Ad Sales Blog

Social networking is hot, but is it a business?

In earlier posts I have cautioned against adding online products to your magazine's brand portfolio because other publications seem to succeed at using them. There are strategic reasons for all online products but they may not fit your requirements. For example, blogs are fantastic web site traffic builders that can lift site traffic and thus rates. But trying to monetize blogs directly by selling sponsorships on them is typically much harder. 

This weeks Economist turns that same analysis to social networking and comes up with a similar cautionary tale:

"The big internet and media companies have bid up the implicit valuations of MySpace, Facebook and others. But that does not mean there is a working revenue model. Sergey Brin, Google's co-founder, recently admitted that Google's “social networking inventory as a whole” was proving problematic and that the “monetization work we were doing there didn't pan out as well as we had hoped.” Google has a contractual agreement with News Corp to place advertisements on its network, MySpace, and also owns its own network, Orkut. Clearly, Google is not making money from either.

Facebook, now allied to Microsoft, has fared worse. Its grand attempt to redefine the advertising industry by pioneering a new approach to social marketing, called Beacon, failed completely. Facebook's idea was to inform a user's friends whenever he bought something at certain online retailers, by running a small announcement inside the friends' “news feeds”. In theory, this was to become a new recommendation economy, an algorithmic form of word of mouth. In practice, users rebelled and privacy watchdogs cried foul. Mark Zuckerberg, Facebook's founder, admitted in December that “we simply did a bad job with this release” and apologized.

So it is entirely conceivable that social networking, like web-mail, will never make oodles of money. That, however, in no way detracts from its enormous utility. Social networking has made explicit the connections between people, so that a thriving ecosystem of small programs can exploit this “social graph” to enable friends to interact via games, greetings, video clips and so on."

Read the whole article on the Economist Website:

http://www.economist.com/business/displaystory.cfm?story_id=10880936

The 10% newspaper problem on your doorstep

Scot Karp on Publishing 2.0  Blogsite estimates that the print/web transition is now at a 10% tipping point. Using the New York Times as  an example he calculates,

"Let’s assume that the NYTimes.com has roughly the same portion of ad revenue coming from online. What you find, with some modest rounding, is that print circulation is about 10% of total audience reach, while online advertising revenue is 10% of total ad revenue — the economics are nearly the perfect inverse of what they should be."

Read the whole analysis

Advice from Facebook on starting a social network

If you are considering building out your brand into a social network, give a listen to what Facebook founder, Mark Zuckerberg, has to say.

As of July 2007 Facebook has 28 million subscirbers and ranks between the 10th and 20th most visited sites on the Web. Jeff Jarvis' BuzzMachine Blog posted a quote from Zuckerberg that offers guidance for publishers:   

"At Davos this year, a powerful newspaper publisher beseeched, the young founder of the hugely successful social network Facebook, for advice on how he could build out his own community. The famously laconic Zuckerberg replied “You can’t.”

Zuckerberg went on to explain that communities already exist and the question these magnates should ask instead is how they can help them to do what they want to do.”

For publishers, when it comes to social networks, the power is with our readers. Instead of trying to engineer interactions between them our job is to augment and enhance the networks that already exist.

Read the entire post on Jeff Jarvis' "BuzzMachine" blog

 

Need a new ad business model? Think like Rupert

We will soon know if Rupert Murdock will succeed in buying the Wall Street Journal.

Other media organizations have passed on the deal, among them General Electric, who owns NBC Universal, and Financial Times publisher Pearson (whose Berkley division published my third book Selling 2.0). 

In a statement today NBC Universal Chief Executive Jeff Zucker, with reference to Murdock's $5 billion offer, said his organization passed on the deal because it would not be "fiscally disciplined" to continue. Zucker added, "I am not going to presume to know what's in Rupert's mind in terms of why he's bid what he's bid."

This week's Time magazine cover story gives us that very look into Murdock's mind and it is all about creatively revising the Wall Street Journal's publishing business model:

"What if, at the Journal, we spent $100 million a year hiring all the best business journalists in the world? Say 200 of them. And spent some money on establishing the brand but went global — a great, great newspaper with big, iconic names, outstanding writers, reporters, experts. And then you make it free, online only. No printing plants, no paper, no trucks. How long would it take for the advertising to come? It would be successful, it would work and you'd make ... a little bit of money. Then again, the Journal and the Times make very little money now."

Every publisher can take a lesson from this. Murdock is not looking to buy the Wall Street Journal for what it is, but for what it could be if it's brand were leveraged into new media.

Read the entire Time Inc. article

Can web video become your search counter attack?

I have described in recent posts how "search" can be the great sucking sound of ad dollars moving away from your on line offerings. But what if there were a trend you could take advantage of to reverse this?

A new study suggests that the growth of web video might make this happen.  Here's how this could work. Search's ability to capture ad dollars rests with it's  ability to offer web surfers the ultimate ability to find what they didn't know they were looking for.

But what if the content offerings on websites simply became much more engaging?  Perhaps the power, and thus ad dollars, would start to shift from the people who provide access (search  providers) to the content providers (that's us).
See an article describing the trend.

Picking Your Next Web-Based Option in the Online Candy Shop

My Folio column in the June 2007 issue: Picking Your Next Web-Based Option in the Online Candy Shop Wednesday, May 30, 2007

If publishers look like kids in a candy store while perusing all the bright new online products to develop, why do so many get stomach aches? It’s because as the online options grow, so do the number of horror stories of promising Web products that sucked up massive resources and generated zilch revenue.

Too often the strategy of picking the next Web-based project is based on what a neighbor is doing. “Another magazine in our company/market/category is having great success with ‘option x.’ Hey, if they can handle it, we can do better!” But development strategy should not be based on what’s going on in other guy’s backyard; it should come from what is going on in yours. Like many things publishing, it starts with a hard look at your market.

How Does Your Market Go to Market?
The first step is to ask, “How do my advertisers sell when they approach their customers?” Your next online product needs to support this process, and this question can eliminate about half of the online options you might consider. For example, “Ask the expert” columns, posted on your Web site, are great for showcasing an advertiser’s expertise and can make them look like industry thought leaders. But be honest, if your advertisers actually do little consultative selling when they go to their customers, this approach could flop.

Finish the article on Folio magazine's site:

http://www.foliomag.com/viewMedia.asp?prmMID=7741