory business. Should publishers use a different sales force for Internet products or for vertical publications? I think you need to take a good look at where you think your growth will come from in the future and support adequately those initiatives.