How do you organise a 21st Century digital content business? One with no printed product no arbitrary deadlines, no old-fashioned structure based on physical production? It's all banner ads right? Not for much longer.
Nick Denton, the British founder of Gawker Media, the publisher of sites such as Gawker.com, Gizmodo, Kotaku and Lifehacker with 18.6 million monthly readers, plans to pivot his business away from a dependency on banner display ads to a more direct, client and user-based revenue model.
Business Insider has an internal memo from Denton outlining both how the editorial and commercial sides of the business are developing. Gawker is one of several online content businesses not taken very seriously by mainstream media outlets, but it's well worth listening in to that strategy.
A client-based consumer marketing model
A new content department within the sales team will work on sponsored posts, events and client services to help commercial partners get noticed. Denton says: "We all know the conventional wisdom: the days of the banner advertisement are numbered.
"In two years, our primary offering to marketers will be our discussion platform. Expanding on our existing sponsored post program, Ray's team will recruit and identify a client's spokespeople and advocates, advise them on web etiquette and language, and help make their most persuasive case."
A sponsored post on Gawker might garner 75,000 views
This is quite a shift in thinking from the predominant, "stack it high, sell 'em cheap" CPM trading model favoured by so many sites today and for the past decade. I've wrote about how businesses as diverse as UBM and Conde Nast are investing in client services. To see a savvy web startup try the same confirms it as the smart content business's weapon of choice in a depressed online ad market.
Direct revenue from customers isn't just payments
Desperate to know whether paid content can work online and on tablets, have publishers ignored the possibilities of e-commerce? Maybe - "without really trying" Gawker made $70,000 from Amazon's affiliate scheme in December alone. Gawker was founded to provide affiliate sales for gadgets through Amazon, but the importance of affiliate has faded. Denton has now put someone in charge of increasing the affiliate numbers as well as revenue overall.
As Denton puts it: "We expect that the banner ad business will be supplanted by our content services and content-driven commerce."
It's refreshing to hear a digital content publisher not complaining about the over-served and inefficient advertising market, but actively and positively innovating in partnership with clients to make more money.
Display ads still matter, but be careful what you measure
A study from targeted ad firm Pretarget and comScore confirmed what some folks working in digital marketing have suspected for years: the traditional ways of measuring banner success are overrated. The researchers looked at 263 million impressions and found that simple clicks were the least successful driver of conversions.
And more worryingly, some ads aren't being see at all. As the study puts it: "Traditional display ad impression measurement and reporting simply verifies the number of ads that were sent by an ad server to a user’s browser. For a variety of reasons, this way of counting impressions does not ensure that the ad ever rendered within a browser."
Another comScore study this year found that as many as 91 percent of ads on some sites are never viewed by any internet-using humans.
Display ads still matter, of course. Even CTR, in direct sell industries like pharma in the US, plays a crucial role. Google expects display to become a $200 billion industry in the next decade and I wouldn't bet against that.
But in the context of an economy that a) doesn't know the best way to measure ads and b) can't be sure that many of them are actually being seen be anyone, you can't blame publishers for diversifiying beyond the MPU, the skyscraper and gutter.