Associated Content is Yahoo’s First Big Media Move. Here’s What Should Come Next

With yesterday’s announcement of the acquisition of Associated Content, Yahoo CEO Carol Bartz has sent a loud message:  Yahoo is investing in becoming a new kind of digital media company for the new age of digital media.   Cheers to Yahoo for recognizing that their “1.0” model needs an upgrade to be more effective in a 2.0 world.  The only problem is that this move gets Yahoo just one step toward where it needs to go.  It could be a powerful first step to add content and audience to their network, but will only be strategically valuable for Yahoo if it is layered with additional new investments to build true destination media sites with premium positioning.

Let’s explore what Yahoo gets from AC first, and then cover what Yahoo must do from here if it is serious about winning in media.

1. Yahoo gets commodity content at commodity cost. With Associated Content’s marketplace, first and foremost Yahoo can source commodity content – i.e. the kind of content that doesn’t need a particularly differentiated author, original reporting, or other hard-to-find talent – cost effectively.

2. Yahoo can improve time (and value) on network. In this age of deteriorating portal power, users come to portals primarily for one reason:  mail.  (According to data from comScore, 73% of Yahoo’s viewers of its most valuable real estate – the home page – are Yahoo Mail users.)  Once they arrive, however, there is far more money to be made by vectoring them to networked media properties like Yahoo Finance, Sports, and Entertainment than by serving additional pages of poorly-monetizing email.  So, by beefing up the available content in the network, Yahoo receives the benefit of extending visits at low cost.

3. Yahoo increases its audience by drawing traffic from Google. Yahoo’s made the strategic decision to move its focus out of the search game and onto media.  And so rather than just feeding them from mail and search, Yahoo needs its content properties to draw audience on their own.   The AC content marketplace can produce thousands of pages per day of content – each one baiting more search engine traffic, and all produced at modest cost.  A recent EConsultancy interview with CEO Patrick Keane revealed that the bulk-buy strategy works:  “80-90% of our audience is driven through natural search,” and according to comScore data, nearly 50% of the traffic that AC’s content sees each month is incremental to Yahoo’s core audience that comes for mail most days.

All three of these improvements have financial benefits to Yahoo – both in increasing revenues with greater reach and traffic; and in bringing down average cost of content. But they miss out on the strategic positioning that Yahoo absolutely must own if it wants to ensure a leader as a top digital media company:

Yahoo needs to be a premium destination; and the AC acquisition message undermines that positioning. Continue reading

USA Today Embraces Commodity Content with Demand Media

Commodity ContentNo publisher wants to believe that content is a commodity.  But by introducing a new web Travel Tips section powered by Demand Media, USA Today is taking the bold and necessary move in admitting just that.

It’s a turning point for the publishing industry to concede that not every column inch is vying for a Pulitzer, and to act accordingly.  Let’s face it:  certain types of content — in this case, detailed travel tips, deals, and the like — do not require nor merit the talents of their highly capable (and highly paid) editorial staff.

It’s also clear from Nat Ives’ report at AdAge that the new section is an opportunity for the USA Today brand to capitalize on search engine optimization (SEO) to capture prospective travelers who search for specific advice, such as “hotels with toddler pools in Maui”.   Demand Media will analyze search trends and engage writers in its content marketplace to address topics with the greatest commercial potential.  Meanwhile, USA Today lends their brand to the equation to generate new audiences from search engines and revenue for both parties.  For USA Today, this solves the problem of how to add more to their user experience and grow their audience, with little to no cost.

It also solves Demand Media’s problem:  they have a whole lot of content with no place to put it, and this deal opens up distribution for a broad new category.  Demand Media clearly has its sites on ‘movin’ on up’, and they are dating up a tier on the social ladder with this deal, as it helps them move upscale into a more premium environment under the halo of the USA Today brand name.  This provides further momentum on the heels of the news that CEO Richard Rosenblatt convinced online heavy-hitter Joanne Bradford to join Demand Media as chief revenue officer.

Will the content be up to the typical editorial standards of the USA Today?  Almost certainly not.  But travel tips don’t require particular expertise or training, so this category is an excellent candidate for commoditized content.  Moreover, it’s important to understand that the primary consumer quite likely is not a current USA Today enthusiast.  It is a web searcher who may or may not have any relationship with the brand.   And given the topic, the value-add of a highly paid writer could easily be lost.   One doesn’t need to wax poetically about a toddler pool after all.

Most publishers will turn their noses up at this as “farmed” content.  But to do so would be foolish.  This is a great example of a top brand recognizing where they do and do not make a difference, and focusing their investments where they matter.

For the USA Today online team, led by Jeff Webber, this is a smart move.  Now, other publishers need to do what people in other industries have done for decades:  focus on your core competencies and economize on those things that do not differentiate your product.    The publishing world has been all too slow to recognize this Econ-101 reality, and it’s time for a wake-up call.

What are your thoughts on low cost, commodity content?