Monthly Archives: November 2014

How Medium is using the mullet strategy to attract new users

mullet

I don’t think I invented the phrase — I likely read it somewhere and then absorbed it through osmosis — but for several years now I’ve been referring to something called the “mullet strategy” when trying to explain how some platforms and social networks have attempted to attract new users. A Google search reveals that Jonah Peretti, a founder of both BuzzFeed and Huffington Post, used the neologism as early as 2007. As described by Grant McCracken in 2008, with the mullet strategy, “the front page of the website is ‘kept sharp’ by professional editors while the back of the site is given over to the unedited, unsubstantiated ‘venting’ of unpaid visitors.” Or, put another way: “Business in the front. Party in the back.”

The approach was used early on with both Daily Kos and the Huffington Post. In the case of Daily Kos, Markos Moulitsas, the site’s founder, employed professional bloggers to write for the front page of the liberal, grassroots blog, and then anyone who commented on their blog posts had to sign up for an account that also gave them their own blogging platform. Their published blog posts, however, were not automatically promoted on the front page; they were relegated to a subdomain, with their headlines highlighted on a small sidebar on the Daily Kos front page. Whenever a user-generated blog post was particularly well written, however, one of the paid front-page bloggers could pluck it from the ether and promote it on the main blog. This strategy worked so well because it attracted readers with the professional-grade material and then converted them into more engaged users who gladly generated content for Daily Kos for absolutely no pay. Occasionally, when one of these unpaid users consistently produced professional-quality content, Moulitsas would hire him or her to write for the front page.

Huffington Post employed a slightly more selective approach. Though it used thousands of unpaid bloggers, you couldn’t publish to HuffPo unless you happened to know someone who worked there. This way, getting your own HuffPo byline felt like you were being invited into some exclusive club, making it easier to overlook the fact that you were creating content without pay. Arianna Huffington famously would hand out accounts to people she met on her speaking tours. This higher bar of selectivity ensured a better batting average when it came to the quality of content.

The mullet strategy has continued to be adopted and improved upon over the last several years. One of its most interesting iterations was rolled out at Forbes, where chief product officer Lewis DVorkin has recruited over a thousand writers, some salaried staffers, others paid based on traffic generated, and the rest completely unpaid. The strategy paid off, reviving Forbes from a state in which it was barely able to make rent to a profitable entity.

The beauty of the mullet strategy is that it effectively tackles the user acquisition problem. Every new platform that relies on user generated content depends on influential users who make the platform indispensable, thereby attracting larger numbers of users to try it out.  But it’s a Catch 22; the platform needs the influencers to make it indispensable, but these users won’t become addicted unless it’s already indispensable. Facebook solved this problem by attracting early adopters from prestigious schools, so that by the time it trickled down to other universities the social network was already populated by their contacts. Twitter similarly had an early adopter advantage, having attracted influential tech enthusiasts very early on. But not every new platform can reach this critical mass, so that’s where the mullet strategy comes in: you’re essentially paying those early influencers to populate your network with content with the hope that the masses will come clamoring to join the club.

Medium has employed what is, in my mind, the most scalable mullet strategy yet. All the other examples I listed, while brilliantly executed, were confined in scope. Daily Kos, while allowing anyone to sign up, only really appeals to those interested in politics, and of those, only people who consider themselves liberal. Forbes and Huffington Post, with their more selective approach, can only manage so many bloggers before quality control becomes impossible. And let’s face it: none of these outlets are technology companies, and so their users aren’t creating content on their platforms because their content management systems are amazing.

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Medium, on the other hand, is a technology company, and it has built a gorgeous, easy-to-use CMS. It also isn’t limited by subject matter. It is therefore just as scalable as any other social network, from Facebook to Twitter to LinkedIn. And it’s solved its user acquisition problem in two brilliant ways.

The first is that it allows you to sign up for Medium using your Twitter account, so that from the very moment your account is live you’re already following people you’re interested in and you also have followers of your own (these are drawn from your twitter followers who have also signed up for the platform). You’re not landing in a ghost town and scrambling to find people to follow.

The second is that very early on Medium hired editors from glossy magazines that specialize in premium, longform content, and gave them substantial editorial budgets to begin recruiting freelance writers. Suddenly, people were landing on Medium before they even knew what it was and before it was even open to new users. This of course attracted the curiosity of journalists, who began penning articles trying to suss out whether Medium was a magazine or a platform. Eventually, our curiosity would get the better of us and we’d set up an account and try it out. Medium has essentially solved the “cool kid” and social graph factors at the same time — first direct users to the site with high quality content, and once they’re there, encourage them to sign up. And then once they have an account, there’s all their friends and followers waiting to consume their content.

It’s a strategy that all future platform creators should pay attention to. In a world where every day a new mobile app or social network promises to crowdsource the solution to some life problem, there are only so many influencers with so much time to invest in a new tool. So when you receive your millions of dollars in investment from venture capitalists, set aside some of that money to pay your early adopters. Because without them, you’re just a night club with no line out the door, in which case you might as well send your DJ home early.

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FULL DISCLOSURE: Want to know how I was paid to write this article? I explain it in this video.

Is launching an online advertising network a losing proposition?

blogads

Back in 2006, frequent visitors of Technorati, a popular blog search engine at the time, began seeing ads for a site called Performancing. Launched by a group of “professional bloggers,” presumably people who had figured out how to make a full-time living online, the site had the ambitious goal of serving as a resource to the blogosphere as it shed its pajamas and entered adulthood. In addition to how-to advice columns on making a living online, the company also planned to release a bevy of tools, from web analytics software to a blog advertising network. As someone who at the time dreamed of making a full-time living blogging (hell, I still do), I was addicted to sites like Performancing and Problogger, refreshing them multiple times a day so I could glean whatever information I could that would take me beyond the few bucks a day I was pulling in through Google AdSense.

The appeal of a blog advertising network is rather obvious. It allows content creators to focus on writing great posts and marketing their websites while the ad network takes on the responsibility of finding ways to monetize that content. As long as the network collects enough websites to its inventory, then it has at its fingertips millions of daily readers. This allows it to attract big name advertisers who wouldn’t otherwise bother with smaller blogs. The network runs the ads on the websites within the network, pays the bloggers 70 percent of earnings, and then takes a 30 percent commission for its troubles. And if you have enough websites within your network with enough inventory, that 30 percent can scale up to a lot of money.

Or so you’d think. Alas, many ad networks over the years have discovered that simply gaining access to million of readers doesn’t necessarily lead to advertisers beating down your door. Performancing suffered its own quick and ignominious fall, shutting down its ad network before it even got off the ground (I found an article claiming that it resurfaced the network in 2008, but if it’s still in existence I couldn’t find any evidence of it on its website). And it wasn’t alone. The last decade is rife with the carcasses of dead advertising networks, each more ambitious than the last. In 2009, Pajamas Media, which had inked deals with just about every major conservative blog on the internet, sent an out-of-the-blue email to its shocked bloggers that it was pulling its ads and focusing efforts on its video network. Common Sense Media, an ad network for liberal blogs, filed for bankruptcy in 2013. 

Even Federated Media, which was led by John Battelle, one of the most sought-after minds on online advertising, sold itself this year for $22 million to a Texas media company, far below the $200 million valuation it had received from investors. “We made money many years, and when we didn’t it’s because we decided to invest,” Battelle told Forbes’ Alex Konrad, trying to strike an optimistic tone. “… I think it’s true that it’s hard to make money in ad networks, but the specific story here could be different.” And then last week Say Media, which had purchased a number of high-profile blogs like ReadWriteWeb and XOJane, decided to sell off those properties after struggling to monetize them.

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Why are the networks having such a hard time monetizing when they have such massive scale? Well, as Mathew Ingram argues in a recent Gigaom column, most of these networks are built upon the framework of display advertising, which has always struggled to gain a foothold for even the most sought-after media properties. In a world where you’re lucky to get $5 for every thousand pageviews generated,  there’s just not that much money to go around, for the network or for the content creator. Let’s say a network has access to blogs with a combined 10 million daily pageviews and is managing to secure CPMs of $5. It’s then generating $50,000 a day in revenue, or $18.25 million annually. Once you subtract the 70 percent cut for bloggers, that leaves a paltry $5.5 million. Not bad for a small business, but that hardly makes you a media mogul worthy of Silicon Valley investment.

Ingram says that these networks exist in between the two real moneymakers in online advertising — programmatic (think Google Adwords and Facebook’s promoted posts) and custom native advertising (practiced by BuzzFeed and Vice):

In effect, the low end of the ad market has been colonized by Google and Facebook — it might as well no longer exist, because those massive operators are the only ones who can compete on the basis of scale and algorithmic ability. And the middle of the market is a dead zone, filled with rapidly-declining banner ads and other gimmicks. All that is left that’s worth focusing on is custom content, and that is a tough game that requires 100-percent focus.

That’s not to say that there haven’t been successful ad networks. Blogads, a North Carolina company founded in 2002, has continued to be the little engine that could, floating mostly under the radar. It was first to the scene with providing an advertising platform for major bloggers like Daily Kos and Perez Hilton, and you can still see its signature ad slots at places like Marginal Revolution and Wonkette. I’ve always liked the concept of Blogads because its tool has always, like Facebook or Google ads, been programmatic, allowing everyday people to place ads without needing to go through a salesperson.

And then there are Glam Media and BlogHer, both of which, at least from the outside, seem to be thriving. Glam has pulled in a reported $35 million in investment and BlogHer has received $20 million (I have no idea what the valuations were). In 2013, BlogHer CEO Lisa Stone told USA Today that it had generated $100 million in advertising revenue in the past four years and paid out $25 million to its bloggers.

It’s difficult to tell why Glam and BlogHer are succeeding where others failed (or if they’re even truly succeeding at all. These could be bubble valuations). It could be because they focused on niche consumer sites whereas political news content, the kind published by Pajamas Media and Common Sense Media bloggers, has never been very attractive to advertisers. BlogHer also heads an influential conference, which has likely enhanced its name recognition for brand marketers.

But aside from these few success stories, it seems apparent, for the most part, that display advertising — which is still inherently tied to pageviews — is not and perhaps never will be a major money maker for your average single-author, independent blog. And if you look at some of the most successful independent bloggers on the web, whether it’s Andrew Sullivan, John Gruber, or Ben Thompson, nearly every one of them has eschewed banner ads entirely. So if you’re a content creator looking to launch a blog that you hope to make a full-time living on, maybe you should focus less on generating massive web traffic and instead place all your effort in gaining your 1,000 true fans.  They may be your only hope.

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FULL DISCLOSURE: Want to know how I was paid to write this article? I explain it in this video.