B2B Online Could Go Ultra niche

A US review of research by Technorati, the blog search engine, claims that most Blogs carry advertising and that average revenue/year is $6000 with some of the uber blogs making $75000 a year.

The numbers are small, but growing fast. This blog, which has a mostly UK audience is much smaller and makes next to nothing from advertising. In part this is because the Google ads are often not very relevant to this very specialist audience.

As regional newspapers wrestle with the concept of ultra local advertising, is there an opportunity in b2b to learn something from this approach and to create a network of business to business specialist blogs and micro sites where the ads are sold on a "classified" model? Advertisers can match their advertising to the audience and select which blogs they wish to appear on. This opens up access to highly relevant audiences not normally available. How would you reach the audience of this blog otherwise? I don't sell ads and the Google system is not sufficently targeted for this specialist group. Only a handful of sites and blogs write about the UK B2B sector and certainly none mainstream media portals bother much with it. And yet, small though it is, there are many suppliers to our industry who would happily pay to reach you. (In case you didn't know most of you are pretty grown up execs in the b2b industry.)

Let's call this B2B idea "Ultra Niche".

The advertising is highly targeted, inexpensive and very effective. It encourages the growth of specialist writing and offers great ROI for advertisers at a low cost. It's a credit crunching idea!

In a larger way Federated Media has built a substantial business in the US using a variation of this thought.

Mmmm.

Job Losses, Curated Content and a Rough Year for B2B Ahead

A report by analysts Outsell penned by Chuck Richards should scare the hell out of you. Every 1% of print revenue lost, they claim, will lead to 435 job losses. They forecast a drop in print revenue of 4.5% in 2009, leading to further job losses. The migration to online combined with the downturn is an ugly cocktail.

The article points out that print sales people convert poorly to online sales and quotes one source saying that the success rate is just 25%.

They conclude,

"B2B trade publishers need to be positioned to compete with companies like Demand Media that will compete on a much more profitable cost basis. Step 1 is to rationalize staffing to match sources of revenue. Step 2 is to use this time of economic stress to restructure all key processes to not just stay afloat, but to be ready to jet forward when market growth resumes."

Not only do I agree with the sentiment, but the company they mention has an interesting model. It uses a mix of UGC freelance and industry source data to compile web sites. The result, according to Outsell is revenue/employee double that of traditional b2b media companies.

Forrester call the Demand Media model Curated Content and explain how it works here

I am not sure its really b2b, and I am not sure it would work here. It depends on much content being supplied by experts and paid a modest fee. You need a lot of experts to make enough content. And as any journo will tell you, turning an experts copy into something readable is time consuming and expensive. However Demand Media has been around for three years and by all reports is doing well in the States. What it has discovered is that curating third party content is a way of reducing content creation costs perhaps enough to allow an online model to produce sufficient revenue to make a profit.

I have written before that the problem with online is that the ad revenue opportunity is modest. The answer is to solve two problems. The first is is to create a better ad model with more proveable ROI for B2B advertisers. The second is to reduce the cost of content creation. Demand Media are addressing one part of one half of those issues.

http://www.demandmedia.com/

Related articles by Zemanta

• Demand Media sucks in $35M, continuing raise-and-acquire trend

The Future of Business Media Part 3

So can the magazine model be reinvented? Is there any future other han squezzing the last drop of cash from magazines as they die from news disintermediation by the Internet, the collapse of recruitment advertising and paid sales, and the slow but crushing decline of display advertising.

Lets start with news. It's a commodity right? No one is going to pay for news unless it is bespoked for them - and even that is not without doubt. Also, news has to be up to the minute. The clue is in the word "new". With news available 24/7 and even the worst of the business media websites posting several times a day, what could you publish in a mag that was genuinely new.


Today most editors are doing what they always did. The result is that by the time the article is printed and on the desk of the reader, it isn't news, its olds. News must be information not previously known to the reader. How can this be done in print in a digital world? The answer is simple. The news editor has to move the story on. If a news event has happened and already been reported on the web, even if it has been reported in a website not owned by the magazine, the news editors task is not to repeat the story, but to move it on. How might this be strucured in a news report in a our new magzine? The standfirst might usefully be a summary of the story so far, ("It has been reported that.....) but the body of the copy must move the story on. An interview with people in or affected by the story. An analysis of the implications of the story for the industry. A back analysis of how the story came about. A summary of what has been said about the story in other media or on industry blogs. You can think of more ideas I am sure. The challenge for the news desk is that this involves work. Reading stuff, calling people, making notes, thinking. It won't be good enought to re write the press release sent by the publicity department.

All this means fewer stories, because each one will require more work. I can just about imagine that it would be useful to publish a round up of what has happened this week, possibly in the style of "The Week", but other wise news editors of a post digital revolution business magazine should erase the word "nib" from their vocabulary.

In the next piece we will look at what might fill the rest of the pages.

Meanwhile you can read parts 1 and 2 here and here.

The Future of B2B Media Part 2

The first challenge for the 21st Century Publisher is what to do about news. As a primer for this discussion read this interesting piece from the Monday Note on the economics of newspaper news.

It questions the online economics of the news room and we might question that for b2b too. Lets play the sames game for B2B that the Monday note plays for newspapers. A major weekly trade paper has a total editorial team of perhaps 12. A smaller weekly perhaps 6. In the online news world all the industrial costs of printing etc, disappear. Let's assume the cost of a journalist averages £30k. Let's also assume that we are modern people with a keen eye on productivity and we do without subs, lay out and so on. Let us imagine we can give good coverage of our b2b beat in the online world with half the number of journalists we used to enjoy. We will also need some web hosting and a bit of skill to maintain the technical aspects of our site. Lets pretend thats another £30k a year.

This means our b2b news web site has costs of around £210k for a six person edit team. We might also need a sales person and an office and some overhead. Lets say all up, around £300k a year. How many visitors do we need to make this pay? Lets assume each visit consumes around 3.5 pages per session (and thats probably being optimisitic) and that each page impression contains three ad imporessions (a sky, a banner and a MPU). Lets also assume we can sell all the ad inventory (another optimistic assumption) and that the yield is £25/000. (In other words we have to sell each ad site at an average rate of arond £8/000.

We need around £25k /month revenue to break even. With three ad sites/page impression we need around 1m page impressions/month from 285,000 visits.

Ah. Houston we have a problem. Even with an optimistic view of page views/visit, yield and inventory sell through it looks highly unlikely that most verticals can support high quality editorial with a simple ad model.

Today the web content model is effectively subsidised by the print jounralists contributing content. In a post magazine world the economics of the web only model, using news as the bedrock just won't work.

Our options then are:
1)Find a way to continue to make the mag model work so that we can maintiain our editoiral standards.
2) Find a way to increase the revenue opporunities from the web offering
3) Accept lower standards of news content on the web than we would have accepted in the print model.
4) Act as a content aggregator rather than a original producer.
5) Use news as a loss leader for seeding other b2b activities which can be profitable.

In the next part of our journey of discovery to find the new model for b2b we will examine whether the mag model can be reinvented.

Click here to read
The Future of B2B Media Part 1

The Future of Business Media Part 1 - The End of Business

Whilst we wait for news of the RBI deal (the word is that there are two serious bidders in round three, that the deal will get done but at a price closer to £1b than £1.3b) it might be useful to start thinking about what strategy a new owner should employ. What will work for RBI will likely work for other traditional b2b publishers.

Lets begin in this piece by agreeing about what has gone wrong for the business magazine model and then we can consider how each of the issues might be addressed.

1) The paid copy model is dying. There are subscription model opportunities in high level must have data, but not for news and features. The few business magazines that still have paid circulation are strugggling to maintain subscriptions and have seen news trade sales wither.
2) The cost of controlled circulation distribution is increasing as proportion of total costs, partly due to price increases, but also because of the collapse of classified advertsing (See 3). With size based pricing it is not possible to flex the cost down as pagination falls. In a downturn this has important implications for margins.
3) The historic high margin classified and recruitment market has been disintermediated by the web.
4) Free web based information means a news model with a weekly frequency is less than compelling as an essential driver of readership. Although business news consumption and disribution has changed dramatciall in ten years, most weekly business magazines are producing news using the same definition of "news", the same presentation and approach as in 1970. They are of course doing this with fewer journalists than ever.
5) B2B magazine brands have different attributes than they used to enjoy. Once they were beacons of essentailness, independence, trusted sources, bibles of the industry they served. Today a blog is just as likely to be credible to a reader (forget whether this is true or not, it is how readers think) and the gateway to finding stuf out is a search engine, a blog roll, favourites, RSS as well as some residual loyalty to the old brands.
6) Advertisers are doubting the ROI of traditional print advertsing. Many are spending more on SEM, their own sites and email marketing than they are on print. Why spend £3000 on a display page with no proof of readership or noting when for the same money I can buy 300,000 page impressions?


Does this mean the end for business magazines? Not necessarily. But the cure is painful and shocking. I'll come back to this is upcoming posts and share with you my recipe for saving the business magazine industry.

Its Not a Joke...

I went to see Batman last night. I recommend it if only for the extraordinary performance by the late Heath Ledger as The Joker. But if you want to be really scared read this reportage of the results presentation from Johnston Press. I know its about regional newspapers not b2b, but aren't there some similarities - communities, the decline of print, the vulnerability of recruitment, the collapse of the paid sale model, online growing too slowly to compensate for the print malaise?

Try reading Peter Kirwans piece but replace all the names of people with names of your own execs, and the every time the company is mentioned, use your company name.

Done that? Feel a little chilly? Thinking that maybe you are not doing enough? What is happening now in regional newsapers is a lens on the future to B2B - and Batman isn't real - you are on your own.

More page views doesn't mean more advertising

Folio magazine in the US has started an interesting community of discussion around b2b and recently hosted a debate about digital strategy. There are several common themes. The advertisers are saying that simply quoting page views won't grab their attention. They want to see evidence of community engagement through the downloading of information, the provision of registration details, participation in discussion and so on.

One media buyer said he doesn't care about price only about quality. He will pay more if he is sure it is the right audience fully engaged with the web property.

The notion of community is not new. Business magazine publishers have bragged for years about how their magazines are the hub of the community. Now, in the digital world we can test whether these brands really are the heart of the community.

Just as with print publishing where it became standard practice to have requested circulations and independent readership data, now in digital, in the US at least, ad buyers are demanding rather more than the mag online. Essential de minimus activity seems to include,
Downloadable info
Registered user activity
Active and relevant forums.
Tools and information in the site to aid decision making and product selection.
The provision of validated leads to advertisers/suppliers.
Proof that the audience is relevant.

The last of these really matters. Claiming page views is hugely misleading. Even this modest blog gets readers from all over the world, 38 countries to be exact. That overseas readership is around a third of my traffic. If I was trying to sell ads, it would be dishonest of me not to declare when I brag about my page views, that 30% of those views come from parts of the world where UK advertisers may not sell product.

I have seen some web publishers explain how they try and monetise traffic on each page with many alternate solutions (ads, sell content, lead gen etc). Now is the time to talk about how to meet customers needs. Adverstisers in b2b do not want to buy banners and skys against spurious page view stats. It's time to raise the game.