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Content futures, Part I

What can content sites do to earn their keep? 3/26 ReleVents hed: Content futures, Part I dek: By James Mathewson

As you read this, I will be sunning myself on a white-sand beach, the waters of the Gulf washing away the accumulated stress of the worst economic downturn I have ever seen. As with my last vacation, I have prepared a several-part series to run in my absence.

While my income has not suffered that much–I’m not a sales guy–my department has had to tighten its belt as part of company-wide cost-cutting. And many more extravagant content companies have had to cut a lot more than I have. So I think this is the perfect time to examine the three predominant business models in the content game and see which ones make the most sense at this juncture. Not only will it help me think about what we should do as far as biz dev when I get back from vacation, I hope it helps you better understand the content business.

First off, no area of our economy has suffered through this downturn more than content providers. Consequently, none has had to delve into the depths of self examination to the extent that content providers have. It’s sort of ironic that the Web is first and foremost a content medium, yet content providers can’t figure out how to make money. Most of us rely on one or more of three primary revenue streams: banner advertising, subscriptions, and newsletter advertising. I’m going to focus on banners today, and talk about the other two in parts II and III of this series, which will run on Wednesday and Friday (March 28th and 30th).

As I talked about at length in this space last year, content providers are still waiting for the majority of agencies to recognize the value of banner advertising. And most of the agencies that do Web advertising are stuck in a rut of paying only for click-throughs as Web users click less and less. Many of them also design poor-quality ad experiences that users don’t want to click. The reality is, it will be a few years before Web eyeballs are viewed by the ad business as just as valuable as other media.

But outside of the general reluctance to adopt the Web, there is a core of innovative Web advertising agencies that are at least trying to improve banner performance. Many advertisers are adjusting their thinking about Web ads. New ad shapes and placements are getting better click-through rates. And the grammar of Web ads has moved beyond animated GIFs and schlocky color schemes. Many now feature interactivity within the ad itself, rather than the false interactivity of the click-through. And new forms of video animation are making their way to the new ad shapes.

The problem with all these new developments is that they drive traffic away from the site by slowing it down. I know when we started featuring more rich media ads, our download times suffered, and traffic suffered as a result. The price users pay for our content is the time they spend in front of the screen waiting for it to load. If that price is too high, they will leave. Many users value our content enough to wait longer. But it is extremely tough to increase traffic while also increasing load times. This will gradually improve as users’ connections get faster, but that process is painfully slow. The bottom line is it will always be a delicate balancing act between better ad experiences and faster load times. I expect to have several meetings in the coming year with Mike Gencarelle, our Web director, hashing out this balance.

The other major development in Web advertising falls under the contextual marketing umbrella. Content providers have to look for ways to improve so that the audience that views the ads is more attractive to advertisers. This means developing content that is targeted towards people who are likely to buy products advertised on the site.

And this is where we run afoul of several tried-and-true journalistic ethical principles. Obviously, we don’t want to produce advertorials–pieces of content that hype advertisers’ products. Instead of increasing revenue it could completely backfire: driving our credibility through the floor, which would decrease traffic to our site, which in turn would lose the audience for advertisers. Yet several third parties offer contextual advertising solutions, which provide links from products mentioned inside of articles to sales sites for those products. This relies on the audience’s faith that the two processes are completely unrelated. Other solutions serve ads for products mentioned within articles–but again, the editors must be blind to how this works and to whom the sales reps are pitching sales inquiries.

For one steeped in journalism yet cynical of major media’s thinly veiled pandering to advertisers, neither solution is pleasant. I know all too well that we can have the purest intentions and all kinds of safeguards against advertiser influence, and still the reader will be suspicious of our reporting if an ad for the company to which we give favorable mention happens to appear on the same page. But solutions like these will be a necessary part of the Web experience for free sites. Just as ads slow down load times, so will they provide friction for the appearance of unbiased reporting.

The solution, which I will describe in detail in Wednesday’s installment, is to charge users for access to a value-added, friction-free version of the site. Salon and other content providers now offer ad-free versions of their sites that allow visitors to get the content more quickly and without all the contextual marketing, for a fee.

James Mathewson is editorial director of ComputerUser.com and ComputerUser magazine.

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