One wild escalator ride
How Canadian publications are using sophisticated targeting and engagement techniques to retain and win more valuable readers.
This article appears in the October 2016 issue of strategy.
Print journalism in Canada has been in some form of long term care for a decade or more, but a brutally inauspicious start to 2016 got the chattering classes eulogizing again with a level of despair unseen since The Great Recession.
Newsrooms big and small announced bad news followed by more bad news over the course of 10 January days: Postmedia combined its newsrooms in markets where it had two publications (Vancouver, Edmonton, Calgary and Ottawa) and cut 8% of its editorial staff; Rogers announced 200 layoffs; the Guelph Mercury, a paper as old as Canada, stopped printing; so did the Nanaimo Daily News, which was only a few years younger; and the Toronto Star made editorial and circulation cuts, and announced it would be closing and selling its printing plant.
The cuts came down to one inescapable fact: revenue from print ads is disappearing and publishers have not been able to make it up online.
Comedian John Oliver highlighted the perils of a disappearing print media in August with a widely discussed segment on his HBO show Last Week Tonight. Showing a graph indicating that newspapers had, between 2004 and 2014, gained $2 billion in revenue from digital advertising but lost $30 billion on the print side, Oliver made this comparison: “That’s like fi nding a lucky penny on the sidewalk on the same day your bank account is drained by a 16-year-old Belgian hacker.”
It’s under this cloud that Canada’s print publications are pressed to experiment, seeking ways to make up for declining print revenue. Doug Knight, president of St. Joseph Media (whose titles include magazines Toronto Life, Fashion and Weddingbells), has been using an analogy as colourful as Oliver’s. “I’m like a guy with his feet on two escalators: one is going down and the other is going up. And I’m trying not to get torn in half,” he says. Despite the graphic characterization of the fl exibility required to fi nd a new balance-sheet equilibrium, his company’s almost three-year-old branded content division, Strategic Content Labs, is now more than offsetting the declines in revenue from legacy media advertising, he says.
Other publishers are experiencing a version of this up and down – finding some kind of star to which they can hitch their careening wagons. The Globe and Mail is using a paywall and new verticals to try to win back subscribers and attract advertisers with premium content and an engaged audience. Postmedia has launched a new in-house programmatic trading desk to extend its offering to advertisers beyond its own network. The Toronto Star is driving up ad rates with its Star Touch tablet edition and investing in other digital properties. And St. Joseph is using its content division to play across a wider media ecosystem.
All of them are relying on increasingly sophisticated tools for mining data about their users to help advertisers target them on the right device, at the right time.
In 2015, Facebook took in more than $17 billion in ad revenue, up 49% from the previous year. Postmedia CEO Paul Godfrey told Media in Canada earlier this year that Google, Facebook and other massive digital companies swallow up 65% to 70% of digital advertising. Everyone else is left fighting over the scraps. “The fact is you can’t exist that way,” he said.
Some publishers are trying to become more than simply places where advertisers can buy space.
The New York Times bolstered its branded content unit, T Brand Studio, earlier this year when it purchased influencer marketing agency HelloSociety and experiential agency Fake Love. In Canada, in addition to the aforementioned Strategic Content Labs at St. Joseph and Postmedia’s trading desk, the Globe has its Globe Edge content studio and the Star has its own ad team for the Star Touch tablet app.
“Once you start looking at it through an editorial lens as opposed to a pure advertising lens, you come up with this sort of unique consulting practice,” Knight says. [It's] not quite a replication of an agency but it is a problem-solving, strategic service that’s somewhere between a traditional advertising agency and a media company selling eyeballs.”
Publications are also seeking new ways to measure engagement – including achieving business results for advertisers – that highlight their value compared to most of the web’s billions of clicks.
Some are trying to move beyond the standard CPM pricing model by monetizing time spent instead. The Financial Times has already rolled out a “cost per hour” (CPH) metric that measures how long an ad is seen, rather than just whether or not it was. The Guardian has also adopted time-based advertising models, offering rates based on how long ads are 100% in view. The measurement benefi ts longer form publishers that create quality content readers spend more time with.
Convincing advertisers used to CPM and click-through rates is the challenge. Lilly Buchwitz, a marketing professor at Humber College in Toronto, says publishers need to do a better job of selling advertisers on their benefits, specifically the targeting they provide.
“Advertisers want big numbers of impressions and clicks, and they don’t care how they get them,” she wrote in an email. “They’re focusing on the wrong thing.”
Advertisers can get millions of eyeballs fairly easily, Knight says. “But the value of that volume is less than the value of true engagement.”
Despite the increased data and ability to target online, Knight says engaging audiences is actually more difficult. Measuring engagement is becoming less about the “horse-race” of click-through rates and other “vanity metrics,” he says, and more about driving measurable business results.
As for the FT’s cost-per-hour model, Knight says St. Joseph is more focused on adapting rates client by client, based on specific goals, than trying out a new engagement rate across the board. For Knight, engagement goes beyond digital targeting and into a broader media ecosystem of events and experiential opportunities. Toronto Life’s “robust digital presence” (its online audience has surpassed its print) and St. Joseph titles’ strong social media following have helped it engage its audience and draw it to new spaces.
Toronto Life hosts a range of events including its sellout Garden Party, TIFF Stylebook, Best Restaurants event and real estate seminars. Weddingbells will host “Unveiled: The Weddingbells Show” in January, a wedding show featuring 100 exhibitors that the magazine’s editorial team will cover through a multiplatform content stream. Fashion is hired by retailers, including Holt Renfrew in Vancouver and Hugo Boss in Toronto, to host store openings.
“We have this hugely engaged, highly targeted audience because of the magazine but also because of what we do in social media and other things. If we want to create an experience, we can drive not just an audience but a relevant audience really quickly,” Knight says.
These events make money but more importantly they extend the brand. So rather than putting on events to support the legacy publication, Knight says, “we’re exploiting the legacy brand’s ability to engage people across multiple contact points.”
The other way St. Joseph is looking to heighten engagement and build a loyal audience is by focusing on user experience, particularly on mobile. Part of that is less intrusive ads, and the publisher is betting on content marketing through its branded content division, Strategic Content Labs, launched in 2014. Its campaigns extend far beyond St. Joseph’s publications. Knight says content marketing suits the mobile world, where there’s less patience for intrusive ads. The studio takes an editorial view to engaging its audience.
A campaign for Grey Goose vodka played off Toronto Life’s editorial content on the city’s top bartenders. Strategic Content Labs went into the bartenders’ homes and made videos of them preparing to host guests. They discussed the vodka but without a hard sell; the videos were sponsored by the brand. A Grey Goose insert also went into the magazine’s print edition.
Toronto Star COO of Digital, Chris Goodridge, says the Star has had internal conversations about the cost per time models but there’s no plan to adopt something similar at this point.
“The notion that all ad impressions are created equal and we’re all optimizing to a click has obviously caused the digital advertising industry a reasonable amount
of grief,” he says, pointing to ad fraud and invasive ads, and the rise of ad blockers.
The publication’s Star Touch app, launched in fall 2015, is trying to sell advertisers on its audience’s level of engagement. With the free app, the paper is aiming to staunch the loss of print advertising revenue by benefiting from higher ad rates and reaching younger readers. The app targets an audience between 30 and 50 years old, skewing female (with a special lifestyle section called Breathe to appeal to this target), whereas the average print subscriber is in the 55-to- 60 range.
Star Touch was designed in partnership with La Presse, whose successful LaPresse+ app led to it scrapping its daily print edition this year. TorStar spent $25 million in 2015 to launch Star Touch, another $7.8 million in the first half of 2016 and expects to spend $10 million over the rest of this year.
The news so far hasn’t been overly bright, though. In August, TorStar announced it was cutting another 52 jobs. Nineteen were from the Star newsroom, and 26 were temporary staff from the Star Touch operations. In an investor call following quarterly results in July, which showed a $24.3 million loss, outgoing CEO and publisher David Holland noted some positive signs from the Star Touch investment. The edition hasn’t been “as quick off the mark as we would have liked,” he said, but its weekly readership of 55,000 to 60,000 uses it three to four times per week, for an average period of 25 to 30 minutes on any given day.
Though the ad revenue isn’t what the publisher had expected, and the number of users is lower than they had hoped, the average user time is encouraging, Goodridge says. “That’s the thing that excites us the most about it.”
Because of the level of reader engagement, ads on the app are fetching four to five times the rate charged for typical desktop or mobile impressions, he says, in line with the paper’s print rates. Ads are bought on a non-CPM basis: clients buy space similar to how they do in a newspaper, paying a price-per-page rate rather than renting it online.
The Star Touch also has its own ad studio, which makes sure the creative works for the platform and serves smaller advertisers. It’s also dabbled in branded content, which Goodridge says is still a mostly “untapped opportunity.”
“We think the content play for an advertiser is more significant than what we can provide on other [digital] platforms,” he says, pointing to the average time spent and how that could translate to consuming longer-form advertising.
Like other publishers, the Globe and Mail is fighting against the move in programmatic ads away from contextual-based placement to an audience-based environment. The publication is making the case that premium products advertised in a context the consumer doesn’t fi nd relevant will hurt the brand, chief revenue officer Andrew Saunders says.
That argument was bolstered in July when ComScore released a report called “The Halo Effect,” which made the case that premium publishers drive higher ad effectiveness. The study concluded that display ads on Digital Context Next (DCN) “premium publisher sites had an average of 67% higher brand lift than non-DCN publishers.” DCN is an American industry association of 74 online publishers that includes the New York Times, ESPN and Hearst.
Part of the Globe’s engagement pitch rests with subscribers, which Saunders says is a major point of differentiation for the paper. For one thing, they consume 25 to 30 times more pages than other readers, he says.
“People that are willing to pay for content are far more engaged with content,” he says. The publication’s “core value proposition” is creating content that people will pay for. While the Star abandoned its paywall and Postmedia relies on being able to target visitors who aren’t logged in, the Globe continues to offer subscriber-only content to its “Unlimited” readers and to limit non-subscribers to 10 articles per month. Subscriptions provide additional information about a user to reference against the cookies that track their behaviour, and forcing readers to register also means they can be tracked across devices when they’re logged in.
It all helps with targeting.
The Star’s paywall experiment lasted barely two years after launching in 2013 and receiving what Goodridge calls an “underwhelming” response. “Most data we look at, the willingness to pay for digital news content in the Canadian market is quite low,” he says.
The Star had expected subscriptions would allow it to learn more about the people coming to the site through the paywall, but it didn’t get nearly the numbers it had hoped. Roughly a year after dispensing with thepaywall, the Star relaunched Star.com in May with what Goodridge calls a “mobile-first mindset.”
The design principles – which include easier scrolling and a more vibrant look – started with mobile, which now accounts for about 50 per cent of traffic, up from one-third a year ago. Two-thirds of the mobile audience arrives at the site through social and search, primarily from Facebook.
But while subscribers can be tracked from desktop to mobile and back (and targeted by advertisers on both platforms), abandoning the paywall means the Star relies on cookies to track users on the same device with no means of following them on a different one. Postmedia has the same problem.
Online subscribers make up less than 10% of its users, says Tony Patel, VP of monetization and programmatic trading. Because of the number of Postmedia titles and volume of content, roughly 40% of its traffic
comes from search.
Earlier this year, Adobe announced it was launching a data co-op to address the problem. It would allow publishers to opt in and pass desktop IPs or mobile device IDs into the co-op to be anonymously shared. Publishers are waiting on details but Patel says he’s interested in its potential.
In the meantime, Postmedia launched its own programmatic trading desk in June, after testing since December. Powered by Google’s DoubleClick Bid Manager (DBM), the desk helps brands reach local and national audiences across its network of 180 newspapers and beyond.
The desk opened with just more than 100 partner sites but that’s expanded to more than 1,000. Postmedia vets each one, offering its clients a “white list” of potential imagery on “brand-safe” sites. The relationship with Google helps with the “cross-platform stitching,” or tracking users across devices, Patel says, if those readers are logged in to a Google account. The desk allows the publisher to use its first-party information on reader behaviour, including how and when media is consumed in various markets, to deliver ads beyond its own network.
That first-party data relies on hundreds of segments tied across its network, which use different thresholds. Someone who reads a certain amount of content about mortgages within a month and is marked as a mortgage intender, for example, would receive targeted ads for months, since buying a house is often a long, drawn-out process; readers bingeing on Vegas vacation stories or airline sites will only see ads for Caesar’s Palace and bargain flights for a couple of weeks, to avoid annoying them after they’ve already returned from their trip.
Those readers can now be found beyond the Postmedia network. “It helps us extend the potential reach of the people we’ve identified because we can now see them on multiple sites. It gives us more opportunities to hit the right person with the right ad the right number of times,” Patel says.
It also means lower prices, he says.
Rather than paying the high rates for guaranteed impressions on Postmedia’s network (space reserved for a specific ad), clients benefit from a pool of 1,000 websites, bought on a cheaper, non-guaranteed basis. “As long as you can overlay some data to make sure you’re bidding on the right ones, non-guaranteed impressions are typically a fraction of the cost of guaranteed – sometimes as low as five or 10 per cent of the cost,” Patel says.
So how, as a seller of ads, does Postmedia benefit when it’s losing those guaranteed rates?
Patel says the marketplace had already evolved to a point where it was more difficult to get clients to pay the standard high, guaranteed CPM rates. They still have a place, especially for brand building – a new store opening in Edmonton, for example, doing a 24-hour takeover of the Edmonton Journal’s home page – but the trading desk is a way to compete with more targeted offerings.
The desk has been more successful than the company had projected, he says: “I’m confident that this is our way forward.”
The Globe is also honing its data in order to reach the right audience for marketers and adjust campaigns to fi t their needs. Its data scientists use a “taste graph” based on about 1,000 attributes that allows them to predict how an audience will respond to a campaign, depending on the advertiser’s key performance indicators (KPI). It uses real-time market intelligence on those KPIs (car test drives, for example, or email sign-ups) to measure effectiveness and adjust.
“Then, through predictive modelling, we can build a segment that we re-message against,” Saunders says.
While St. Joseph’s has strong online followings, Knight doesn’t see revenue from online advertising alone matching what’s being lost in print. Publishers can’t compete with Facebook and Google, even with efforts at targeting in order to charge higher rates, he says.
“There is a general narrative out there that the world is moving from print to digital. And I fundamentally reject that as a premise,” he says.
There still is that escalator ride. The legacy advertising revenue is going down, and “no one’s going to put a finger in that dyke,” he says. Instead, St. Joseph is expanding the ways it reaches consumers, trying to be active in everything.
While he sees a role for print in the future (Strategic Content Labs has created print products for Birks and Air Canada as ways of engaging those audiences), he says he’s not sure every print product will survive.
“If you’re spending all of your time playing defence on the legacy media, you’re not going to have a good time,” he says.