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April 13, 2008

The meaning of "the great unbundling"

Nicholas Carr has written the best analysis I've seen of the impact of the Internet on the concept and implementation of the newspaper. You might think that newspapers can move online and be the same sort of beast with the same sort of revenue, but Carr explains why newspapers "unbundle" on the net, and this "great unbundling" has serious implications.

When a newspaper moves online, the bundle falls apart. Readers don’t flip through a mix of stories, advertisements, and other bits of content. They go directly to a particular story that interests them, often ignoring everything else. In many cases, they bypass the newspaper’s “front page” altogether, using search engines, feed readers, or headline aggregators like Google News, Digg, and Daylife to leap directly to an individual story. They may not even be aware of which newspaper’s site they’ve arrived at. For the publisher, the newspaper as a whole becomes far less important. What matters are the parts. Each story becomes a separate product standing naked in the maketplace. It lives or dies on its own economic merits.

I don't necessarily agree, but there's much to think about here. There's a lot we don't know about the impact of advertising - who'll be attracted by what ads in which locations? Carr assumes that the longer investigative pieces don't "sell," saying

The most successful articles, in economic terms, are the ones that not only draw a lot of readers but that deal with subjects that attract high-priced ads. And the most successful of all are those that attract a lot of readers who are inclined to click on the high-priced ads. An article about new treatments for depression would, for instance, tend to be especially lucrative, since it would attract expensive drug ads and draw a large number of readers who are interested in new depression treatments and hence likely to click on ads for psychiatric drugs.

There's also the question of the click-through vs the ad impression. In general, we get more specific data from web advertising than from newspaper advertising. A newspaper organization can deliver hard data about how many papers were sold or distributed, and they might do additional research about who's reading what sections of the newspapers, but it's hard for an advertiser to make more than an assumption about the actual commitment of attention to a newspaper ad. Click-throughs on the web are a more precise measure, considered a better metric than an impression. An impression tells us the ad was served, but, as with the newspaper, we can't make any correlation with actual attention. In fact, the ad may have been served but blocked, just as television ads might be skipped by viewers with DVRs.

We're getting better at analyzing conversions and we're going deeper with the analysis because we have the necessary tools and data to support better intelligence about aggregate behavior. Advertising is less about hitting the most eyeballs - it's qualitative and niche focused. I.e. as an advertiser I'm okay with fewer impressions or clicks if I know I'm getting attention with the right audience. One thing I think we're learning is that our assumptions are just that - we're not always good at predicting what will work. We had to believe our assumptions about advertising in the past, lacking more precise metrics about what worked. The results we actually see in an environment where we can get better metrics and indicators can be surprising. What I'm saying is that we're just beginning to learn what "sells" online.

The unbundling part really means that it's harder to sell the news source, formerly a newspaper, as a whole, but an established news source will still have the advantage of an established attention base and, by virtue of that authority, decent page rank on search engine results pages. A New York Times or Washington Post will grasp the strategic differences in moving from bundled paper to unbundled bytes, and I suspect they'll find rationales for funding good, expensive hard journalism in those stories' contribution to reputation and page rank, if not in precise click-throughs for the specific story - though it's still possible that there'll be signficant click-throughs with the kinds of advertisers you'd associate with Sunday morning talk shows on television - companies that will spend significant dollars to reach an upper-income niche.

jon posted this at 8:37 AM
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