Why Advertisers Don’t Value Online Engagement

This article originally appeared as a feature on iMedia Connection.

Nieman Journalism Lab recently posted a very provocative piece on the eight trends to watch in 2011.

Taken together, the eight trends reinforce the fact that digital publishers have been forced to abdicate their relationships with customers. It’s a big change from our offline legacy, where news and magazine publishers built long-term customer relationships by offering a branded collection of content.

But in our current digital world, content is no longer oriented toward delivering on an existing relationship. Instead, every published piece is a marketing vehicle. The content itself has become the bait for customer acquisition, with each new item the means for catch-and-release fishing for more unique users.

With this practice, the basis of customer acquisition has changed: Digital media publishers acquire audience by the item — not by their collection. We all see it play out with the bad content around us all the time: An inflammatory headline earns clicks. Keywords garner search rankings. And sensationalist pieces generate social distribution and links.

But the obsession with acquiring audience article by article has had serious consequences and, in the end, the holistic sense of a “publication” as a product — one that builds a long-term branded relationship with audience — has gone out the window.

How did this happen?

I chalk it up to the perverse system of online media buying that takes place with advertisers and, particularly, their agencies. This system places such a high priority on maximum momentary reach that it totally overlooks any question of relationship.

The net (and short-sighted) result of this focus is that digital publishers spend all of their energy acquiring customers. But acquiring them to what end?

There’s no reward for keeping customers anymore. Having audience return daily is a nice-to-have — a “supporting statistic” on a page of a PowerPoint media kit — while almighty reach drives ascent through the comScore reports. Given the opportunity, publishers would gladly double their reach while halving their engagement; then they’d wonder why no one came back. Customers today are met for a moment, and then discarded — then publishers go out and acquire all new viewers the next month. And, to fill this hole, publishers too often appease Google’s search algorithm as their evergreen source of new eyeballs.

But as publishers get on the customer acquisition treadmill, an increasingly smaller percentage of their consumers connect to their greater collection or brand. Instead, a user comes for one piece and, more often than not, leaves right after. The whole process is all about churn-and-burn, rather than relationship building.

Once you accept this digital advertising dynamic and how it has shaped publishing behavior, you realize some pretty interesting things about your online audience.

First, there’s the inner-circle audience that has a strong branded, destination relationship. These people come back frequently — several times a month to every day. They type the URL into the browser bar, or use a bookmark, or type your brand name into their favorite search engine, or maybe they have “liked” you enough to add you to their Facebook feed. You are a habit to them, and they are your loyalists. These folks know you well. They have a relationship with you. And they come back over and over for your collection — for the entirety of what you have to offer, all wrapped up together and labeled with your brand name.

Then there’s the outer-circle audience. These people don’t visit for the collection at all. They might know your brand well and, if so, that might have helped them make a decision to click. But they aren’t here for you; they are here for your content. And when they are done with that content, they’ll leave.

Gut instinct would say that those loyal inner-circle users are the ones who should be prized most highly. After all, the outer-circle users, who come for one short visit once a month, at most for a page view or two, should pale in value to a loyal user.

But the real problem is that publishers are rewarded by advertisers for the combined size of the two circles. The No.1 driver of ad revenues is unique users, and it is totally dominated by the outer circle. Given this reward system, no matter what the buzz might say, “engagement” obviously isn’t valued by advertisers with any sincerity these days.

And yet my view is that digital media companies must now — more than ever — convert customers to loyal, brand-loving audience. In the long term, these readers are the ones that an advertiser has the greatest ability to impact, since they can leverage a real — rather than fleeting — relationship with the publishers.

It might be difficult and daunting, but that’s the only true path to sustained publishing prosperity. The current advertising model is broken, and it must be fixed.

Let’s Get Real – Blogging Is About Fame, Not Fortune

I have a question for Jonathan Tasini, who is leading a $105 million lawsuit on behalf of thousands of uncompensated bloggers against The Huffington Post.

If you and your litigious colleagues are so good, so valuable, and so organized, why don’t you launch your own online media venture to out-compete HuffPo?

I’m sure you have your reasons – and, of course, initiating a lawsuit is so much easier than starting a digital publishing site from scratch.

But, let’s get real.

Blogging isn’t free-lancing, and it’s hard to imagine that any of the contributors who sent their material to HuffPo ever thought it was. As I wrote several weeks ago, every contributor knew the basis of the transaction: write what you have to say in exchange for being publicized. As always, the prime currency of blogging was fame – not fortune.

So who’s trying to cash in now?

On a broader, more global note: I feel sad for the desperate bloggers who are trying to shake down HuffPo; and I’m deeply sensitive to the fact that  the media world is under pressure and steadily shrinking. But Tasini and his fellow litigants look like starving dogs scrapping for a shred of meat. It’s unseemly and unproductive.

What’s next?

Will Tasini respresent a class action suit against Endemol on behalf of all American Idol contestants, who were totally exploited as they sought super-stardom?

Or will he represent the tens of millions of users in a suit against Facebook, for advertising against their status and Farmville activities?

Both legal moves would make for entertaining blog posts, and I look forward to the juicy reading!

Going Long on the Web

One of the supreme ironies in digital publishing today is that there’s infinite online space, and a desire to read rich and substantive content on mobile devices such as the iPhone or iPad; and yet, there’s still limited long-form multimedia journalism available on the Web.

That’s the subject of a fascinating feature in The New York Times by David Carr.

Always incisive, David focuses on The Atavist, which he describes as “a tiny curio of a business that looks for new ways to present long-form content for the digital age. All the richness of the Web — links to more information, videos, casts of characters — is right there in an app displaying an article, but with a swipe of the finger, the presentation reverts to clean text that can be scrolled by merely tilting the device.”

Since January, The Atavist has had over 40,000 downloads of its app; and it’s also begun conversations with publishers about the possibility of adding nonfiction books to the eclectic mix of stories it now presents.

This nascent success reinforces what I’ve been saying for a long time – give people an enhanced digital content experience, something that’s very special, and they’ll be willing to pay for it.

Good luck to The Atavist, which has the right business model, and the best of reading to all of us.

Sometimes, You Get Lucky and Just Nail It!

I’m not the Amazing Kreskin, and I hardly consider myself a visionary prophet. I’m just Ben. But I happen to live and breathe the digital publishing business because it’s my professional passion.

So, I was quietly surprised to read this week that Hulu’s subscription video service will surpass one million subscribers in 2011.

This forecast comes from Hulu CEO Jason Kilar, and was reported in the Wall Street Journal; it was also analyzed by Peter Kafka in All Things Digital.

I was taken aback by Jason’s announcement – not because I doubted Hulu, but because I somehow managed to predict the Hulu Plus subscriber number exactly a year ago.

Indeed, a year ago, in April 2010, I said: “I expect that the service will reach or exceed a million subscribers by the end of 2011.” (See my April 23, 2010 prediction here.)

In life, like baseball, sometimes you win; sometimes you lose; and sometimes you’re rained out.

But the W’s always feel best.

Good job, Jason!

And for the record: I continue to be bullish on Hulu. As long as it can keep its content license agreements humming, it will have a killer collection of content, plus killer experience, to offer consumers; it also has killer context to offer advertisers. And that’s a formula for great success.