Turning credibility into money: A new revenue model for newspapers
- Article ID:
Learning from Google
Newspapers can learn from Google how to develop a revenue model that is connected to their core business. And while Google's core business is search, news sites are the most trustworthy sites online. So instead of erecting pay-walls that drive customers away, newspapers should learn how to leverage trust online.
By Grig Davidovitz and Max Levitte
Take a look at Google’s homepage. This is by far the most viewed page on the web. Now go to your newspaper's site, and then take a look again. Something is missing on Google’s homepage: it doesn't have any ads at all.
Well, there's another difference. Unlike your site, Google doesn’t have any income problem. Google's annual revenue in 2009 was over US$ 20 billion, not bad for an advertising based website with no ads on its homepage.
There is definitely a lesson to be learned here. When developing their revenue model, Google didn't do what everybody does: try to leverage traffic with display ads. They developed a unique revenue model that fits perfectly into their core business: search.
Google understood that their advantage is they know something important about their users - what they are looking for. And when the user is looking for something, Google is in a special position to show the best ad, tailored to the user’s quest.
Finding the unique advantage: What should newspapers learn from Google?
If Google is special because people are searching on it, then what exactly makes news sites special? What is their unique advantage online? Journalistic sites are very different from any other website because they have credibility. They are the most trusted sites online. Google itself considers newspaper sites as “information hubs” and ranks their content higher on the search results.
The only thing a user knows about the anonymous results on Google’s first results page when searching for “good LCDs” is that they have great SEO. The user doesn’t know much about the content quality on these sites or if their recommendations are unbiased and provide the best value. But if your newspaper recommends an LCD TV set - that is something the user can trust. And that is something that newspapers must learn how to leverage into income.
How can trust be leveraged into revenue? The first step is to understand that newsrooms produce two kinds of information products. The first is “general knowledge information”: the icebergs are melting, a politician took bribe, what's new in Iraq. The second is “actionable information” – articles that may lead readers to action: the best 42 inch LCD, a book review, the best restaurants in your city, etc.
The actionable articles usually belong to one of these sections: “lifestyle and consumer information,” “business and technology” and “culture and leisure.” The true challenge is to efficiently link the content of those sections to the customers/reader's needs – and monetise it.
Connecting to the reader/consumer needs: How to monetise trust
So what are the consumers' needs? The first question a consumer asks when going to buy something is “What should I buy?” If it is an LCD TV the question will be “What LCD TV should I buy in the category I'm looking for?” If it is a movie, the question will be “What movie should I see?” The best agents to answer these questions online are the news sites – they have the credibility.
The New York Times made a big step in this direction recenty. A few weeks before the end of the year they launched a page called “The 2009 Holiday Gift Guide – The New York Times.”
Above: The 2009 Holiday Gift Guide – The New York Times. Lists of recommended goods.
Here you can find “The 10 Best Books of 2009,” “Home and Decorating Gifts for under US$ 100,” “Digital SLR's,” etc. Clicking on “The Best Books of 2009,” for instance, leads to a New York Times page containing the list of the books and a short text about each one (see image below).
But there is something else on the page. On the upper right side there's a clear, important sign in a light blue box. It reads: “Buy these books from: Amazon, Barnes and Noble, Local Booksellers.”
Clicking the Amazon button takes the user to an Amazon page (see next image below), containing the same NY Times list.
And from here, the readers can complete the transaction – and buy the book they want.
In fact, by pressing the Amazon link on The New York Times page, the reader is linked to Amazon's website and becomes a customer. This is traffic converting into revenue by leveraging trust.
Above: Where to buy the books. The link from trust (newspaper) to money (retailer).
This, of course, is just a small example, a beginning. The “Holiday Guide” can be a routine coverage of the relevant subjects and the “10 best books of 2009” can be “The best 42 inch LCD” or “The best films today.” The idea is:
- To anticipate the consumer’s question (e.g. What LCD should I buy? What movie should I see?)
- To create a page that answers the question.
- To link to the retailers or retailers aggregators (price/service comparison sites).
- To enable conversion whenever possible. Every specific actionable item (a specific LCD review, a book review, a travel review) should have links to the providers. This would also serve the user better in the shopping process. (Cnet.com is a good example for that, and they are also developing review pages that answer the consumer's presumed questions, although these pages are not the main focus of the site).
From paper to pay per: Daring to take the risk
How to charge the retailers and service providers? All current online revenue models are relevant here: Pay per View, Pay per Click and Pay per Action. The right way to combine these revenue models is a dynamic statistical science, which uses accumulated experience and an ongoing “trial and error” channel based method. The idea is to maximise revenue by using the right model in the right place.
Using Pay per Click or Pay per Action can have a huge advantage in today's advertising climate. A big struggle is under way these days in the advertisement world: Who is taking the risk? The news sites want to stick to the Pay per View model, while the advertisers want to move to Pay per Action. Pay per Click is the middle way.
The interests here are clear. The advertisers want the publishers to take part of the risk, so if the campaign doesn't work (the users don't click or don't buy) – they pay less; the newspapers want to be only a delivery platform and not bother themselves with the question of whether the campaign works or not.
In the “Leveraging Trust” model the newspapers can afford to take some of the risk. They can do so knowing that they are properly integrated into the consumer’s buying process and therefore will be successful in converting their traffic and content into income. And as newspapers will be willing to assume more risk, the advertisers will be more inclined to spend.
Creating perfect synergy with Google: How to get the consumers
Not only does the “Leveraging Trust” model fit perfectly into the needs of the consumer, the publisher and the advertiser, it is also fully synergetic with Google.
Google loves news sites. They are credible, trustworthy, and accurate and usually have quality traffic. So when someone is looking for “the best LCD,” Google is likely to display a news site page as a high ranking quality search result on this subject.
From Goggle's point of view, you are helping them to do a better job and at the same time helping them to create income. It is the perfect model for a news site to share ad revenue with Google via the Adsense Program. The responsibilities are clear:
- Google sends the traffic.
- The news site creates the credible review.
- Google Adsense provides the advertiser’s link and revenue.
- The news site and Google split the revenue.
This is another important aspect of this model – it brings new customers to the newspaper site. People who were not thinking at all of consuming journalism, but merely looking for a new TV, find themselves on the news site.
Another way to bring traffic is by gradually developing the news brand as the “review bible” of your users. The next time someone is looking for a new LCD he might come directly to the news site, knowing that the best reviews are there.
The new revenue model: Everybody wins
The “Leveraging Trust” model has the potential of radically changing the market position of the news sites. The advantages are clear:
- Everybody wins. The model is creating a new advertising eco system in which everybody wins: The retailer (former “advertiser”) gets new customers; the newspaper produces income based on trust – a specific advantage that differentiates it from most of the other sites online; and the consumer dramatically increases the chances of buying a good product.
- Newspapers embrace the risk instead of fearing it. The correct integration of the news sites into the consumers needs enables them to assume more risk, by employing Pay per Click or Pay per Action revenue models. The less the advertisers have to lose (paying only for click or for a complete transaction) the easier is to bring them aboard.
- Perfect integration with Google. By using this model, news sites help Google with good results to product searches. At the same time, it helps Google generate revenue by displaying the right contextual ads (the providers of the chosen products) in the right spot (near the news site recommendation).
- From useless display platforms to income generators. News sites can be much more than a meaningless billboard to present information paid for by others. They become an important factor shaping consumer behaviour. They have to know how to monetise this.
Important questions remain open: How can this be done efficiently in the normal day-to-day routine? What are the best ways to integrate into the consumer buying process? How to create the best review pages from the users and from Google's point of view? How to ensure that the journalistic ethics of the newspapers – the very ethics that create the trust – are preserved? Answers to these questions start to pop up online, and might solve at least partially the income crisis of the newspaper industry.
Instead of thinking how to erect pay walls that drive customers away, newspapers should think how to really connect with their customers needs – and turn that into profit.
Max Levitte is the CEO and founder of Cheapism.com, a product review site. Prior to that he was general manager for ConsumerSearch.com, a site acquired by The New York Times Company.
Their workshop “Leveraging Trust Online: A New Revenue Model for Newspapers” is available through WAN-IFRA.