Monday, August 24, 2015

Why Website Ad Revenues Today Can Erode Long-term Profitability

I’m a firm believer in design thinking principles, particularly when it comes to web and mobile apps.  I’ve been a product and marketing manager since the mid-90’s.  Back then, complex and clunky workflows and user experiences didn’t matter as much because it was all new and unchartered territory for software product managers and engineers.  As long as you had a “web presence” you were set.  The new norm for marketing materials, including business cards, was to promote a website address. Today, we see Twitter, Facebook, Pinterest, Instagram, etc. added to all marketing communications.

It’s 2015 and we know better about clunky workflows and user experiences.  Design and innovation consulting firms such as IDEO,  universities such as the Institute of Design (d. school) at Stanford University, and the many authors on the subject such as Jon Kolko, “Well Designed:  How to Use Empathy to Create Products PeopleLove”  are all sharing the same information about being user-centric (humanize technology).  There really is no excuse for poor user experiences anymore (and ultimately “customer experiences” across all touch points).

My theory is that Marketing and Sales departments are in a KPI (key performance indicator) battle.  Both groups need to report their KPIs on a regular basis to executive management via a Dashboard or Report on a regular basis.  What’s interesting is that departmental KPIs can be misleading and perhaps even contradict other department KPIs and/or the overall business strategy.  Most organizations want to build scalable business models, which provide long-term profitability and therefore sustainability.  That’s where the hockey stick growth charts come in to play.

If Sales and Marketing are held accountable to their metrics, they can toggle their budgets accordingly as they discover the best performing channels and campaigns. Some lead generation methods incorporate the following:
·      Search Engine Optimization (SEO)
·      Social Media
·      Local Optimization
·      Paid Search
·      Website Design
·      Email Marketing
·      Event Promotion
·      Direct Mail (includes Mobile campaigns)
·      White Papers
·      Document creation (aka – Content Marketing)
·      Telemarketing
·      B2B Appointment Setting 

Why does this matter?  If a company has a tried and true business model that no longer produces the results management is accustomed to, they are simply trying to survive.  Desperate times result in desperate measures. They resolve to “advertising revenue” to stay afloat, or at least get by for the remaining fiscal year.  “Subscriptions” may also be a key element in the business model.  But there has to be compelling value to entice customers to pay for it.  Organizations need to make it easy and enjoyable for end users to access and view the content in order to build out a scalable model.

What is a good example?  The newspaper industry (and Yellow Pages for that matter).  I live in Colorado and my favorite newspaper, Rocky Mountain News, which had been in existence since the Civil War, went belly up.  The “survivor” is The Denver Post.  I’m not sure how they will continue to survive by producing a  user experience such as this:

Screenshot 1:  Top of Homepage

Screenshot 2:  Middle of Homepage

Screenshot 3:  Footer of Homepage

What is the Denver Post’s reason for being?  To deliver the news.  Their primary target market is metro Denver, followed by the rest of Colorado (where there are smaller competing newspapers).  Beyond that, it’s anyone who has an interest in keeping up with Colorado and metro Denver news around the globe.

As their homepage demonstrates, they need a LOT of ad impressions.  Let’s break down their ad positions:
·      Left and Right side of the page; duplicate “skyscraper” banners
·      Top of the page banner
·      Skinny banner beneath the double Navigation bars (which is the same sponsor as the 2 duplicate skyscraper ads on the left and right sides)
·      Ad to the Right of the “Top Story,” below the “skinny banner”
·      Sponsored Content: Left of the “Top Story”
·      Square banner #1 – as you scroll down the page it appears on the left side of the ”right skyscraper banner”.
·      Square banner#2 – just below Square Banner #1
·      Square banner #3 – below Square Banner #2
·      Square banner #4 – below Square Banner #3
·      Bottom of page banner

Did you count how many ads there are on the homepage?  11.  
Plus 2 of the 11 ads remain in view as you scroll down the page to actually try to read the news. The 2 ads are the left and right “skyscraper” banners, in case I didn’t notice them the entire time I’ve been on the page.    Why would this car dealership waste their money?  This is akin to walking down the street and people handing out flyers, the same flyer, with every step you take.  I’m not going to pay attention to the ad, and I’m annoyed with the dealership. Imagine how “in your face” their sales people are when you’re at their lot?  No thanks!

An end user’s experience becomes irritating with the bombardment of ads.  End users likely will not click on any stories (or ads) and abandon the site.  The bounce rate for this particular homepage must be quite high.  Hint to the Denver Post:  engage readers, don’t drive them away from your content.  Readers come to your site because they want to be informed.  Unfortunately the site makes it so hard to become informed.  

I want to support my local newspaper. I want it to be my “go to” news source and I would be willing to pay for a subscription to show my support.  But they have a long way to go before I switch my allegiance from Google News.

Why does The Denver Post continue to run their homepage this way? I would imagine it’s because they need a high volume of impressions to drive their revenues.  This KPI contradicts long-term profitability and sustainability because it drives target readership away to substitute products.
The short-term gain of an impression has a long-term cost for them in readership, potential subscriptions, and ultimately loyalty from their community.

What should The Denver Post do differently? 
  •        First, spend some time with their readers. Just listen.

o   Conduct one-on-one usability test sessions and record feedback on what readers think of the homepage experience (and subpages if they ever get there).  Make note of what they are saying, but also what their body language is saying, emotions in their words (note anger, frustration, hostility, etc.), feel the pain points your readers feel when trying to read the news at your web site.
o   Conduct focus groups to uncover what reader expectations are in 2015, and what they might become moving forward (key piece likely involves mobile).  Apply what you learn into themes. Prioritize themes.  Plan to execute on high value, big wins.  They are likely low hanging fruit (because a redesign is what you need at this point).
o   Create a ‘reader advisory board’ – readers who raise their hand because they have a vested interest in seeing The Denver Post succeed.  Rocky Mountain News is gone, what’s left for a Denver-based major newspaper?
o   There are more tactics, but these 3 will get you a long way to develop  empathy for your readers.  (I’m assuming you do care about readers, not just advertisers.)
  •       Work with User Experience (UX) professionals.
o   They may recommend developing “customer journey maps” and “personas”.  Basically, you need a solid understanding of how to attract attention, keep it and engage with your readers so the focus on ads in their face doesn’t turn them off.  A homepage shouldn’t be similar to walking down the strip in Vegas.
o   Create mock-ups and/or prototypes about what an ideal user experience could be – and test them with your readers.  This is where the Reader Advisory Board comes into play.  Quick feedback, so you can iterate quickly and refine the prototype to get it right.
  •       Build the new user experience.

o   This is the tricky part.  It depends on your backend infrastructure and database schema and how you can streamline your content delivery.  I’m not an engineer,  however your engineers will figure out the “how” – and your marketing and product team will deliver a clear vision of the “what”, which is the new website and reader experience.  Communicate with engineering everything you learned through your discovery sessions with readers.  They will appreciate the context and also understand their pain points.
  •             Educate Sales on the value of “meaningful” KPIs, which are in alignment with the overall business strategy.  I’m going out on a limb here, but I’m assuming the strategy includes x% increase in subscriptions, x% increase in readership, (and circulation), a metric tied to “happy path” analysis in website, x% increase in reader time spent on website, x% increase in # articles read per reader per session, etc.
  •      Engage with your Readers (and reader advisory board) in a 2-way dialogue.  Build and nurture relationships with the readers and build your community (or as Seth Godin says, “build your tribe.”)    

If I were in charge of the “Next Gen” Denver Post website, those are the initial steps I would take.