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Q&A: The FT’s Gillian Tett on separating digital from print and tailoring news to new reading habits
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Nov. 21, 2012, 12:24 p.m.

The newsonomics of native, indigenous, and immigrant content

Content produced by news companies is increasingly being sent down new paths — from the new advertorial to repurposing old archives.

We’re being bombarded with news of a new species of content. “Native advertising” is all the rage, intermixing elements of journalism and commercial speech. This Thanksgiving week couldn’t be a more appropriate time to consider what we might call native, indigenous, and immigrant content.

Native, in this case, means natural. The etymology here is interesting, but more important is the newsonomics. The newsonomics of native, indigenous, and immigrant content promises a revenue evolution for both national publishers and regional ones. At a time when pricing pressure on display ads remains relentless — and even Google’s paid search rates have hit a bad patch, causing recent investor concern — this new commercial content offers a way forward to re-invigorate advertising.

Let’s start definitionally. Jay Lauf, Atlantic Media Co. vice president/group publisher and graduate of Wired (back into the days when it defined much of early Web lexicography), defines native content as content that “is native to the web.” It is “linkable, sharable, findable, able to be Facebook-liked and tweeted.” What it’s not: ad units. It’s natural in the sense that it’s part of the web’s flow. Think of all the awful ad units that we’ve seen in the first decade and a half of the web. (Just yesterday, on a newspaper site, I saw a page-takeover ad that looked like it was going to drown me in water.) Those units are the ones now yielding pathetic clickthrough rates and dropping prices.

While Lauf uses the term “native,” he prefers “indigenous.” For him, indigenous advertising is embedded into the audience’s very experience, content that an audience might find relevant. Look on the new Quartz (“The newsonomics of the Quartz business launch”) on web, tablet, or smartphone and you’ll see indigenous commercial content. Quartz is perhaps one of the best pure examples of it. At September launch, it both began life with an app-like look (left-hand scroll, big feature well to the right) and with sponsored, indigenous content.

You won’t see small-space display ads on Quartz. Why adopt a failing model for a late 2012 start-up? In fact, we see only two kinds of ads. There are the large “engage units” that appear between the stories in the feature well, and there are the specifically “sponsored” ads, well labeled, which appear in the flow of the left-navigation scroll. They appear in a manner similar to Promoted Tweets. In the first quarter of the new site’s life, it snared four foundational sponsors: Chevron, Credit Suisse, Boeing, and Chevron. Each uses the sponsored links, and to some extent the engage units to talk to, and with, Quartz readers. The content may focus on new products or diverse topics — global warming, space technology/energy harvesting connections, or Larry Ellison’s attempt to make sailing the new NASCAR — that are intended to connect with Quartz’s “global business elite” target audience.

Quartz’ business-side team — which includes editors and those skilled in the editorial production of video and other content — works with these national and global companies to find or create content that is appropriate and readable and aims to be, well, a natural fit.

Such content-as-advertising is a major selling point for players like Quartz. Its sister publication, The Atlantic, has been selling sponsored content for more than three years. While sponsored content will probably make up a majority of Quartz’s income this year, it is becoming a more substantial part of The Atlantic’s as well. Gawker, BuzzFeed (“BuzzFeed adapts its branded content approach to political advertising”), and Forbes are other national outlets that have recently won notice for the native approach. Major national/global news players, like the Wall Street Journal, The New York Times, and Financial Times (“The newsonomics of ads that go bump in the night”) have also figured out that native content is a perfect match for new tablet products.

For these publishers, the payoff is significant. While display rates struggle, sponsored content is earning effective cost per thousand (ECPM) rates of $50 to $100, two to four times what display often fetches. The “effective” part of that ECPM is that these ad placements aren’t sold on the basis of pageviews or clickthroughs. They are sold as sponsorship, an old-fashioned broadcast “share of voice” model. It’s a scarcity model, and one that provides commercial brands attention within a less-cluttered, high-end news brand.

While national publishers are ahead of their regional peers in so many digital innovation areas, this landscape of native, indigenous, and immigrant content is one that is also being embraced by regional publishers. We do see some sponsored content on local and regional websites — but the most innovative use, though, is coming in a new area: digital services. Digital, or marketing, services is the primary growth area for many regional newspaper companies moving into 2013. From Hearst’s Local Edge and Gannett Digital Marketing Services to Tribune’s 435 Digital and The Dallas Morning News’ 508 Digital, digital services is getting major investment. The big idea, which I’ll explore in depth in later columns, is to become the premier regional digital ad agency for local businesses.

You can see the scale of possibility laid out by Jeff Griffing, the Star Tribune’s chief revenue officer and a former Sports Illustrated publisher. He’ll tell you that the Star Tribune, like most metro dailies, has long relied on a relatively small group of merchants paying bigger bucks to reach the paper’s audience, both in print and online. In the Twin Cities, like in most metros, it has done business with 5 or 10 percent of smaller businesses — maybe 3,000 to 5,000 of them. Now the paper has launched Radius, its digital services initiative. Radius uses a new, digital services-centric sales team of 20, licensing Hearst’s LocalEdge platform, which is now deployed in all Hearst newspaper cities and is picking up licensees.

With Radius, Griffing puts his potential market at 30,000-plus. That’s 30,000 small- to medium-sized businesses — from roofers and restaurateurs to landscapers and lube ‘n oil guys. That’s the kind of arithmetic that drives digital services initiatives now fanning out across the U.S.

For the purposes of newly useful content and its evolving lexicon, let’s just look at the notion — in digital services — of what I’ll call immigrant content. That’s content that is just beginning to migrate out of newspaper databases and onto the sites of its new smaller merchant customers.

The Dallas Morning News’ September-launched Speakeasy demonstrates the big potential of immigrant content well. Speakeasy is headed by Mike Orren, the Dallas entrepreneur behind early city start-up Pegasus News. Speakeasy is majority owned by The Dallas Morning News, with local ad agency Slingshot the minority partner. While the Morning News’ 508 Digital, which also uses the LocalEdge platform, pursues clients in the $350-500/month range — offering the familiar digital services menu of site-building, SEM, SEO, and email marketing tools — Speakeasy’s focus is a bit different. Orren says the company is going after a spend of about $2,000 a month, and concentrating on services like content marketing and social optimization.

Few local merchants offer an engaging experience on their sites; most are still focused on name, address, phone, and hours. In this next stage of digital business, though, it’s about more than being found. It is about finding reasons for would-be customers to find out more and know more about the business. Enter content.

“Knowing how to create great content is the first thing. Then the social-verse takes care of itself,” Orren says.

Orren says that custom content is created for about two-thirds of Speakeasy’s first set of clients. For one-third of them, Speakeasy has harvesting Morning News archives on behalf of clients. Gardening content for a gardening center. Neighborhood profiles for realtors. Profiles of local charities, for special events like an upcoming football game which will benefit those charities.

The ability to use Morning News content — appropriately and relevantly — opens a lot of potential doors. As content emigrates from under-used archives to the expanding sites of smaller businesses, we see a new model under development. It’s a local twist on what Quartz and Forbes and others are doing on a national level. It’s also a reaffirmation of the value of editorial content, used in ways that no one could have envisioned 10 years ago.

Morning News publisher Jim Moroney has summed up the new weapon succintly. “In a lot of ways, social media is a content war. Having good content about your company and your industry is very helpful in how you gain visibility,” he’s said, adding that the Morning News is a “tremendous repository of great content.” That repository now becomes an upwardly valued asset to the company.

To be sure, there are many questions that surface around native, indigenous, and immigrant content. Questions of blurring church and state lines, of labeling, of distinguishing commercial speech. These are questions that smart editors and marketers can figure out, as long as they meet this cardinal rule: Don’t try to fool readers.

POSTED     Nov. 21, 2012, 12:24 p.m.
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