News aggregation may be cheap, but the ads are even cheaper

wire

The media world was shocked the other day when The Atlantic announced it was going to roll the well-regarded spinoff publication The Wire back under the umbrella of the magazine. The Wire was, for the past year, a standalone general news aggregation site that pounced on trending news stories and viral videos. Why did a publication that showed such promise fail to exist on its own? Wire editor Dashiell Bennett explained the move to Justin Ellis:

Bennett said the logic of separating the two sites no longer makes sense. “We were just having trouble selling it as a news site,” he said. “The traffic was substantial, it just wasn’t at the scale of news sites that are much, much bigger.”

Pulling The Wire back into The Atlantic runs counter to Atlantic Media’s succession of spinoffs in recent years, which includes Quartz and CityLab(née Atlantic Cities). What makes those sites different than The Wire, Bennet said, is a tighter editorial focus that helps attract a distinct audience.

This is a rarely-reported fact about aggregated news: While it may produce enormous waves of traffic, it’s difficult to sell high CPM advertising against it.

Why? Think about it from an advertiser’s point of view. For an advertiser, it’s a buyer’s market. The internet has obliterated the high barriers to entry for new publishers, and because of that there’s no longer a scarcity of news. There are more websites with more traffic than there are ads to sell against that traffic. So an advertiser isn’t just looking to advertise on a website that has loads of traffic; it wants to reach a targeted, core readership that returns over and over again. It also wants to associate its company with the brand of a hip news organization, one that has a hardcore fanbase.

And here’s the secret with news aggregators: For the most part, they don’t have core readerships. They’re playing a simple numbers game; if they jump on enough trending news stories at a high enough rate, a certain percentage of those posts will take off on social media or, more likely, Google.

I experienced this first hand. There were a number of times, while working in the newsroom, that I appealed to an editor to focus his resources on original reporting, rather than being three hours late to every news story. And every single time that editor would point to our traffic stats as evidence that the aggregation strategy was working. Every third or fourth story we’d publish would indeed, for reasons unknown, find itself sitting at the top of Google News (My theory: Because we were so late to the story, Google would wrongly assume that we had more up-to-date information than previous news reports). And because we were putting ever more resources into aggregation, we were seeing an upward trend in traffic.

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But if you took the time to speak to the business side of the equation, you’d quickly learn that most of the display advertising on all those pages consisted of what are called “remainder ads.” These are ads that weren’t sold by the company’s advertising staff, but were rather placed there by bottom-of-the-barrel ad networks with CPMs barely reaching $2. So as we began churning out cheaper content at an ever increasing rate, we were simply driving down our advertising rates, making any revenue growth pretty much negligible.

And that’s likely the problem The Wire faced. It may have been slightly more hip than your average news aggregator, but it didn’t have a widely-recognized brand, and so advertisers probably weren’t seeking it out. By rolling the operation back into The Atlantic, the company gets to benefit from the traffic but can associate it with a staid institution (The Atlantic) and the longform, deeper content that readers truly value. So while some are taking a pessimistic view about what The Wire’s failure means for the state of the news industry, I think it’s a good thing. It shows that quality content is truly more valuable than cheap aggregation. Now companies just need to figure out how to maximize the revenue potential for this quality content even more.

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