News Site Monetization Model…Change Or Become Wholly Irrelevant! – A Whitepaper

Update: This post was originally published in 2015, and is being re-published with updated information on October 17, 2018.

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Have you visited a news site recently or a blog that holds it out to be a news portal? If so, chances are you’re inundated with ads. It seems that those sites are being operated from a 2001 perspective.

For people who are in the news, here’s a newsflash for you. We hate ads. We just don’t hate them, we loathe them. In fact adblocking is becoming the norm. Check out these stats from the 2015 Pagefair Adblocking Report:

• There are now 198 million active adblock users around the world.
• Ad blocking grew by 41% globally in the last 12 months.
• US ad blocking grew by 48% to reach 45 million active users in 12 months up to June 2015.

I think this quote by a commenter sums up the feeling of news site visitors:

Ads are not only annoying, they’re downright dangerous to you PC. There are so many unscrupulous ads that run crapware or are so bloated with media they almost kill your browser. There’s no way I would tolerate browsing without a blocker.

He goes on to say that the numbers reported in the study may actually be much lower and are not showing the true proliferation of adblocking.

The math is bogus… I never, ever, ever, click on click-bait ads. Furthermore, someone leaching off me to sell my browsing behavior without my permission is morally bankrupt. The model needs to die.

…and die, it most certainly will.

What’s Killing The News Site Revenue Model?

Social media. Facebook and Twitter want to be the destination for news.

News sites are obviously aware of what Facebook and Twitter are doing. However, most aren’t evolving. There’s no secret as to where things are headed. It’s not like the social networks are being secretive. They are openly telling every publisher what they are planning.

In case you haven’t been following along along with the release of Moments, Live Mentions, Instant Articles…etc… you’re ignoring the warning lights that are flashing in your face.

It seems that many news site operators are seeing the engine light come on in their cars and simply ignoring it because the car is still running. You can drive a car for quite some time with no oil. But it won’t be long before it seizes up and dies.

That seems to be how many news sites are operating these days. The social networks want to keep visitors on their platforms. They don’t want people clicking away. They are going to continue to try as hard as they can to keep their users on site. Your referral volume will increasingly diminish.

It’s not an if…it’s a when. And when it stops, it will be like someone turned the lights off as it will happen all at once.

CURRENTLY there are people making money by annoying a minute percentage of souls to click on banner ads that inundate their sites. But that ship isn’t sailing…it’s sinking. I hope they grab and squeeze every last dime they can. Because Facebook is coming for them in a BIG way.

But as Danny Devito said in the movie, “Other People’s Money”, the news site business is certainly dead. They just aren’t broke. And the fact that a lot of them are still making money as annoyance purveyors, blinds them to the  inevitable demise of functional obsolescence.

Much of the current crop of news sites are making a boatload of buggywhips! The business model is dying. As from the same movie…the reason is new technologies”…the best way to go broke is to invest in such a business model. It’s not your fault…not my fault…things have evolved.

As I mentioned above. No one will ever be able to say that they were caught by surprise. It seems almost daily that there is a new harbinger admonishing news sites of their pending doom.

“Publishers are at risk of becoming interchangeable. With Moments and Instant articles, Twitter and Facebook seem happy to take content from publishers without ever sending people back to their sites — you know, the place where publishers earn their money. If news outlets and other media properties don’t change something, they could become dumb content in the smart pipes of social networks.”

Another Problem Is The Content

Many of the news sites rarely produce any content. Now, it seems the model is to regurgitate a blurb from one site, load a shit ton of ads on to a page, write a very slanted opinion and then post the link on Facebook with a click bait title in order to drive people to their site so they can annoy them with ads.

It’s worked for a LONG time, but the times they are a changing and in addition to their monetization model, Facebook is beginning to take aim at their content model as well.

Facebook and Twitter want more interesting content that is originally created. Which is why they are pushing video and images. No one wants to read anymore. (no, the irony of that last statement wasn’t lost…this is directed at a certain segment of people/publishers as a whitepaper reference piece)

Now That You Know The Problem, Here’s The Solution

So now that we can clearly see that the current news site monetization model is most assuredly terminal, let’s look at the good news. I’m taking the opinion that ALL of this is good news and affords a publisher who wants to be on the front end of the bell curve with tremendous opportunity.

I believe that new sites need to flip the script. Instead of posting articles designed to drive people to click penny grabbing ads…develop a customer base instead of a reader base. Become an online retailer.

You want to monetize things…then enhance the brand of your news site. You need to become a retail brand. An ecommerce brand. A news site that is a retail brand that happens to write stories.

What’s the basis for my opinion? Simple. Why would you drive people to your site with the sole objective of getting them to click off to someone else’s site? That’s what your ads are designed to do.

A news site purveyor does a lot of work to get eyeballs to a page and then pounds that visitor with ads in the attempt to get them to click an ad so that they will leave their site for a few pennies.

I know of one site that gets 20 Million visitors per month and they think they are doing well because they generate in excess of $100,000 per month from their annoying ads.

Imagine instead of pennies, they made dollars from every click. I have a number of sites with a fraction of that traffic and I make a whole lot more than they do per visitor. Why? Because I sell my own products.

If my site visitors click on ANYTHING, they are clicking on my own products and staying on my own site.

But wait a minute…didn’t I say you have to worry about people being locked in by Facebook? Yes, I surely did.

Imagine a world where the Facebook user doesn’t even need to leave Facebook to buy anything!

Boom! The Bomb That Will Kill The Current News Site Business Model

Facebook is making it easier for retailers to set up shop on the social network. And Shopify is helping clear the way.

This week the e-commerce company said that it will give all of its 175,000 customers the ability to sell their products from a Shop section on their Facebook Pages in the coming weeks. Those sections, announced by Facebook, are meant to give businesses a simple digital storefront, optimized for mobile devices.

The Shop sections are a major improvement from Facebook Store apps, Shopify said in a blog post:

“Existing Facebook Store apps don’t work on mobile devices, which is how most people now use Facebook. As well, existing Facebook Store apps only add a tab to your page, while the new Facebook Shop section appears as a larger section on your main Facebook Page. This means more people will be able to easily discover your products. Finally, the new Shop section includes a subscribe button that lets people get notified when you add new products.”

Merchants will be able to drive sales directly from Facebook. Game over. No reason to ever leave Facebook!

Key Recommendations

I’m working with a number of news publishers as well as on my own sites and here’s what’s working and what needs to be done to maintain both relevancy and revenue as things progress on the social platforms:

1. Be Prepared– Put together a long term plan wherein you are ready to seamlessly integrate with all of the changes on the social networks. When Instant Articles fully rolls out, be ready to seize the opportunity. When the Facebook Shop section is fully implemented, be at the front of the line. Be an early adopter to all of these changes and don’t get stuck in your current malaise.
2. Budget Wisely – Understand that in order to drive substantial revenue you MUST invest in social advertising. I know of people who spend in excess of $50,000 or more PER DAY and I’m not talking about huge brands. If you’re not ready to spend in excess of $500 per day MINIMUM, you won’t be a player. I’m seeing returns of as high as 8:1 on Facebook spends. That means if you spend $500 you could generate $4,000 in revenue. Do the math. Spend $5,000 per day and see $40,000 per day in revenue. If you don’t believe this is possible and you don’t understand how to ramp up to that level, you risk being disrupted.
3. Eliminate Gimmicks And Crappy Product Offerings – If you want to build a revenue generating machine, you need to produce offers on products and services that people actually want to buy. Give them what they want.
4. Understand The Data Of Your Community – If you’re not using Facebook Audience Insights then you really don’t know anything about your community. Do you know what they like? Do you know what they buy? Highly relevant offers that you determine based upon Audience Insights are the products that most resonate.