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October 26 2010

14:00

Getting beyond just pageviews: Philly.com’s seven-part equation for measuring online engagement

As web analytics reports become a mainstay of news meetings, there’s a lot of nervousness about how attention to clicks will affect news coverage, and about the perceived incentives to produce high-trafficking junk news. Earlier this week, a web research company released a good-news study arguing that stories about substantive issues like unemployment and mortgage rates can actually bring in more revenue per pageview than celebrity crotch shots.

But two months ago, philly.com, home of the Philadelphia Inquirer and Daily News, began analyzing their web traffic with an “engagement index” — an equation that goes beyond pageviews and into the factors that differentiate a loyal, dedicated reader from a fly-by. It sums up seven different ways that users can show “engagement” with the site, and it looks like this: Σ(Ci + Di + Ri + Li + Bi + Ii + Pi)

I spoke with Chris Meares, senior data analyst at Philly.com, about how the equation works, and what it’s revealed so far about the newspaper’s users on the web. The first step in measuring engagement, Meares explained, is identifying which web behaviors show that users are “engaged.”

Working off a white paper called “Measuring the Unmeasurable: Visitor Engagement” by Eric T. Peterson and Joseph Carrabis, Meares sat down with Ryan Davis, the president of Philly.com, and Wendy Warren, the vice president for content, to hash out the meaning of engagement.

One possibility they considered was measuring engagement simply through how many visitors left comments or shared philly.com content on a social media platform. But that method “would lose a lot of people,” Meares said. “A lot of our users don’t comment or share stories, but we have people — 45 percent — [who] come back more than once a day, and those people are very engaged.”

They ultimately decided on seven categories, each with a particular cutoff:

Ci — Click Index: visits must have at least 6 pageviews, not counting photo galleries

Di — Duration Index: visits must have spend a minimum of 5 minutes on the site

Ri — Recency Index: visits that return daily

Li — Loyalty Index: visits that either are registered at the site or visit it at least three times a week

Bi — Brand Index: visits that come directly to the site by either bookmark or directly typing www.philly.com or come through search engines with keywords like “philly.com” or “inquirer”

Ii — Interaction Index: visits that interact with the site via commenting, forums, etc.

Pi — Participation Index: visits that participate on the site via sharing, uploading pics, stories, videos, etc.

Those are largely the same as in the Peterson/Carrabis white paper, although they use a Feedback Index (“captures qualitative information including propensity to solicit additional information or supply direct feedback”) in place of Philly.com’s Participation Index.

The next step was to track the percentage of overall visits that satisfy each of these categories. What percent of visits to the site lasted at least five minutes? What percent included a comment or other interaction? For instance, in a recent measure of the Click Index, out of 3.9 million total visits, 698,000 were visits where a user clicked through at least six pages — which comes out to a 17.9 percent engagement rate.

As well as paying attention to the engagement rates for each category, Meares also averages the seven individual percentages to create an overall engagement score — the average percent of visits to the site that broadly qualify as “engaged.”

Because the engagement percentage typically goes down as total site pageviews go up (new visitors are, by definition, not loyal ones), Meares multiples the overall engagement percentage by the total number of pageviews to get a estimate of the total number of engaged visits.

Last week, the overall engagement was 31 percent, which translates into an estimated 1.221 million engaged visits.

Month to month, the overall engagement score for philly.com has hovered around 35 percent, Meares said. He also tracks the levels of engagement for different areas of the site, including news, sports, and living. While he said the sports score isn’t actually as high as the 73-percent figure a Philly.com exec gave us last week, it is higher than the average engagement level across the site. In September, sports page visits were 46.6 percent engaged, while news page visits were only 34.4 percent engaged.

Tracking site visits with this level of specificity is time-consuming — Meares says he devotes about a third of his full-time job to analysis of the engagement equation — but it has produced some interesting information. For instance: “We’re definitely seeing the impact of social media and how it provides engaged visitors.” While Google and Yahoo provide a lot of traffic, the visits that they send to Philly.com don’t tend to be engaged. Only 20.34 percent of visits that come through Google are engaged visits. In comparison, 33.64 percent of visits that come via Facebook are engaged.

More broadly, Meares said, tracking engagement allows Philly.com to put traffic data in perspective. If overall traffic for the site is down, but the number of engaged users are up, that still means the site is doing well, Meares said.

Newspapers in other markets have come to Philly.com for advice about measuring engagement on news sites. “It’s a really big challenge,” said Sonia Meisenheimer, digital marketing strategist for the St. Petersburg Times’ tampabay.com. “There’s not an expressed moment of loyalty. You have to basically be a diviner with a divining rod and go around and tap on all these different things.”

Meisenheimer said she found philly.com’s engagement equation “fascinating” but impractical for her requirements. “They can do this because they have a web analytics person full time looking at ‘how do we measure success?’” she said. “We could never sustain the reporting and tracking.”

While the equation might provide interesting feedback to editors, Meisenheimer said she thought the results it produced were too complicated. In a competitive market, businesses want to compare different web outlets on apples-to-apples factors like total audience and local audiences. She said tampabay.com would measure engagement in a much simpler way, focusing on registration numbers and their brand index, or how many people come to the site through a bookmark or by searching for terms like “St. Pete Times” or “tampabay.com.”

Internally, she said the most important number for tampabay.com is simply revenue per unique visitor. “My question to philly.com is: how does this help you make more money? Because I don’t see that in the equation.”

September 22 2010

19:00

Journal Register Company joins with Outside.in for a hyperlocal news/ad portal in Philadelphia

At the Suburban Newspapers of America conference in Philadelphia this morning, Journal Register Company CEO John Paton made an announcement: The newspaper chain will soon be launching an online, hyperlocal news portal in Philly. A new step forward in the company’s “digital first” business model, the yet-to-be-named site’s content will come from a mix of journalists professional and amateur, curated by JRC editors. And it will leverage the partnerships the JRC already has in place with Yahoo (audience targeting) and Growthspur (contributor training).

Or, as Paton puts it: “crowd and cloud.”

The site will be a direct competitor to Philly’s existing establishment news sources: the Inquirer and the Daily News. It’s no accident that Paton announced the project the day before the financially plagued papers are to be put to auction. “They’ve had that town to themselves for a long time,” he told me. “And I think there’s room in this new ecosystem for a whole bunch of people to play. I’m sure they’ll think we’re no threat at all — and I hope they keep on thinking that.”

The idea of the new site is to bolster both content and audience — on the cheap. (JRC, you’ll recall, declared bankruptcy last February; since Paton took the helm of the company shortly after that — with an advisory board that includes new media thinkers the likes of Jay Rosen and Jeff Jarvis — it’s been engaged in the Herculean task of restoring a network of small, Rust Belt papers to profitability. Remarkably, it’s getting close.) The new effort will tap into Philly’s existing content infrastructure — the hyperlocal blogs that have already sprung up to cover the area — and then give that content, via the hyperlocal news provider Outside.in, a singular publishing platform. (The site will also mark a continuation of JRC’s partnership with Growthspur, which trains would-be journos in both blogging and the dark arts of content monetization.) The details are still being worked out, but the idea is a mutualization of resources and revenues that will benefit all involved, from the local bloggers to the Journal Register Company to its partners — to, of course, the site’s consumers. Think TBD, Philly edition.

Think also: TBD, “inexpensive tools” edition. Though JRC will dedicate some of its resources to the new site — in particular, staffers will provide additional content, curation, and general editorial oversight — “we’re hoping that this will be largely crowd-supported,” Paton notes. JRC, after all, doesn’t have papers in metro Philly. “We’ve surrounded Philly with our properties, and so we’re able to provide some context” — but, then, generally not “right-downtown context.” For that, the site will rely on the bloggers who know the terrain; and in turn, Paton says, “we can bring depth to this, and we can bring curation to this.”

And that’s true of audience, as well. The site will apply JRC’s “digital first” approach…to users. Last week, JRC expanded its partnership with Yahoo — the latter company provides behavioral and geographical ad targeting to the newspaper chain — to include the Philadelphia market. That was “the sales piece,” Paton notes; the new site will be “the content piece.” The hoped-for end result? “We’re collectively creating audience, collectively creating content, at a very low price point.”

It’s a “hoped-for” result, though, because the site is still in its development stages. (Hence, again, the lack of name — “I figured TBD was taken,” Paton laughs.) But the CEO values transparency, even if it means unleashing a gestational product onto the market. “It’s a work in progress,” he says of the site. But he and the JRC staff figured, he says, “Let’s just announce it — we’ll get some help in finalizing it just from the announcement. And our solution will come out of that.”

July 15 2010

15:00

The Newsonomics of the dead cat bounce

[Each week, our friend Ken Doctor — author of Newsonomics and longtime watcher of the business side of digital news — writes about the economics of the news business for the Lab.]

The season’s upon us, as newspaper and media companies announce their second-quarter earnings. At least some of the companies will announce: fewer than used to a couple of years ago, as Tribune has gone private (and banko), metros like Philly and Minneapolis have moved to private hands, MediaNews releases less information than it used to, and Dow Jones’ results are less decipherable, aggregated within News Corp. news division results.

Still, Gannett — the largest U.S. newspaper company — leads off Friday. The New York Times Co. follows on July 22. McClatchy comes in on July 29. We’ll also hear from A.H. Belo, Scripps, Lee, and Media General, dates TBA.

Let’s get ahead of it a bit and see what we can look for in the announcements and what that will mean for the news industry. Let’s look at a newsonomics primer of this struggling industry as the rest of the economy haphazardly improves around it.

I could call this post “The Newsonomics of newspaper quarterly earnings reports,” but much better is the story of the moment: How much will newspaper companies tout — and how will the reduced-but-remaining corps of those who cover the industry report — how positive their dead cat bounce is. “Dead cat bounce” is a phrase you hear — confidentially — from some newspaper executives. It’s an old Wall Street term, observing that even long-declining stocks will bounce a bit sometimes.

Let’s recall that last year’s ad revenue results had all the spring of a dead cat — down some $10 billion and 27 percent. So take a dead cat and pump a little life in it, with things less worse than they were in the disastrous 2009 and you get a bit of a bounce — but not one to crow about. Unless, that is, you don’t have much else to crow about, and that’s that’s the predicament, circa mid-2010, of most newspaper companies. They don’t have a big, positive story to talk about.

So, consider this a parsing guide to what we’ll hear in the next month:

  • How much was the second quarter down from 2Q 2009? First-quarter numbers were down largely in single digits, and that seemed a relief after comparable double-digit declines. We heard such CEO parsing as “improvement in comparables” and hopefully spun statements such as “Domestic classified advertising was just seven percent lower than March a year ago.” The problem: The rest of the economy, and even the TV and online ad economies, are all showing real growth — and taking market share from newspapers. Newspapers’ continuing inability to find real arithmetic growth doubles down on the theory that these revenue changes are more structural than cyclical — and that the Great Recession may have accelerated newspapers’ downward fortunes. Are there any positive growth numbers to report? Which categories may be turning positive — maybe national or retail display ads — as the sagging economy continues to plague the traditional classified strengths of auto, recruitment, and real estate?
  • How much will the prepared remarks focus on cost or debt reduction and how much on revenue growth? Play Earnings Bingo and count the comments involving “debt reduction” or “cost restructuring” as compared to “growth.”
  • How much of revenue is now coming from digital, and what’s the digital growth rate? Most newspaper companies increased their percentage of overall revenue attributed to digital to the 12-15 percent range in 2009 — but that was largely because print revenues dropped so precipitously. The news industry is becoming more digitally oriented, but still has a long way to go. Still, it’s a useful percentage to know; few companies report it routinely, but often mention it in Q&A. Most importantly, is the digital business growing, and at what rate, after being just north or south of flat in Q1? Such growth is key to these companies’ future.
  • How much of that digital revenue is coming from digital-only sales? McClatchy CEO Gary Pruitt was the first to make a point of digital-only sales, as it approached half of total digital revenue. Pruitt’s right; it’s an important barometer of where the business is going, not where it’s been. Since the mid-’90s, the industry has been overly reliant on “bundled” ad packages of print/online. Now as the digital marketing revolution matures, a number of companies — often spurred by the Yahoo Newspaper Consortium — are really pushing online-only packages.
  • How much revenue is coming from emerging marketing services business initiatives? Tribune and Gannett are among the leaders at selling website building, search engine optimization services, and more to small and medium-sized businesses. Will we hear about this big new push — and how many dollars it is starting to drive?
  • Is there any circulation revenue growth? Circulation numbers have continued to plummet, while newspaper companies have priced up substantially. The overall notion: Get long-standing, habituated print subscribers to pay more of the freight. For The New York Times, the strategy has worked and circulation revenue has continued to grow (up 11 percent in Q1). For other companies, Gannett (circ revenue down 5 percent) and Lee (down 4 percent), the math isn’t working as well. Pricing up and losing both revenue and circulation numbers that are the lifeblood of selling advertising is not the outcome desired. So watch circulation revenue numbers in the reports. If they’re still negative, that’d be an indication that newspapers’ circulation pricing power is waning.
  • Do we hear any strategies discussed for the second half of 2010 or into 2011? Any iPad/tablet plans or development? The discussions surrounding the earnings calls can focus just on numbers, sometimes arcanely so, or get into actual strategies that may lead from the tepid now to a better tomorrow. How much strategy do these companies have and/or are willing to share with investors?

Image by Eric Skiff used under a Creative Commons license.

May 03 2010

14:00

The Newsonomics of reborn newspaper profit

[Each week, our friend Ken Doctor — author of Newsonomics and longtime watcher of the business side of digital news — writes about the economics of the news business for the Lab.]

The first quarter newspaper numbers are in. They paint a consistent picture.

Across the board, the reporting of public news companies reflects a new, if unsteady reality. In short, that reality is one of profit. Not the big profit of 20-percent-plus profit margins — the envy of many other industries — that were a truism as recently as five years ago. Now, the profit’s more tepid, mostly in single digits: The New York Times, 8 percent; Gannett, 8 percent, McClatchy, 1.5 percent. Expectations run that news companies will show a five to 10 percent profit for the year, absent unforeseen calamity.

But that mild profit is good news. Recall that a year ago, much of the industry was in freefall. A number of companies — stunned by the quick near-Depression downturn of ad revenues — went operationally into the red. They responded with draconian cuts in staff and newsprint, and as the recovery has emerged, they’ve positioned themselves as smaller but profitable companies, though their first-quarter revenues still largely lagged the first quarter of the horrific Q1 2009. Wall Street has rewarded them with improved credit ratings and advanced share prices. There seems to be, say investors, some future here. This week’s tenacious auction in Philadelphia with lenders led by the Angelo Gordon private equity company — now a big player in the U.S. daily business — winning the papers with a $135 million bid only reinforces the notion that newspaper valuation may have been trashed too much.

It’s a fragile stability. One big question for all publishers: where do we go from here?

Here the newsonomics are constrained. While Google is off buying a company a month and Apple charts its own strong growth path, most newspaper companies have little room to maneuver. Sure, the private Hearsts — a diversified media company with newspaper interests — can invest in new companies and technologies, but for publicly owned newspaper companies, it’s a different story.

First off, their meager profits are uncertain. They then face three ways to use those profits. The three:

  • Debt reduction: Debt has been the anchor around many newspaper companies’ necks, as those that borrowed to complete acquisitions reeled as the business changed and then the economy tanked. Thirteen newspaper companies have declared bankruptcy, with that clean-up continuing. Yes, they’ve discharged a lot of debt (Alan Mutter tracks the $1.9 billion discharged in just four of the bankruptcies), but almost everyone — those now out of bankruptcy and those that avoided it — still has debt service to bear. In most cases, it is reduced, given either bankruptcy or workouts with lenders, which extended payments. Debt reduction remains not only a necessity, but a strategic goal. In most quarterly reports, news company CEOs trumpet their abilities to reduce debt, a sign of their revitalization — and an indication they hope to have more maneuvering room in the future. New York Times Co. on its 1Q debt picture: “The Company continues to improve its liquidity, reducing its debt, net of cash and cash equivalents by approximately one third to $671 million from its balance at the beginning of 2009. The majority of the Company’s debt matures in 2015 or later.” Over at Gannett, CEO Craig Dubow made a prominent point of his company’s recent $260 million quarterly debt reduction. Much of McClatchy’s first quarter statement focused on debt reduction and its refinancing.
  • Product investment: Publishers don’t have to look much beyond their own recent FAS-FAX circulation numbers — another 8.7-percent daily decline — or their talks with community members. They realize their major cuts in staff and product has diminished their business prospects; they’ve cut into bone, in parlance you often hear. A few companies, including Belo and MediaNews, have cautiously added back a little staff here, a little newshole there. They’d like to invest more in product, but agreements with lenders and their own sense of how fragile the newspaper recovery is holds them back.
  • Profit improvement: These are, after all, public, for-profit companies. Investors of all kinds expect them to grow their profits, after re-establishing the stability of them.

To put it simply, at this point, there’s not enough profit to satisfy all three goals. So, in 2010 — a year crying out for investment in innovative mobile media product creation and marketing services/advertising infrastructure build-out — news companies have far fewer resources than they’d like and they need. While once they were the big guys, looking at buying startups, for now, they’re largely on the sidelines, marveling at the mojo, the profits, and the acquisitions of the Googles and the Apples.

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