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June 08 2010

13:54

Community Centered Ads Boost Engagement, Funding at Spot.Us

The beauty of starting something from scratch is the iterative and agile process I've talked about since before "Spot.Us":http://www.spot.us began. In this post I'm going to discuss two new developments at Spot.Us. One is an exciting feature and revenue stream. The other is in relation to our expansion into new regions.

For almost two years now, Spot.Us has been growing and evolving. I'm very happy to say that the last month has possibly been the most exciting since our launch. We grew almost 30 percent in terms of users. Even more exciting is that the technology behind Spot.Us is starting to show real signs of scale between our expansion into Seattle and other regions, which I'll describe below.

So what's happened in the last month?

Community Centered Advertising

I'm normally good about breaking news of Spot.Us on my personal blog and Idea Lab. But last month we unleashed a feature somewhat quietly, using just an email to registered members of Spot.Us (sign up for our newsletters here). It was later covered in Poynter.

We call it "Community Centered Advertising." Before I go off on a rant about it, let me ask long time readers, friends, acquaintances, lovers of journalism or revenue geeks to try the following demonstration.

In less than two minutes and five clicks you can help an independent reporter (and Spot.Us).

  1. Go to Spot.Us and login or register.
  2. Click "Earn Credits" in the header navigation.
  3. Take a simple and short survey.
  4. Submit the survey and earn $5. Then you'll be taken to a page with all our active pitches.
  5. Select the pitch of your choice (this is the fun part), click "Apply Credits," and confirm that decision.

Bill Mitchel from Poynter wrote about it and summed it up: "In some ways, it seems like a no-brainer: Encourage consumer engagement with advertising by giving users a stake in deciding how the revenue gets spent ... Spot.Us itself is an experiment in transparency and control of money for news. This is just a matter of applying it to advertising."

What we are doing is making it very transparent how advertising money gets spent on Spot.Us. It's so transparent that we give up ownership of that decision to members of the public who engage with the advertisement. Spot.Us is sponsoring this current campaign but we already have our next sponsor lined up. (Interested in being a sponsor? Contact info@spot.us).

Is It Working?

1. The numbers don't lie: Our engagement percentages went up drastically. When fundraising online you can expect a certain amount of attrition. People will view your site and not engage. It's a big mental burden to reach for your wallet even if it's not a financial burden. Folks like Beth Kanter have been talking about it for years; there is an engagement
ladder
and people have to start from the bottom. Well, now the bottom level of engagement on Spot.Us can still support stories financially at no cost to the user. As expected, user engagement went up dramatically -- it quadrupled, in fact.

2. The numbers got better: We also saw something that I didn't expect to happen -- we got more financial contributions on Spot.Us as well. I figured with the "Earn Credits" option nobody would donate their own money. To the contrary, many did. The $5 in credits was an appetizer.

3. The challenges for this revenue stream: I feel confident that this model is ethically sound in that the advertising won't influence the content -- at least, no more than could be argued advertising impacts content for any publication. That said, we want sponsorships that engage people in a positive way. Wouldn't it be great if people were engaging with the advertisement not just because they wanted the credits, but because it served their information needs somehow? Still, we are a non-profit startup. Unlike the Bay Citizen which had $8.7 million at their launch, we have just me to try and sell sponsorships on top of everything else. So challenge  number one is finding a way to sell sponsorships quick and easy. To do this we need a broader appeal. Which brings us to the next part of
this update.

Spot.Us Creeping into Your Town (Lessons on Assumptions)

Today we are publishing a pitch that is in collaboration with both The Uptake
and MinnPost.com, two of Minnesota's finest non-profit news organizations. 

There have been two aspects of Spot.Us that, since launching, I realize have not worked the way I envisioned. One was around the idea of distributing content. Most news organizations are adverse to running content that isn't 100 percent produced by them or produced by somebody within the mainstream media club. Hell, even the larger non-profits have trouble distributing their content to the AP. It's a challenge and we've gotten around it by partnering with news organizations from the start of a project. That was a shift from my original vision.

It's time now to question my original vision of expansion, and this creep into Minnesota is a perfect example. The pitch we're publishing today is to cover the gubernatorial race via video from The Uptake coupled with reporting from MinnPost. You couldn't find two better partners to do this. Meanwhile, they have large enough audiences such that if 10 percent or so take action on "community centered advertising" we'd start fundraising large amounts. Even better, it wouldn't divert from their regular fundraising efforts. If anything, it might bolster it by giving potential future donors an easy route in.

But this is the only pitch we have in the Minnesota region (more are welcome -- just click "Start a Story.")

Meanwhile, over in Seattle, we've funded two stories and a third is close. After that's done, I'm going to have to start emailing around to convince reporters to create a pitch. Not an impossible task, but a drain nonetheless.

At the same time, I'm getting pitches from places like Portland, Oregon; Sacramento, California; Vermont; Maine, etc. Even as far away as Guatemala (international is a whole other can of worms). These locations don't necessarily merit their own network. I don't suspect I could get a steady stream of pitches from Maine. But the pitch that has come my way is pretty good. It is local and covers civic issues. I certainly wouldn't want that to die on the vine because I couldn't find three other Maine reporters to create sister pitches. 

From the start, I thought Spot.Us would expand a la Craigslist: Pick locations, create sub-domains and let people aggregate around them. Certainly San Francisco and Los Angeles have worked like this. We always have about five active pitches in both locations at any given time. Seattle however, might not be that way. I fear I'm viewed as an outsider -- perhaps even as "competition." And perhaps outside of The Uptake and MinnPost.com, I will have no luck in Minnesota either (I hope I'm wrong). 

But that shouldn't stop me from expanding. Especially not when I am getting very solid pitches from around the country.

Which is to say: Spot.Us might need a new organizing principle for expanding. Maybe the network or "region" shouldn't be a factor at all; maybe we will expand to wherever a decent pitch comes calling, be it in New York or Sante Fe. Making this shift would undoubtedly raise more questions, such as how we decide what pitches to take, etc. But I am prepared to have that conversation.

What do you think?

April 01 2010

21:07

A Plan for Spot.Us to Use Community-Centered Ads

Perhaps it's ironic for me to write about advertising. Fellow Knight News Challenge winner Dan Pacheco can quote me as once saying "f*&# advertising" and one of the initial inspirations for me to get into journalism was Adbusters Magazine. Below I want to describe a potential advertising model that Spot.Us hopes to employ (and others can steal) along with general thoughts about the diversification of revenue streams.


Community Centered Advertising

The underlying inspiration for Spot.Us is to give the public a freelance budget so they can help set the editorial agenda. Right now that is done via contributions from their own wallet. But what if they directed an advertising budget? What if the people to whom an advertisement was directed had a say in where the money it generated went? I imagine it would look something like this.

A button on Spot.Us that says "Earn Credits." Upon clicking a user is sent to a blatantly sponsored page. We even have our first sponsor Mortgage Revolution. They are holding a fundraising event in San Francisco and part of the proceeds will go to sponsor our first Community Centered Advertising campaign which will try and stir up conversation about the real estate and mortgage industry.

In Community Centered Advertising the sponsor is looking for some kind of engagement with their brand, cause, business, etc. In the case of Mortgage Revolution they hope to stir up a healthy conversation about the real estate and mortgage industry. But let's use Levi Strauss purely as an example.


Perhaps Levi's provides survey questions:

  • What is your favorite cut of jeans?
  • What is a memorable Levi's moment you've had?
  • You buy Levi's jeans because... (multiple choice answer).


Or it can be a branded survey simply to get the customer to think more about Levi's

  • What year was Levi's invented? (Multiple choice)
  • Guess how much of material X Levi's produces a year?

Or a quick video that people have to watch Hulu-style.

Upon engaging with the advertisement the Spot.Us community member earns X credits, which represent real dollars, and they can direct those credits toward funding the story (or stories) of their choice.

The community still makes the decisions about what stories get funded but they are doing so with our advertising budget, not their own money.

At this stage it's just theory but we have our first sponsor and hope to roll this feature out soon and I hope more sponsors will follow (if interested in details, send me a note: david@spot.us). Then again, we may find that the Spot.Us community reacts negatively to it. Who knows? That's why we need to try it -- even new media experiments need to experiment.

Depending on the level of the sponsorship Spot.Us would probably take a small overhead fee. But even if we didn't, I would feel encouraged that with a low overhead we will be funding independent reporters. (Want to know when this feature is live so you can be one of the first to try it out? Sign up for our newsletter).

Journalists Awash at Sea

I bring this up because like all news organizations Spot.Us needs to diversify revenue sources. An analogy I often use is that, "Journalists are awash at sea. Previously we could rest the majority of our weight on a few revenue streams -- advertising, classifieds -- but now we need to get many revenue streams and a piece of rope to tie them all together in order to make a stable raft that distributes our weight."

This also requires re-thinking and re-inventing our relationship with classifieds, advertising and even coupons.

One of the problems I'm observing is that instead of re-inventing our relationship with classifieds, advertising and even coupons, news organizations are assuming they can take the old models and stick them on the web and move on.

Craigslist as Counter-Factual; GroupOn as Factual

I hate when journalists point to Craigslist as a "killer." But let's talk about why there is so much tension there. The fact is Craigslist was not a technical innovation. Any newspaper company could have invented it. They didn't because it would have drastically re-thought their relationship with classifieds. The bummer in this is that newspapers were really always in the advertising and classifieds business and used their profits to support journalism. That business has dwindled and journalism has suffered. Imagine if Hearst had created Craigslist? The profits from that would most likely be pumped back into newspapers.

This isn't to knock Craigslist either. With his profits Craig Newmark has created the Craigslist Foundation which is a HUGE boon for society. Craig has also supported journalism here and there. Understandably this isn't his top issue -- but at least it's on his radar.

Now look at GroupOn. Take a good hard look. I think Michael Skolar is right in his post "I'm suggesting you steal the idea for your local news operation fast before national competitors own the market."

These sites represent a new relationship to coupons, one of the last great revenue streams is being revolutionized right underneath newspapers' feet. And once again the technology isn't mind-blowing. I'm talking to the big guns (Hearst, McClatchy, Gannett, etc.) when I say "start something like this up now or buy one of these startups." The revenue you make can be reinvested into journalism because that's what your companies do.

I consider the founder of GroupOn a friend, but I doubt his company would just take profits and subsidize journalism -- that's understandable. The few companies that historically used profits from advertising, classifieds and coupons to prop original reporting are few and some of them are going bankrupt.

Re-inventing our Relationship to Advertising

One of the reasons Facebook is worth so much is because of the relationship they have created between advertisers and users. As an example a little birdie at the NY Times once told me that the number two country for registered users on the New York Times was...Afghanistan.

Before you start scratching your head as to why so many Afghans are reading the NY Times, consider the image of this registration drop down from NYTimes.com:

NYT register.jpg

Now you can stop scratching your head.

Compare this to Facebook where most people freely reveal their age, religion, relationship status and more. Now ask yourself: As an advertiser, where do you want to be? The site with lots of people pretending to be Afghans or the site where you can target the customer you most want? Privacy issues aside, it's pretty ingenious. And some might even argue that a good advertisement is good content. If the advertisement is exactly what you were looking for, it isn't annoying -- it's helpful.

Interestingly enough the new relationship to advertisers is predicated on the new relationship with the audience. The more the audience is ready to reveal about themsleves the more advertising is valued. Same with GroupOn. If a customer freely reveals they are interested in a deal before it becomes official, the small business offering the deal starts licking their chops -- rightfully so. And in all cases the user is incentivized to reveal the information because it's in their benefit. For the Facebook user they are connecting with friends. For the GroupOn user, they are looking for money saving deals.

With Community Centered Advertising our hope is that community members are encouraged to reveal something about themselves in exchange for the ability to fund the original reporting of their choice. Most news organizations don't have a system by which individuals can direct cash towards stories but perhaps they can offer something else?

What incentive can a news organization give to a user so that they freely reveal more about themselves in an effort to become more attractive to advertising? I would argue that it's best if the end goal, to become attractive to advertisers, is done above the table -- as with Spot.Us' model and GroupOn's. There is no deception. You are engaging with an advertisement. I wouldn't argue that Facebook is being devious, but certainly they have come under criticism because users aren't sharing their info with advertisers in mind, but rather with their friends as the goal.

So Now What?

As always, I never claim to have solutions. Just crazy ideas that I want to execute. Keep your eye open for Community Centered Advertising. If you've never donated on Spot.Us before, I hope this inspires you. Instead of having to reach for your wallet, you can just donate a little time and a little bit of your own knowledge. Register for our newsletter why doncha!

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