Native Advertising, the new hot buzzword for local media executives hunting down new revenue models, may also provide the best mobile ad unit.
That is, sponsor posts are a much needed alternative to mobile display ads, and better-suited to the small screen.
So said Chris Lee, president of Deseret Digital Media, at the Local Innovation conference. He walked through a model of the mobile paradox that native ads can solve:
If you are lucky enough to be president of Deseret Digital and have, say, 100 million desk top page views with 4 ad units per page and an overall CPM of $5, that's $5 x 4 = $20 x 100,000 or $2,000,000 possible dollars.
It's easy to see why newspaper companies can't migrate their massive organizations to digital sales for the measley sum provided by banner ads alone.
That's why the most successful initiatives have included non-traditional revenue streams, where Deseret is a clear leader.
As consumers migrate en masse to mobile, however, the situation gets worse.
There is only one muon-sized ad unit on a phone and CPM's have fallen to around $2.
So Deseret's entire 100,000,000 in traffic could be sold out, theoretically, for $200,000.
The impact of this fact-of-media-life is still waiting to be felt, as ad spend greatly trails the consumer in use of mobile.
One of the answers to the mobile dilemma, however, is native advertising.
Sponsored posts appear in-stream and several can appear per user session on the page as readers scroll, not just click.
Facebook mis-understood the mobile advertising model at first and suffered until they finally got it right with sponsored posts.
Today, "sponsored posts" account for Facebook's fantastic growth forecast.
One of the odd quirks of media is how physical space impacts design, which profoundly impacts the business model.
And as a better, more profitable mobile ad unit, native has a strong future.
See all the reports on local native advertising in our …
Why is everyone so interested in obits?
To start with there's a lot of money at stake.
The obituary market is worth millions in many large cities as our case study on the Bay Area News Group has shown; they grew annual obituary revenues from $2 million to $7 million in about seven years.
Overall, families spend $900 million on obituaries in the United States, depending upon who you talk to.
About 1% of the population on average dies every year, a number that stays surprisingly flat but does have local variations. That's about 2.4 million deaths a year in the U.S.
About 80% of these people have families that will buy an obituary, depending on the DMA and cultural and socio-economic factors.
For media executives planning to research their own marketplace more carefully, best practice is to talk to funeral homes, and your own sellers, as well as researching what other media have done.
A few practical details: Plan to contact funeral homes over the summer months; fewer people die in August, while there is a spike in December and January.
To estimate the market for a specific area, check with the county for an exact number of deaths. General statistics by state as of 2012 are at this link.
As an example, Mississippi had 1,022 deaths per 100,000 people, meeting the national average of about about 1%.
So with a population of 2.985 million statewide, that means about 29,850 deaths, 80% of whose families purchased an obituary, or 23,880 obituaries sold.
So at $100 to $250 a piece that represents a $2,388,000 to $5,000,000 marketplace, statewide.
The city or county health department is the place to start for death rates in smaller areas.
Unfortunately, even with the death rate in hand, it's not quite that simple. If your DMA has a variety of cultural and socio-economic groups, it may be hard to pin down what the percentage uptake should be.
Family preferences after a death vary culturally and …
At last week's awesomely content rich, Native Advertising Summit, produced by Local Media Association, a smallish group of attendees was almost giddy with the new possibilities offered by native advertising programs.
Here's a round-up of what we heard:
• Native advertising is the new black. The chop-licking started with expressions of palpable relief from media execs at selling anything against news content that isn't a banner ad.
Rick Ducey, managing director of BIA/Kelsey, pointed out that "You are 475.38 times more likely to survive a plane crash than click on a banner ad," while native advertising is experiencing hockey stick growth.
Almost every major media company now has a native program and a variety were in attendance.
Speakers included David ARikin, VP of content at Gatehouse, which is building a new content and design center in Austin. There was even a radio company or two.
• Content that is not good doesn't work. All speakers with experience in native agreed "It has to be excellent" and said they are picking up tips from BuzzFeed.
One digital agency, SpeakEasy had to cancel a story for a sports-oriented client because the newsroom had independently come up with the same one, "Top ten places to watch the World Cup."
Biggest concerns from a quick poll of the audience was "crappy content" and dilution of the brand.
• Customers read but dislike native content. The annoying paradox of native advertising is that if correctly done click-through rates to stories can be, frankly, fantastic.
But in the end, readers sometimes feel duped or informationally glutted wandering down a rabbit-hole of sponsored content.
The day I got back, a friend sent me this pertinent quote:
"Everything was going well until John realized that the hilarious list of management failures he was reading was sponsored by a burrito."
(I also surfaced a Tweet, Disrupt Burrito Journalism, but can't figure out …
At the 2014 Radio Ink Convergence the conversation about activation of FM chips inside phones continued. Wait... an FM chip where?
Just Androids. And only FM.
For those of you new to the issue, apps can activate the chips to receive FM radio broadcasts directly, like tiny radios. It's the most under-reported media debate outside of radio insiders.
Convergence Key note speaker Jeff Smulyan, Chairman/President/CEO of broadcast conglomerate Emmis Communications - and chip activation advocate - got on stage to pitch the concept (again) and say he no longer believes streaming apps are radio's future.
Emmis purchased a large streaming network back a few years ago, but is now pouring resources into a new company, NextRadio, an app that activates FM chips.
Apparently there is already an FM chip placed in about half of all smart phones when they are manufactured.
Jeff Smulyan, CEO
They just sit quietly in there until an app activates them.
Smulyan argues that history is on the side of chips; as bandwidth is sucked up by the insatiable demand for video and audio streaming, users will experience time lags and price increases, and look for free options.
Given a choice, according to this vision, they will turn to free over-the-airwaves FM broadcasting on their phones - and terrestrial radio will make a comeback.
Since stations hate paying streaming charges, this should be music to their ears.
As both a consumer and media analyst, I like the idea of receiving FM on phones - who wouldn't - but many consumers already have unlimited dataplans.
And chip activation is not, actually, free, either, to the industry.
The wireless industry sees no reason to install more FM chips or partner to allow them to be activated.
So NextRadio had to buy its way in, paying Sprint $45 million for the privilege of chip activation, a cost shared by a consortium that includes a number of radio companies large and small, from Hubbard to …
What's radio up to in 2014?
If most of the speakers at RadioInk Convergence are right, the critical problem for the industry is that radio is stuck in cars, and the key challenge will be moving radio from cars to phones.
Many of the speakers tried to map the problem for the audience. And one thinks they have solved it.
But first, the awful truth:
Terrestrial radio is losing audience at the rate of 6% per year, while total audio audiences are growing, 16% per year, in fact, on mobile devices alone. As a Clear Channel Executive pointed out, 70% of all online radio listening is already on mobile devices.
And while radio execs have poo-pooed Pandora's claim of a 9% share of the audio audience as "self-reported," Larry Rosin, Co-founder and president of Edison research said his best informed guess is even higher, at 12% of all "share of ear."
In fact, he said, Pandora audience is now three times the size of the total online radio audience, with 44% of its reach at the expense of AM/FM stations. Ouch.
So as long as radio is trapped in cars, the future looks bleak.
The mainstream approach is via apps and streaming. Following audiences from cars into streaming platforms and bundling the two audiences has become a standard practice at Clear Channel and many forward-thinking stations. But other station owners and managers at the conference complained bitterly that streaming is an unsustainable as a model in its current form.
The whining may sound familiar to print folks who already followed audiences into cheap, tiny online display ads. But for radio the pill is much more bitter to swallow, and some are threatening to cough it back up.
Streaming transfers broadcast dollars to digital pennies, not just dimes. The reality is that so far streaming costs are so high that ads are much lower in margin ("no margin" one station manager pouted) than other kinds of digital ads.
And everybody pays. Streaming eats up consumers …
There were some truly outstanding entries last month for LocalMediaInsider's monthly Top Ad Contest after Impact Engine, a leading premium ad platform, added a $1,000 award and Premium Ad Challenge to the contest.
In the end, one campaign stood out from the pack:
Winner: Andrew Burney, Account Executive, WMEE radio, a division of Federated Media
Campaign: $50,000 Backyard Makeover
Client: Customer Outdoor Oasis, a division of Auburn Concrete
About the winning campaign: Auburn Concrete, a commercial supplier of outdoor paving products, wanted to break into the high residential market.
WMEE's step-by-step annual plan started with a new website and SEO, then launched a contest - $50,000 Backyard Makeover - as a lead generation program powered by all of the stations audiences. Listeners entered via a premium ad on WMEE.com. Judges liked the big prize, distribution strategy and results; the campaign virtually launched a million-dollar business overnight: 1,225 requests to be contacted for outdoor remodeling and $500,000 in business in the first two months (see how they did it in the members' area).
Congratulations to the whole team at WMEE and Federated Interactive.
Andrew Burney, Marketing Consultant/Integrated Marketing Solutions, Federated Media
A shout-out also goes to Deb Williams, Director of Interactive Sales, Federated Interactive for nominating a campaign from her team. Andrew owes you lunch!
For those interested in big ideas for integrated campaigns like this to pitch in your own market, you can find this step-by-step case study in the members' area and search for more by target customer on the left rail of LocalMediaInsider.
Don't forget to enter July's contest by June 31. Entry is free. All winners receive cash prizes and a free pass to LocalMediaInsider.
Thanks also to Impact Engine, which supplies a leading platform for creating cutting edge premium ads, for supporting best …
Impact Engine, developers of an ad platform that allows a typical production person to build a premium ad in minutes, now has hundreds of premium ads running at any given time.
This month the company posts an award of $250 for June's Top Ad wnner, plus a special bonus of $750 to the best campaign that uses premium ad formats - sliders, push-downs, take-overs, and other premium ads.
(If you have a great local marketing campaign click here for details and to enter.)
So after seeing the good, the bad and the ugly in local ads created by media companies, what does the team at Impact Engine think makes a top ad?
Bryan Depew, VP Product Development/Co-Founder at Impact Engine us some answers:
"You need to start with the client's goals, obviously, and what gets attention and interest," he said.
"However, the fact that digital ads have always told you exactly how many clicks you get, advertisers can get overly focused on CTR as the only measure of a digital ad's success.
"We spend a lot of time with our media clients teaching them to move away from click-throughs as the primary metric.
"A top ad is one that garners eyeballs, interactions with the ad unit and clicks through to the site."
So what is it about clicks that is misleading?
"A click is like the cherry on top of the sundae... but don't ignore the sundae underneath," he said.
"Our analytics tell you, first off, did the ad show up? Then how many people hovered over the ad with their mouse, then how many interacted inside the ad unit.
"In my opinion, the criteria for a Top Ad is how much engagement and overall impact the ad has overall, including click-throughs to the web site, but also interactions within the ad unit itself."
So is the use of video and audio for premium ad units on the increase?
"Where we see the media moving is very much in a television-style direction. With large format premium ad units, we are getting closer and closer to the methodology …
If this headline taps some primordial survival instinct in the hindbrain of media executives... it should.
The sudden rise of the "Plasher," or platform-based publishing company, such as BuzzFeed, and need for infrastructure that supports, say, native ads, are just indications of how rapidly publishing technology is shifting and how neccesary is a full-on strategic response.
Just as media culture needs to change, so does its software.
Examples abound, once you know where to look. For example, when travel purchasing is almost full automated, why haven't all the dominant media in destination markets added booking engines, as Deseret Digital has done?
One reason is that without progamming capability or an adaptable CMS partner, media companies are simply trapped in their own architecture. Or else move at the pace of their CMS provider which typically trudges at the industry's overall lead-footed speed.
The bright side of this issue is that investors have poured millions into each knook and cranny of the local market identified by a Stanford grad or entrepreneurial engineer and these companies are ripe for partnerships with media.
MediaExecsTech (see the vendor tab on this site) is an alliance of media executives who share ratings and reviews of the third party media technology they use. But there are also opportunities developed by incubators in your own markets that are unknown and worth exploring.
The simplest place to start looking for "what consumers want' is at opportunities to add online ordering and aggregate marketplaces to allow a single buy.
One opportunity we've written about before (and are continually surprised that more media companies have not adopted), is to add PRLink, which allows visitors to post press releases free with a guarantee of review by the editorial team - or pay a small fee to have the release go live on the site, in a "pr" area, for SEO purposes.
Full disclosure: …
The hallway and cocktail party circuit at the 2014 Mega-Conference was abuzz with conversation about where newspapers are headed - or should head.
The top talked-about take away was the gist of Gordon Borrell of Borrell Associates's opening speech that framed the meeting.
"The message I got from the conference is that you need to decide," said the veteran of a family-owned small newspaper chain.
"Are you going to invest in change? ...If not, this may be a good time to sell."
Borrell's advice seemed carefully composed to appeal to all parties: For newspapers who choose to remain print centric - and there were many attendees in that camp - revenue declines have flattened, and they may even see a blip or two of political advertising-fueled gains.
But don't expect to grow, Borrell said. On the other hand, companies that invest in new markets - digital services in particular - will ultimately see substantial year-to-year growth.
And after the first one or two painful years of investing in infrastructure - new sales teams, fullfilment processes and technology partnerships - profit margins on well-run digital divisions will settle in at around 35% and the gap between the media companies who are digital haves and those who are digital have-nots will widen.
That's what he said. What some newspaper executives heard, however, was that print revenues would flatten ... for a while. And then they could drop again, leaving the have-nots also several years behind. Hence the decision by some companies to sell now may be a smarter move.
Other key trends and take aways from the conference worth noting:
• Borrell's target for newspapers to achieve at least 18% of revenues from digital this year was referenced by many of the companies moving aggressively in the digital services area.
• Those companies also target 50% year-over-year growth in the digital sector, and as goals for digital reps.
• Successful Investing in digital …
Getting ready to start selling political advertising during the 2014 mid-term election season?
The most savvy political advertising sales teams are already in the field making contacts to pre-sell mid-term election advertising, slated to begin in April.
So why the early push? First, the data shows historic spending levels, with money flowing in from PACs and SuperPacs to help or defend against Republicans taking over the senate or losing seats in the house, in addition to the high profile gubernortorial races and ballot issues. With unlimited cash, some negative ads are running already - in January for congressional elections in November.
Second, more newspapers have their act together, according to John Kimball, of The John Kimball Group, a consulting company with a speciality in political ad sales.
We checked in with Kimball to find out "what's changed" since 2012 and predict the winners and losers in the race for 2014 political dollars.
"We’re looking at a $6 billion-plus mid-term election," Kimball said. "Newspapers have positioned themselves well to take full advantage of the revenue opportunity. (They) will eclipse radio in total ad spend and estimates that show the entire portfolio of newspaper products will reach 10% of the total spend."
That's $600 million all spent over the course of a few months. In fact, newspaper's total spending has already risen between 2002 and 2012 from $50 million to $650,000 million.
Television, of course, continues to own the lion's share of political dollars, but their share is dropping - from 55% to 50% of the total spend, a loss of a whopping $300 million this season.
So what is print doing right?
Granted, Kimball, who consults with print companies on how to sell more political advertising, has skin in the game. But, he says, newspapers are finally playing up their advantages: Dominant web sites, ability to compete with direct mail for inserts, available …