ChasNote

The Pulitzer Prize

It’s nearly impossible to talk about the future of news without someone predicting the extinction of two species at once: investigative journalists and working democracies. You can’t argue that wouldn’t be bleak. But Google’s chief economist Hal Varian points out that the biggest cost center at newspapers isn’t the journalists.

“There are huge cost savings associated with online news. Roughly 50% of the cost of producing a physical newspaper is in printing and distribution, with only about 15% of total costs being editorial. Newspapers could save a lot of money if the primary access to news was via the internet.”

He also points out that newspaper circulation declines can’t entirely be pinned on the Internet: “Circulation has been falling since 1985 and circulation per household has been falling since 1947!”

Perhaps the Internet isn’t killing news, it’s just making what one New York Times writer calls a new kind of news junkie — one that doesn’t demand we spend enormous amounts of money putting that news on paper and tossing it to her doorstep.

I’m thrilled that the IAB and 4As have rolled out Version 3.0 of the standard terms and conditions for online advertising. The two sections I love the most: One, that v3.0 addresses auction-based ad platforms such as Google’s AdWords and Digg’s Digg Ads. Two, indemnity for publishers and platforms — like Digg, Facebook, Twitter, Google and Yahoo — where some of the content is links to other publishers’ content.

Make the move, agency friends!

TechCrunch reported its traffic numbers for 2009. Google is still the #1 source of traffic to the site, bigger than direct traffic. Digg, Twitter and Google Reader round out the top 5 sources:

“Google search is the single biggest source of traffic, although it decreased from 37.3% in 2008 to 29.6% in 2009. Direct traffic is second, at 24% in 2009 (v. 25.3% in 2008). Then there’s a big drop to Digg (5.1% in 2009, 5.3% in 2008), Google sites (Reader, etc. (3.18% in 2009, 4.2% in 2008) and Twitter (2.9% in 2009, 1.2% in 2008). Feedburner, TechMeme, Facebook and Hacker News rounded out the list of top referrers in 2009.”

It’s interesting to see that Facebook doesn’t make the top 5. I’m also surprised that Twitter represents such a small percentage of total traffic, given TechCrunch has more than 1.3 million followers in Twitter. But, hey, I’m not complaining: I love to see that Digg remains TechCrunch’s biggest source of traffic after Google.

More stats on where big sites get their traffic.

From PaidContent:

“Search engine marketing firm Efficient Frontier has upped its estimates for search ad spending this year. The company now expects spending to increase between 15 and 20 percent, up from its earlier estimates of 10 to 15 percent growth, in part due to the economic recovery. By contrast, Efficient Frontier says search ad spending increased six percent in 2009.”

In Q4 2009 Google added to its enormous market-share lead:

“That was a shift from previous reports, which had indicated that Google was losing ground to Bing. Efficient Frontier says Google’s share of overall search ad spending increased to 74.5 percent from 73.9 percent during the previous quarter. Bing’s share, meanwhile, shrunk to 5.1 percent from 5.3 percent.”

Rupert Murdoch is getting lots of attention by calling sites such as Google and Digg “content kleptomaniacs” for making money as they point new readers to newspaper sites and content publishers. Here’s another article on the topic from McLeans. It’s hard to tell, though, if his rhetoric is earnest or if he’s just stoking the Google-Bing rivalry so that Newscorp can extract subscription fees from online distribution channels (Google, Bing, Digg, etc) similar to the fees cable networks like Fox News collect from the cable operators like Comcast and Time Warner.

To me it feels a bit like Conde Nast and Time Inc suing the guys who run newsstands — making a profit selling gum and chapstick by luring people into their stores with the glossy covers of magazines. But the magazine publishers didn’t do that. Instead they let newsstand owners give away some of their content for free (cover photography and headlines) in hopes that some percentage of the browsers would pay to buy the whole magazine. If potential readers collectively decided that a glance at a magazine’s cover was enough — that there wasn’t any value to actually opening the magazine to read it — I’m guessing that magazine’s publisher would halt the presses, maybe even issue an apology to readers for failing them so deeply. They certainly wouldn’t sue newsstand owners for robbing their cover art as a ploy to sell Snickers bars.

Meanwhile, the French government has proposed taxing digital ad revenues in order to subsidize traditional media. I’m going to go out on a limb here: That won’t save traditional media. Let traditional media companies save themselves. A bit of hardship will actually help the best media companies rethink the value they deliver to readers, viewers and advertisers. Deliver value and you’ll get paid for it. If you’ve stopped delivering value, don’t blame it on the competition.

“For the first time in its history, Facebook was the number one most visited website in the United States on both Christmas Eve and Christmas Day this year, according to traffic analyst firm Hitwise today,” reported Read/Write Web on December 29.

And they did it again on January 1.

The search era officially makes room for the social-media era.

Silicon Alley Insider summarizes Google’s recent presentation on its evolving display ad strategy.

On the surface, two aspects strike me as mistakes. One, I worry that the intensely rational approach to targeting may go too far, forgetting that brand advertising is often intended to create interest among consumers who didn’t have (or, therefore, express) a preexisting interest. Two, I’m not sure that “simplification” is what brand advertisers want; they (and their margin-deprived agencies) certainly want a streamlined media-buying system, but not at the expensive of unique formats to express the uniqueness of their brands.

What I really like, though, is a continuation of the advertising philosophy that’s made Google so dominant. Start by understanding what your customer (the reader, viewer or searcher) is doing at various parts of your site, and then create ad formats that match the user experience. If a visitor to Google.com expects to ask a question and get a list of text results ranked by relevance, Google.com advertisers must articulate their propositions in text, ranked by relevance. If someone “shows up” at the front page of YouTube, he or she isn’t yet searching for something specific. YouTube serves up graphical teasers to content that has broad popular appeal (the opposite of relevant) and homepage advertisers are given the opportunity to do rich media mass marketing.

From Schmidt’s editorial in WSJ:

“It’s the year 2015. The compact device in my hand delivers me the world, one news story at a time. I flip through my favorite papers and magazines, the images as crisp as in print, without a maddening wait for each page to load.

“Even better, the device knows who I am, what I like, and what I have already read. So while I get all the news and comment, I also see stories tailored for my interests. I zip through a health story in The Wall Street Journal and a piece about Iraq from Egypt’s Al Gomhuria, translated automatically from Arabic to English. I tap my finger on the screen, telling the computer brains underneath it got this suggestion right.

“Some of these stories are part of a monthly subscription package. Some, where the free preview sucks me in, cost a few pennies billed to my account. Others are available at no charge, paid for by advertising. But these ads are not static pitches for products I’d never use. Like the news I am reading, the ads are tailored just for me. Advertisers are willing to shell out a lot of money for this targeting.”

The relevance problem with newspapers started with radio, TV and 24-hour cable news (not the internet), even if Craigslist, eBay and Google added to the pain by breaking down their primary business model. But all the whining that search engines (like Google) and news aggregation services (like Digg) are killing the news business neglects the fact that the Google News headline service sends news publishers a billion clicks a month. It’s time for publishers to turn that enormous audience into a new business model.

(Thanks for sending, Keval!)

A study by Comscore, AOL’s Tacoda and Starcom back in February 2008 showed that 50% of all clicks on banner ads were done by just 6% of Internet users. A repeat of the study, published in October 2009, shows the core group of heavy clickers (8% now) are responsible for 85% of ad clicks.

And these “natural born clickers” are not the most desirable demographic for most advertisers: They skew toward Internet users with household incomes below $40,000 who spend more time than average at gambling sites and career advice sites.

Digg’s lead scientist, Anton Kast, recently shared with me an analysis of who’s clicking on Digg Ads, the ads on Digg that give readers the option of Digging and burying them like regular Digg stories. Since advertisers buy Digg Ads on a cost-per-click basis, I was eager to see the results.

Instead of concentrated click activity by a small group of (inexplicably) click-happy individuals, clicks on Digg Ads (red line) are spread across a wide population of light clickers. In other words, the branded content items promoted by Digg Ads units is appealing to lots of people, each of whom clicks on an occasional ad. The profile of these Digg Ads clickers roughly matches Digg’s upscale demographic, unlike the “natural born clickers.”

Digg Ads (still in beta) doesn’t yet offer much targeting, so relevance can’t entirely explain these better results. Digg Ads do, however, offer advertisers an opportunity to speak to Digg readers in the “local vernacular” of Digg — blue headlines that point to content next to yellow boxes with numbers in them, and the option to Digg and bury the sponsored content just like organic content stories on the site. Kind of like the paid search ads on Google results pages, which I bet have a diversity of clickers that goes well beyond the “natural born clickers” too.

Targeting (relevance) is great. But finding ad formats that are native to content experiences may be just as important.

To celebrate Sesame Street’s 40th birthday, the US version of Google added Big Bird’s legs to its logo.

Cute. But to make it work you have to imagine Google spelled Googlle, right?

In Google’s UK tribute, they worked in Cookie Monster. Still cute and Google doesn’t need to misspell its name. Is this because Google doesn’t want to encourage chubby Americans to eat more cookies??