Weekly notes 09/25-10/02

Current online media landscape and trends

Since the inception of the online media business models used by news Web sites, the business landscape hasn’t changed much, except advertising becoming the main revenue source. Advertising is the dominate source of revenue to online news sites (Brown, 2003; Greer, 2004).

Furthermore, advertising is growing to be more sophisticated, interactive and targeted to extend the value proposition on the B2B side, as clients are looking for more innovative ways to showcase their products.

In 2006, advertisers are looking for more hi-tech and innovative ads: from simple banners to rich media like Flash, animations and interactive ads.

Studies show that 89 percent of news Web sites contain advertising (Greer, 2004), and 75 percent of revenue to newspaper Web sites comes from classified advertising (more than double the 36 percent for hardcopy editions) (Brown, 2003; Newspaper Association of America, 2006). A typical news homepage has five ads that take up about 10 percent of the front page (Greer and Mensing, 2004).

By 2004, online ad spending was at $145 per U.S. household with Internet access compared to $674 per newspaper home (Robertson, 2005-2006). After the dotcom crash in 2000, ad revenues dropped but traditional brand advertisers became the biggest spenders (Bruner, 2005; Greer, 2004).

By 2005, online advertising raised to almost $13 billion, which is almost 5 percent of total media spending (Foege, 2006). In 2003, it was only 2.5 percent.

Along with the revenue numbers, online traffic metrics is one of the measures of success. CNN.com gets over 22 million average monthly unique users (in 2005; Nielsen ratings). This amount of “eyeballs” is definitely attractive to any advertiser and translates well into revenue numbers for CNN.com.

Paid content is becoming increasingly important in CNN.com’s revenue stream, as the company is being able to offer unique and exclusive content wrapped in premium packages like Pipeline. The Wall Street Journal’s online edition follows the same model, offering unique business-related content.

Most news content providers and aggregators, however, may not be able to extend the same value proposition of a unique product. Their revenue seems to be mostly based on “bounty” and licensing fees, or revenue share models. When there’s no unique value proposition, there will be consumer resistance to subscription-based revenue models.

CNN.com as a continuous breaking news operator delivering the freshest content 24/7/365 has a unique advantage of having close to 4,000 journalists in all parts of the world, including the company’s 42 worldwide bureaus and more than 1,000 affiliates.

What makes the product even more valuable to consumers is the fact that most reporting is done by locals: be it in the U.S. or in Somalia. With the exception of a mega stars like Anderson Cooper going to Afghanistan on reporting trips, the majority of breaking news is handled by local correspondents that have knowledge of local history, customs, background of events and can offer a unique insight into a news development.

And the faster the broadband grows, the more “eyeballs” will CNN.com get: both at work and at home. Currently, the model seems to be serving users at work more than users at home, as many employers supply the broadband needed for watching premium products like Pipeline. But home use seems to be growing as well. As of March 2006, Internet penetration reached 73 percent of all American adults – 90 percent have broadband access at work and 42 percent at home (Horrigan, 2006b).

To further extend its product value, CNN.com captures its audience with mobile technologies. When there’s no Internet and no breaking news e-mail alerts, the text messaging technology SMS works to the company’s advantage in its “CNNtoGo” product line.

Weekly notes 09/18-09/25

Interview with Ramonica Harton
Director, Sales and Programming
CNN Interactive
Media Pool

Highlights:

CNN.com has its own sales force, which is separate from Time Warner, and Turner Broadcasting. There are two types of advertorial opportunities: TV-Web integrated and online only.

The value of this proposition is very clear: getting to the audience through multiplatform approach is a dream come true for advertisers. Speaking of the B2B side of the value component of CNN.com’s business model…

With its adaptability and access to new platforms, essentially the Internet and its podcasting, video-on-demand, mobile services, interactive TV, CNN positions itself as a great catch for advertisers.

Greg D’Alba, the COO of CNN Ad Sales and Marketing, is quoted saying that “advertisers… believe in, and pay for, CNN’s ability to reach consumers in a number of ways with the same content.” (John M. Higgins, “D’Alba keeps fighting for CNN”, Broadcasting & Cable, October 17, 2005.)

As dot-com’s business model is ad revenue supported for the most part, the dollar numbers are of importance here. According to Broadcasting and Cable, domestic ad sales in 2005 were more than $400 million for CNN, Headline News and CNN.com.

With the explosion of pay-for-performance (PPP) search marketing in 2002-2003, CNN.com had its portion of the pie by joining partnerships with Overture, Yahoo! and Google. Also known as the pay-per-click (PPC) search is one of the streams of ad revenue for major online brands like CNN.com. The online ad dollars are being spent with PPC search engines and any content site can get a share of that by driving its users to these search results.

Overture and Google let advertisers to appear in search results as well as on partner Web sites. The companies generate revenue when users click the links. This is a revenue share model, as distribution partners get some percentage of it.

Overture is a very large pay-for-performance search engine that offers search listings in its extensive partner network on a pay-per-click basis. Minimum bid: $0.10. The partner network includes Yahoo!, Altavista, CNN.com, InfoSpace, MSN, NetZero, Juno, Sympatica, Dogpile, and many others. Overture claims advertiser receipt of over 170 million leads per month.

In the end, Overture get wider distribution, and CNN gets its ad dollars. According to CNET.com, financial analysts estimate that sales from paid search comprised between 20 percent and 24 percent of the nearly $7 billion generated by the online-advertising market in 2002. That compares with between 10 percent and 12 percent in 2001.

When Dell bought sponsorship of dot-com’s new product – the Exchange – the value of this deal was obvious for both sides. Dell’s desire to be associated with innovative technologies and groundbreaking content approach was in sync with CNN.com’s search for additional ad dollars from its long time customer.

The content product offered by CNN.com is appreciated by advertisers, as the breadth and depth of it allows specific targeting to achieve greater results, i.e. impressions, clicks and any other conversion metrics. Marriott buys ad space on the Travel section of the Web site, as there is the audience that is looking to travel.

To emphasize its value proposition, CNN.com sells ad spaces in special reports, which are sometimes produced for a specific advertiser. As in the case with Western Union sponsoring all hurricane related specials, Cingular Wireless was the sponsor of the “Your Digital World” special report. Not to mention that when CNN.com launched free video in June 2005, the ad-supported player was sponsored by Chase and GM. What’s a better way to get the oh so desired eyeballs?

CNN's digital ad inventory is essentially limitless and includes streaming video, wireless, podcasting, VOD, digital-only special features and high-profile page positions like CNN.com home page roadblocks. Each month, more than 24 million unique visitors to CNN.com access more than 32 million video streams and 3.2 million podcasts. More than 62 million monthly page views come via wireless or mobile devices.

Weekly notes 09/11-09/18

Interview with Mitch Gelman
SVP & Executive Producer
CNN Interactive

Interview with Cecilia Villanueva
Manager of Partner relations
Sales and Programming
CNN Interactive
Media Pool

Highlights:

No news organization can create all the content that it can benefit from. There are such obvious restrictions as the area of expertise, human and technological resources, timing, finances, etc. The idea of content acquisition and content partnerships has been widely employed on the CNN.com grounds. The benefit is obvious, when partners are carefully selected. The content acquired should compliment the already existing content and fit in the business model. The complimentaries play a substantial role in value component of any business model at several different points in time: from its inception to sustainability.

Currently, CNN.com has content partnerships with SportsIllustrated.com, EntertainmentWeekly.com, Business 2.0, The Christian Science Monitor, Time Magazine, Edmunds.com, CNN Money, People Magazine, MayoClinic.com, Fortune Magazine, CourtTV.com, FindLaw.com, BudgetTravelOnline.com, MedPage Today, CareerBuilder.com and CNN’s affiliate stations throughout the country.

The expertise and superior content that is brought by partners is used to emphasize the value of CNN.com’s own product. By attracting expert opinions, the dot-com’s product is reinforced as the leader in the news (entertainment, technology, health, etc.).

The benefit is mutual. While CNN takes advantage of additional content, the partners gain exposure to CNN.com’s 22 million uniques per month. In addition, every content deal is developed on a co-branded page and a link to “More information,” which goes straight to the partner site.

Partnership deals are carried out throughout the world due to the networks worldwide presence. In Australia, Turner Broadcasting signed a deal with a mobile company Telstra. Under this agreement, the i-mode® users get access to the latest CNN news and Cartoon Network content on their mobile phones, as Telstra is launching its i-mode® service in 2004. http://www.3g.co.uk/PR/August2004/8209.htm

No deal is the same. In 2005, CNN.com signed a deal with Yahoo! Inc. ABC News was also a part of this video content partnership, in which both news organizations were set to provide daily video feeds to Yahoo!

While Yahoo! is gaining reputable video content and shares the respectability of the abovementioned brands, it also makes profit by integrating CNN.com’s video content into the Yahoo! News section on a free and ad-supported platform.

On the consumer side, this partnership benefits the users by allowing them to access the inventory available on the Internet.

For CNN.com, the value of this agreement, is in the exposure to bigger online audiences, especially, since Yahoo! is on the list of dot-com’s major competitors on the Nielsen//NetRatings scale, even though it is only an aggregator.

The year of 2005 also brought the MedPage content partnership. CNN.com brings MedPage Today with its physician-reviewed, in-depth medical news to its more than 20 million unique visitors each month (including over 500,000 healthcare professionals).

"Our partnership with MedPage Today helps to enhance the delivery of top-quality content to CNN.com users," said Mitch Gelman, Senior Vice President and Executive Producer, CNN.com. "Our readers are highly engaged and appreciate in-depth reporting on stories they care about."

From the press release: “As part of the agreement, links to MedPage Today's contextually relevant medical news content will be available from CNN.com's health section. MedPage Today will also develop custom content for CNN.com, including two weekly columns: Medical Journal Roundup and Profiles in Medicine. MedPage Today will also feature links on its news website, www.MedPageToday.com, to CNN.com's health section, thereby providing its audience with better insight into the health news coverage by the mass media.”

Around September 2006, CNN.com added “The Onion” to the list of its content partners. “The Onion” is a known satiric news source on the Web and has a reputation of one of the nation's most popular humorous news publications and is all about parody, satire, sarcasm and mockery. One of the examples of their headlines as follows: "Schwarzenegger Campaign Running out of Movie-related Campaign Slogans."

With a weekly readership of over 2 million, The Onion’s BM is largely based on advertising revenue for both online and print editions. In addition to that, there is a book publishing business: Compilations of Onion’s articles are published as books and are available in bookstores nationwide. The latest one is called "The Onion Ad Nauseam, Volume 14."

In the case with CNN.com content integration, The Onion is represented as a weekly feature on the US page. One of the examples follows:

Satire: Summer intern already forgotten http://www.cnn.com/2006/US/09/14/onion.intern/index.html

Under the terms of the partnership, CNN.com gives the Onion a prominent placement on the home page as well as on the U.S. section page and a co-branded environment with external links directly to The Onion’s Web site.

Weekly notes 09/04-09/11

Interview with Andy Mitchell
CNN Interactive -- New York
Director of Interactive Marketing
Dept.: Strategic Marketing

Highlights:
Dot-com's marketing department is working constantly on different marketing initiatives. The campaigns are mostly worldwide. Interactive marketing is implemented on several platforms: Online, free video, Pipeline, interactive TV, wireless. These digital properties are also used to promote TV content online -- TV/Web integration.

The selling point is the brand. In the current state of the media, CNN means immediacy, trust, worlwide and around-the-clock news coverage.

RPU (Revenue per User) is an online metric used to showcase revenue for every unique on a monthly basis. While there are no exact numbers available publicly, the RPU reflects the year over the year growth and financial success of the company.

Audience is broad -- 30 million, which is about the half of total online population. It is mixed in gender and is relatively upscale. Very little of behavioral marketing is done, if any. Most efforts are very broad marketing without particular targeting.

Dot-com's marketing is very active in the advertising and marketing industry and is frequently featured in such publications as Advertising Age and Media Week to position itself in front of the advertisers.

CNN's Ad/Marketing Strategy:
In terms of reinforcing and maintaining the value component of its business model, CNN.com operates on two fronts: B2C and B2B. If Business2Consumer part operates primarily on the editorial level, the Business2Business component is strategized and implemented in the Interactive Marketing and Sales departments.

The company employs a multiplatform ad strategy to satisfy the interests of both its advertisers and consumers. As any other media company in the era of the emerging media platforms industry, dot-com is focusing on delivering its value/product via different digital platforms: Internet, video, wireless, podcasting, video on demand, etc.

"Consumers access news everywhere: at home, at work, on the go by using different technology available at that point in time," says Andy Mitchell, Director of Interactive Marketing for CNN.com.

The more there are product distribution platforms, the more there are benefits for advertisers. CNN.com’s marketing strategy offers both end users and advertisers a unique proposition of accessing news on several different platforms, as well as place advertisements on those various platforms.

Ad placements on the site vary from textual ad links to fixed positions as the homepage roadblocks. In the end, the company creates more opportunities for more ad inventory on different distribution channels. The limited premium digital ad inventory gives advertisers access to CNN.com’s very extensive and desirable demographics. The demand for this premium inventory is only increasing year after year.

Success comes from combining various distribution platforms to maximize the reach and consumer exposure to ads, therefore, enhancing ad revenue. The advertising industry probably never had it this good, since multimedia content revolution took place on the Internet, as well as traditional media outlets.

The most successful marketing campaign
"The power of CNN under your command" (http://www.cnn.com/yourcommand/), launched in November 2004, featured a set of funny videos with the starry cast of TV personalities such as Christiane Amanpour, Wolf Blitzer, Anderson Cooper, Lou Dobbs, Paula Zahn and Dr. Sanjay Gupta.

The humorous promotional spots were showcased on both TV and the Internet.

This project allowed CNN.com to showcase CNN as a whole and show that they don't take their serious business too seriously. For the online side of the business, it was a good experience to be associated with famous TV personalities, therefore, extending the brand name and its talent components to the digital platform. This project provided an online outlet for TV personalities and created a certain buzz in the industry as a whole.

Struggles with wireless
To many users, the wireless technology is still foreign, which makes it difficult to market CNNtoGo, the company's wireless arm. The new product must be logical and easy for users to understand, otherwise, it will fail. Wireless is still a relatively new notion in the minds of many consumers. The wireless carries promote their product and it helps in the overall education of consumers. CNNtoGo is built to accommodat current technology used by the carriers. People fear things they don't understand.

The eureka moment
It sounds silly, but it just dawned on me that the value component in dot-com's BM is not entirely concentrated in the editorial/consumer part of it -- i.e. the B2C and product offering module. The big part of the value-driving activity is in marketing, advertising, sales, programming, intra- and inter-company relations -- i.e. on the B2B side.

Weekly notes 08/28-09/04

Interview with Manuel Perez
Supervising Producer-Interactive
CNN Interactive
U.S. Editorial

Highlights:

Org. Structure

What's interesting is that even mega stars like CNN.com are having recruiting troubles. That's me talking again about the organizational structure and the importance of versatile and talented staff that is responsible for creating the company's major product -- content. Dot-com is on a dry land for talented online journalists, as what the "old force" learned, it learned on the spot, but there are no people who come in with specific education in online journalism and convergence -- at least, not yet, or not as many as desired.

The need is in professionals of digital storytelling, which still is a rare talent/skill to find, bus so much needed by the industry.

I produced several multimedia projects working in a team with a writer whose background is quite impressive and includes experience of working for major newspapers and wire services. But the thing is that there's no multimedia background, or knowledge, which, clearly, complicates the process of achieving goals. So, I see why dot-com is struggling to find talents.

Sustaining the product value
On a different note, there's a struggle to refine products all the time. In the late 90's video integration was crude as the videos themselves (very low quality). Now, video is integrated into interactivity and textual stories. In the latter, it is a link next to a relevant line in the story; that would pop up a video player window to show you something that's better to see than to read about. Video is also being vigorously integrated into multimedia content: photo galleries and explainers, as well as interactive maps. This only makes sense from a business perspective, where there is so much video content that is aggregated in the process of newsgathering, it would be wrong not to put it through all available channels of distribution: from cable to online.

Reputation
When nothing happens, people watch/read Fox, but when there’s breaking news – it’s always CNN, as the network, along with its other distribution channels like Internet, became almost a synonym for breaking news. The reputation of the brand name may be considered to be well deserved: CNN was the first (or the best) to have covered the Berlin Wall destruction, the Persian Gulf War, September 11 attacks and Hurricane Katrina devastation to name a few. For the latter, the network even got a Peabody Award in 2005. The value of dot-com’s product in the event of breaking news is consistency, proven results, worldwide coverage, speed and accuracy. In addition, there’s a network developed perception of “the most trusted name in the news,” which translated to online beautifully. And it even got better: on the Internet people go t find out what’s breaking right this second, and, chances are, CNN.com will tell them.

Stickiness
An online metric crucial to the success of an online medium… On the editorial side of dot-com, there is a continuous effort to improve writing, headlines, provide more compelling images and frequent updates. To pull people in, there are breaking news e-mail alerts and banners.