Wetpaint CEO Ben Elowitz on the Future of Digital Media
This week, we made some announcements about our achievements at Wetpaint, and it has prompted me to take a look back at 2011. It’s easy to be proud of the 6.4 million unique visitor audience we have built at Wetpaint Entertainment monthly. It is a significant accomplishment in just 15 months since we launched, and the Wetpaint team has worked passionately to get us here. But even a number like that is, well, just a number. The real value of what we did in 2011 lies in the all the learning we had about how to build, run and monetize a successful media property online.
And that learning makes me feel grateful – because as successful as we have been this year, it’s been against a context of upheaval in the industry. Media is not easy. Old formulas from print and broadcast are no longer working. And even the just-minted generation of seemingly successful digital companies, from Demand Media to Zynga to Facebook itself, are having to constantly innovate to stay on top of the wave that they’re on as they hope to catch the next.
Clearly, the most important keys to financial success in media are building audience and monetizing that audience – and we’ve made significant progress on both here at Wetpaint. Our greatest strength has been the data engine we’ve built to acquire, assimilate, and apply every possible insight about our audience. We learned that smart and targeted analysis can improve everything we do; that lots of rapid experimentation is critical; and that social traffic is far more valuable than search.
We also learned more about the Kardashians and the people on the The Bachelor/Bachelorette than anyone in this world should. Our editors did a bang-up job capturing the liveliness of the entertainment industry and they definitely deserve plenty of credit.
But while all our great content and social mojo would succeed in delighting audiences, it wouldn’t be enough to make a strong business without excellent monetization. And so I’m equally excited to note that as we get ready for 2012, we’ve found that our formula of great content and social mojo is just as valuable to advertisers as it is to our audiences. I’m pleased that we will be working with the team at Cambio Group via their joint venture between AOL, Jonas Group and MGX Lab. Together, we will be serving outstanding advertisers with some of the most innovative offerings around.
With this partnership in place, we are able to turn amazing traffic into amazing financial results. It will mean strength for our model and our company into 2012 and beyond.
But the implications are even broader for the industry, and that’s because we are setting a model that others can follow as well. And that is what I’m most excited about: What media needs most is a model that can be scaled and repeated – and our latest results make it clear we are on the right track to build it.
I’ve projected before that within the next couple of years, social can drive as much traffic as search to major media properties – especially those that are driven by real-time news. But I hadn’t expected it to happen so soon!
Yesterday was a milestone here at Wetpaint: social for the day drove over 45% of our audience visits; while search brought in about 30%.
Now consider this: Layer on the ~150% higher lifetime value of our social audience (our social users stay longer, come back more frequently, and bring additional viral referrals), and social was responsible for over 60% of the value of our audience yesterday.
It may start as an outlier, but it’s going to get more common. We are on track to be the #1 social publisher within a short time. Want to know where you stand too? Stay tuned for the updated media industry social leaderboard, which I’ll be posting in the next few days.
A few months ago, Ken Doctor wrote about the cost of a story, highlighting that financial pressures in media require new formulas to lower content costs. But my takeaway was different: that the greater leverage point for media success is not in reducing cost, but in increasing value.
And the hard truth is that each and every story has to pull its own weight on the new social Web these days. Demand for media now comes for the item, not for a bundle.
That said, social networks – led primarily by Facebook and Twitter – provide publishers with increased transparency about what readers consume, interact with, and share; all in real-time.
This makes publishing easier and less expensive, hence more profitable, because editors know exactly what their readers want to consume, and they don’t have to waste time, effort and resources creating content that simply won’t resonate.
To put it a different way: imagine that you have a magazine, and it’s blank. The first page, the home page, might serve as a table of contents. Then, as you click and read along, each page gets filled in – based on what you read on the previous page; the depth to which you read the previous page; and the amount of real-time sharing that you participated in on the previous page. The next page becomes an instant predictive reflection of the prior set of interest signals. This “Magic Magazine” is assembled just for you, and its content is based on your implicit explicit preferences.
I believe that we’re headed in this direction, and we’ll get there, sooner than you might think.
In fact, it’s already beginning. AOL’s Editions product invites each user to thumbs-up and thumbs-down the various topics and sources it shows, resulting in a Pandora-like experience that self-tunes, so that today’s magazine is even more personally relevant to each user than yesterday’s.
And that has the potential to make a more efficient content economy, to the extent publishers can invest in the right content and get it to all the right people.
To do that, publishers must collect all those valuable signals from the audience – which naturally means connecting on the social Web. The social Web provides robust real-time signals about exactly who the audience is, and what they want. That’s why, at Wetpaint, we’re maniacally focused on writing our playbook to master this best. Right now, we derive more than 12% of our visits from Facebook and Twitter, which ranks us #4 when compared to the 50 largest Web publishers. And we expect that figure to double or more over the next 12 months. (In fact, we’ve been increasing our Facebook traffic by 11% per month.) We’re benefiting from more than traffic: the value of each visitor is going up as well, with social visitors coming more frequently and staying longer.
It’s because our social focus lets us serve customers better. Looking ahead, we’re moving in the direction of hyper-personalization, with customized experiences that seamlessly make themselves felt.
You can see this, to some degree, on the Huffington Post today. They pioneered social channels based on what’s hot, and what’s being shared, and then they reorganized their own pages and published in real-time in order to flow into this.
Old-line media players must adapt here, and in a hurry. From my perspective, Forbes, under Lewis D’Vorkin, is way out front and doing an excellent job showing the way.
With all that programming, what about serendipity? It will still be there. But if a publisher can provide 90% of what a consumer needs and wants, that’s a big value add – especially if the remaining 10% is all the stuff the customer doesn’t know they want yet.
Over the next two years, as social media is continuously refined in new and previously unimaginable ways, I believe that the value of individual stories will keep rising.
And, if we focus on the economics of it, the value of a story online can be thought of as an equation: Page Views x RPM.
But the mathematical symbols in this case are directly representative of two really basic things – how much audience the story attracts, and how desirable the publisher’s full offering is to advertisers.
The roots of both of those are in the content; great content increases both dramatically – albeit over time (The truth is: it takes years of repeat!). And, when we peer out across the long-term horizon, it’s clear that great content that increases audience increases overall reach; and this, in turn, has the compound effect of increasing the desirability to advertisers even more.
My strong sense is that publishers of both old and new media can definitely take advantage of this all-important dynamic by closely watching and assessing the way their consumers interact with content on a real-time basis. In the end, the process should be interesting – and profitable.
As I have shared previously, our goal at Wetpaint is to be the leader in building media properties on the social Web. That’s because I am seeing the web’s nature fundamentally change to become fully social.
It’s not just theory – it’s data.
As I shared recently at AllThingsD.com, the social Web is capturing a dramatically increasing share of users’ attention – with internet users collectively increasing the amount of time they spend per month on Facebook by 69% over a one-year period – while usage for the entire rest of the Web, excluding Facebook, shrank by 9% over the same period.
Social is the most strategic medium for our industry. And yet we haven’t established how to track our collective progress.
So, I’d like to introduce to you the first industry effort to do so. I’ve released it this week, so that we can all compare ourselves with other top publishers and see our individual and collective progress.
Below you’ll find the “Media Industry Social Leaderboard”, a scoreboard and chart that was developed by tabulating the top 50 media publishers, based on monthly unique visitors, and then determining which were best at generating traffic from Facebook and Twitter. Of course, I’ve included Wetpaint Entertainment on the list because we are so committed to social that we are going to make our progress public. (And it doesn’t hurt that we are already significantly better at reaching audiences on these two key social platforms than many major media brands such as The New York Times, The Huffington Post, CNN, Fox News, TMZ and others. My mother should finally be proud!)
This Month’s Findings
This month, we found that MTV’s website leads the pack with 14.3% of its traffic from Facebook and Twitter, indicating the shareability of their content (especially video, which is inherently more viral), and the heavily socialized audience they serve – not to mention their great execution. In fact, MTV beat average performance by a factor of two, and were one of only four out of the top 50 that were in the double digits. Sadly, over half of the Web’s top 50 had less than 4% of their traffic from social, making them menial performers on the medium.
Social Success Could Triple Your Audience’s Value
Lest you think that MTV’s 14.3% is anything to sneeze at, we dug a bit deeper to look at the true value of social. Beyond the boost to audience attraction, we also looked at audience retention. Measuring the visit frequency to each of the publishers (excluding the portals), we found a striking correlation to their sociability. The performers above median in social saw an average of more than five times as many “addicts” (visitors who come 30+ times per month) as a proportion of their audience, according to data from Quantcast, compared to those below the median; and they saw a corresponding reduction in their “passers-by” (visitors who come only once) by 16 percentage points. These patterns map overall into more than three times the visit frequency per audience member overall for these top performers. That’s three times the value per unique.
A Leading Indicator of Long-Term Success
One thing is clear from the growth trends of the social web: Those publishers that figure out how to capture and maintain a leadership position in social will win over the next decade. For Wetpaint, it’s a critical strategy for us to be a leader among the media industry. Which would make my mother very proud.
Speaking of which, in this debut month, my company Wetpaint came in #4, bested only by MTV, People, and ESPN. Not bad for a debut… we’ll be #1 within six months.
For those interested, detailed rankings of all Top 50 are included below.
|Rank||Name of Publisher (Owner)||URL||Monthly Uniques||% from Social|
|8||Major League Baseball||mlb.com||15,552,415||7.9%|
|12||IGN (News Corp)||ign.com||10,112,530||6.1%|
|15||FOX News (News Corp)||foxnews.com||26,900,038||5.0%|
|18||Nickelodeon (MTV Networks)||nick.com||10,716,354||4.6%|
|19||The New York Times||nytimes.com||33,034,269||4.4%|
|24||Cartoon Network (Turner)||cartoonnetwork.com||10,794,764||4.2%|
|25||The Washington Post||washingtonpost.com||17,818,260||4.1%|
|26||New York Daily News||nydailynews.com||9,931,052||3.9%|
|29||Food Networks (Scripps)||foodnetwork.com||14,324,933||3.5%|
|30||Allrecipes (Readers Digest)||allrecipes.com||17,986,031||3.4%|
|31||The Huffington Post||huffingtonpost.com||36,701,275||3.3%|
|32||TODAY / MSN (NBC/Microsoft)||today.com||23,323,684||3.3%|
|33||Los Angeles Times (Tribune)||latimes.com||18,618,265||3.2%|
|35||The Wall Street Journal||wsj.com||16,643,499||2.5%|
|38||USA Today / Gannett||usatoday.com||16,979,964||2.2%|
|41||CNET (CBS Interactive)||cnet.com||27,602,379||2.1%|
|42||Sports Illustrated (Time Inc.)||si.com||9,304,012||2.1%|
|43||LIVESTRONG / (Demand Media)||livestrong.com||9,650,128||2.0%|
|44||MSNBC Digital Network||msnbc.com||44,198,985||1.9%|
|45||About.com / NY Times||about.com||36,978,618||1.4%|
|48||eHow (Demand Media)||ehow.com||48,624,976||1.0%|
Source: Wetpaint.com analysis, comScore, Compete.com.
One of the most important questions publishers are grappling with today is whether they oversee a media company or a technology company. In the following article, which appeared originally in my Media Success newsletter and was subsequently republished at AllThingsD, I explain why every media company has to be a technology company. Then I offer several keys to success in the current digital environment, which is dominated by the rise and evolution of the new social Web. Please take a read, and let me know what you think.
Let’s start with two truths.
First, publishers need cutting-edge technology to hook an audience through today’s digital media channels of the Web, mobile, social, and search.
And, second, the breakthrough technology can’t just be about product design – it’s got to go beyond to create distribution advantages on the new connected Web.
Okay, now that we have the truth out of the way, let me ask you a question:
“Is your company a media company, or a technology company?”
I love getting asked this question. And every digital media leader I know hates answering it.
Discomfort, Uneasiness, Anxiety, Fear
The uneasiness begins with the mistaken idea that the two are separable. And they were – back in the 15th century, when Gutenberg first worked his printing magic, and up until a few years ago. But we all know digital technology has inserted itself inextricably into the guts of publishing, replacing ink with bytes and paper with pipes. And now, over the last two years, technology has transformed the basis of publishers’ relationships with their audience, by connecting them through social operating systems, as we discussed last month.
And yet, our uneasiness escalates to anxiety when we realize we still don’t fully understand the new technology’s potential or impact on our business.
That is a scary thought.
Technology Drives Media
I think we all need to collectively swallow our fear. We know every media company must be a technology company today.
In the first generations of digital media, it was easy. In AOL’s past, technology’s key role was simply to provide basic Internet access over dial-up lines. Today, while that access provides cash flow, it no longer has any strategic value in media. Similarly, Yahoo’s early technology prowess was applied to create significant products like Yahoo Mail. But while Mail still drives 73 percent of the audience to Yahoo’s media properties, it won’t secure Yahoo’s future ability to be a great media destination.
These two companies – as well as the rest of us – need to use technology for something more advanced than access and ancillary products. We need to put it right into the heart of media so that we can create breakthrough user experiences and new connections with audiences.
Millions of Ways to Engage
To do that, let’s start by recognizing what’s changed about the medium itself: In analog days, publishers’ products were two-dimensional; and all we had to work with was ink and some paper. And similarly, distribution was mostly two-dimensional; a subscription list and newsstand sales was all there was to it.
But now, consumers have access to millions of sources at their fingertips, and each one can be rich and interactive, reaching us through several different digital channels. Both our product experiences and our distribution can be much more intricate – and much more valuable. And combining the two gives media the chance to do something it’s always aspired to do before, but never been able to.
The Future Will Be Personalized
We have recently become ready for a whole new vision for media.
And that’s giving every audience member the right content in the right place at the right time.
To do this takes a combination of data – from the social operating system – coupled with media’s greatest power, that of creating experiences and distributing them.
To achieve this, though, we need technology to do more than output HTML pages; instead, it has to chaperone customized content to every individual.
This is a big change from the original Internetization of media, which was, like generations of offline media before it: “If you publish it they will come.” That worked when directories like Yahoo and search engines like Google matched consumers to content. But that attitude was passive; and today’s social Web is anything but. So publishers now have the opportunity – and the challenge – of taking charge of their distribution.
The key is using the emerging social Web to get signals from, and connect to, the audience. And when we do this, we are putting technology in the role of relating uniquely to every consumer in order to create the ultimate experiences they crave.
Now that’s a refreshing concept for media.
Three Ways to Get Ahead
But what does this mean, practically speaking?
I believe the role of technology in media success must embody these three things:
We’ve already seen this at Wetpaint, and the results are still getting better each week. Our database of everything we publish tracks all the distribution causes and effects, so we know what works. We also pay attention to who the influencers are, with technology that identifies them as well as who their influencers are; and now we’re building a “CRM”-like system to help us know more about these individuals and win them over.
Technology Changes Businesses
Let’s circle back to the discussion of whether you’re a media or technology company.
By its very nature, digital publishing is a technical medium. But, beyond that, what makes technology interesting isn’t its ability to carry bits; it’s its ability to change businesses. And we need to change our own by updating our sense of audience, distribution, and experience creation to provide thousands of times more precision than media ever has before.
When we do that, we’re making the content thousands of times more relevant. And I believe that’s how you build a thriving digital media business in the next decade.
A couple of weeks ago, here in Seattle, I had the opportunity to participate in a discussion about the future of SEO (search engine optimization) and SMO (social media optimization), along with one of the top SEO experts in the world: Rand Fishkin. The conversation was a lively one, moderated and reported –by Curt Woodward, at Xconomy.
My view is that – particularly for media – we are at a tipping moment. The web is no longer a field of static documents navigated by a precise search engine. Instead it’s a living organic distribution machine from person to person, through the ether of “social operating systems” like Facebook and Twitter. And, as a result, I expect Google will be losing ground to Facebook.
It’s was a lively and fun dialogue.
This week at the All Things D D9 conference, I found myself telling people that lately I’ve been “tricoastal.” It’s a codeword I’m enjoying for the rotation I have been doing between the Bay Area, Los Angeles, and New York. I seem to run between the three of them continually, as I’m trying to put together my best thinking about the future of media. And, despite the time, expense, and hassle of the travel, I keep finding that blending the three of them is far more powerful than if I spent time in any one of them. And if I didn’t visit all three frequently, I wouldn’t just be facing the catastrophic loss of super elite status on multiple airliner, nor innumerable calls from my mother asking “where are you and are you wearing a sweater??”. Far worse, I’d be missing an accurate picture of media.
My company, Wetpaint, has its roots in Silicon Valley. The Valley is great for its appreciation of the mechanics of digital media. In fact, it’s obsessed with them. The Bay Area practically invented the word “virality,” and it understands distribution – both through search engines and social networks, and from person to person – far better than others. At least at a mechanical level. The Bay Area culture is left-brained; it celebrates analytics, tactics, and leverage created by software and automation to get nonlinear results from human efforts. However, it is blind to the art of content and the realities of the advertising business. It assumes that both of these can be deconstructed successively into analytical components; that all actors are rational; and that these are systems problems, not human problems. But these assumptions are all patently false in media.
New York, on the other hand, recognizes the art of editorial and the less predictable, more spontaneous nature of the consumer. The iconic titles of companies like Conde Nast, and their personality-driven cultures, seem to have established a reverence for the editor-monarch with perfect knowledge, and have embedded a culture of royalty based on editorial superiority that translates into sales prowess. And that last component is met by New York’s enormous advertising machine, which operates based on a currency of relationships and perks.
But it’s Los Angeles that impresses me even more for being image-obsessed. Hollywood’s influence seems to understand the value of brands the best – that brands are greater than the sum of their parts. The LA mentality, however, assumes that content creators have captive distribution – as they do in broadcast and cable TV channel agreements and movie theater agreements. It assumes that once a brand is launched it becomes a pipe through which you can shove whatever content you want, like a cable channel, as though the lead-in and lead-out are guaranteed. And it carries an assumption that brand franchises have immense value to be tapped and negotiated by dealmakers.
In truth, digital media doesn’t operate this way. No distribution is guaranteed. Just as LA has seen the record companies crumbling under disaggregation, now it is happening to other forms of digital content. Published content online needs to find its audience one “single” at a time. The brand value of the collection, while still significant, no longer carries guaranteed distribution online. And the personalities linked to that content no longer have the star-power that an Anna Wintour or Tina Brown have been able to create in the New York model.
None of which is to say that the Silicon Valley mechanists are right, either. They aren’t. Their mechanical analysis of the universe doesn’t survive contact with humanity.
Instead, what I love to find every time I tour is how these pieces fit together.
If you’re not practicing the art of content that the New York media is best at, then you are creating a bunch of meaningless drivel that will never deserve the loyalty of a branded relationship. That branded relationship is the exact mantra of LA’s movie franchise creators; and yet, the distribution mentality of LA (that you can own a captive channel) is all wrong. Instead, I find that the Silicon Valley mindset of each item needing to find its audience – and then self-lubricate for viral distribution – complements it best. And this, then, reinforces the fact that it all starts with the NYC notion of content, in contrast to Silicon Valley’s algorithmic bias that it’s all about the technology.
By putting the three together, we end up with a complete picture of media – content, mechanics, and brands all working together – and that combination is one that represents how the audience behaves, with human drives around interest, engagement, and loyalty.
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.
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!
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.
Peter Kafka’s very interesting column in All Things Digital reveals that a number of media sites are seeing their referrals from Google decline while those from Facebook increase. Indeed, as a nice chart in Peter’s piece indicates, Google’s influence has diminished among 80 percent of the top media sites in the last year.
This isn’t surprising, and it makes perfect sense to me.
Using martial metaphors (how apt and appropriate these days!), media is the beachhead for Facebook’s entry into all Web browsing and all matching between visitors and what’s visited – and Facebook is quickly taking over that territory from Google.
Think about it.
Media is where it all starts, but certainly not where it ends.
Media sites are the most reactive to serendipity on the Web. And they’re the most “frictionless” of any product we consume online or off: The only cost is the click of a finger and a few seconds of load time. It doesn’t cost money to read a link; you don’t have to enter any shipping or billing information; you don’t have wait time while a freight company delivers it; and you don’t need a sharp implement to open it – or a place to put it.
The most viral media consumption is emotionally driven, too. And it generally offers high entertainment value, and is associated with some urgency because people want to be “in the know” in order to earn social currency. And, finally, like many products, it’s taste-based.
All of this helps explain why Facebook is gaining influence among media sites. And why, whenever Facebook offers a link to a media site that is worthy of consumption, there’s a very high probability that it will, in fact, be consumed.
Commerce sites are the next frontier for Facebook. As I mentioned above, commerce is harder, because there’s more friction, and there are more impediments that get in the way of buying / consuming.
But these are just degrees of friction.
As Facebook gets better at knowing me, who I share taste with, what products I need, and what people like – both people in general and people I’m likely to share taste with – it will be able to overcome that friction.
And, one can easily imagine Facebook doing everything it can to grease the commerce skids by facilitating frictionless login (Facebook Open Graph and Instant Personalization), payment (Facebook Credits), and more to reduce the underlying friction, so that commerce sites will follow closely behind media sites and start leaving the Google orbit.
Google is still driving traffic to many Web sites. But that is clearly changing. And Facebook’s assault is starting to succeed.