You are here

Lookie Lou isn't really a customer

Submitted by yelvington on November 27, 2009 - 10:27am

Danny Sullivan is getting a lot of points for his post beating up on News Corp. titled If Newspapers Were Stores, Would Visitors Be “Worthless” Then?

Far be it from me to defend Rupert Murdoch.

But I have to take issue with the premise that newspaper executives are idiots for not realizing the immense value of random visitors from random places who stumble across a newspaper story.

It ain't there.

As so often is the case, Sullivan uses an analogy, then takes it to absurdity:

At the store, the news exec owner greets visitors by asking them what the hell they want. Perplexed, they visitors say they heard about these stories and wanted to know more. The exec shouts at them. “Get the hell out of my store, you freeloader! This is for members-only. We don’t need riff-raff like you in here.”

This is bullshit, of course. Nobody's doing that, not even Rupert Murdoch, whose bellowing is nothing more than a negotiating ploy to try to squeeze some cash out of Google, which -- thanks to zillions of website owners signing up for its opaque AdSense deals -- has more cash than it knows what to do with.

Website users are not fungible. Some of them are very valuable. Some of them are worse than worthless, consuming resources or otherwise making a nuisance of themselves beyond reason. If there is a magic to operating a successful website, it's in figuring out how to identify the valuable ones and harvest that value, while not wasting time, energy or other resources on the others.

To use the storefront analogy: When I have people in line to buy big-ticket merchandise, I'm not going to shut down the cash register line so I can provide personal assistance to the guy who's agonizing over whether to buy a 50-cent postcard.

And the "Lookie Lous" who are shopping but not buying? So long as they don't get in the way of the real customers, or start knocking the china off the shelves, they're not really a problem. But I'm not going to go out of my way to serve them on the off chance they might accidentally drop a quarter on the floor.

A more appropriate analogy -- and one more easily understood by journalists -- might be that of a bar. If you're sitting in a bar warming a seat but not consuming anything, are you a customer? If you're eating the free peanuts but not drinking, are you a customer? Not all visitors are customers.

Once upon a time, I blocked Google from being able to index (or even access) Associated Press stories from our local newspapers' websites. It was not a stupid thing to do, not at all.

Here's why. At that time, we were not participating in any national ad networks. Every pageview delivered to anyone outside a newspaper's geographic market was a net loss in two ways: One, it consumed some server resources (not a huge deal, but servers do have costs). Two, when the ad server delivered a local ad to an out-of-market user, it reduced the effectiveness of that advertising campaign in measurable clickthrough per thousand pageviews.

Now, some things have changed. We're participating in national networks. We can serve nonlocal ads to nonlocal Lookie Lous. We can -- and do -- sell and deliver behaviorally and demographically targeted advertising, and provide anonymous targeting data to national networks. So we don't block Google, and in fact we're working aggressively to optimize our sites for searchability.

But don't try to tell me that there's significant money in random visits by random people from Elbonia. There's no there there.

One of the chronic problems that crop up whenever people write about newspapers is a failure to understand the nature and scale of the business. This isn't unique to people outside the news business; few journalists have any real grasp of the business underpinnings of their employers.

When the Star Tribune sold for around a billion dollars in 1998, it wasn't a statement about the value of newspapers. It was a statement about the value of a king-of-the-hill position in the advertising market of a top-15 U.S. metropolitan area.

That newspaper's value has plummeted, of course, as it has suffered from a brutal combination of economic recession, higher costs and an explosion of competition that's knocked it from its position of dominance.

And it may be that no one can "control" the hill in 1998 terms any more.

But the hill is still immensely valuable, and those who criticize newspapers for choosing to focus on the local advertising business are generally ignorant of the amounts of money involved.

Keeping your eye on the real value is the right thing to do. Don't be distracted by Lookie Lou.

Comments

Back in the day when I ran the interactive side of a small western New England newspaper group, our stats showed that about half our traffic was coming from outside the local area. We had worked, in the pre-Google, pre-SEO days of the 90s, when lots of people were building directory-type sites to assist Web navigation, to get our site listed on every newspaper directory we could find and to get links to our content inserted wherever possible. This gave us on online readership volume that far exceeded that of much larger newspapers in our company (MediaNews), something that has carried through to this day. We used that non-local traffic as a selling point to our local advertisers, rather than worrying about how the clickthrough rate might be affected. As we saw it, and as we sold it, that traffic was coming from people with some kind of interest in our area: (a) they grew up there, have relatives and friends, and visit from time to time; (b) they have a second home in the area and want to know what's going on, or (c) they're looking for a place to go for a weekend or vacation, or have made specific plans to do so. Merchants responded to this proposition and got good results. Car dealers sold cars to out-of-towners. Realtors found prospects; cultural venues got visitors; restaurants and stores got customers. Granted, this is a touristy area a few hours from New York City, but I think the same idea applies in many places. For the Wall Street Journal, there is no local vs. nonlocal, it's a national paper. Sullivan quotes Jonathan Miller of News Corp to the effect that folks who pop in for one story and right back out are not worth the trouble and won't be missed. "You can survive without it." But Sullivan's point is that you haven't even tried to engage them. In the advertising world where gross rating points, readership measures and traffic stats are key metrics, why would anyone want to write off even a small percentage of their audience as worthless? Martin Langeveld - newsafternewspapers.blogspot.com

"One of the chronic problems that crop up whenever people write about newspapers is a failure to understand the nature and scale of the business." Indeed. Thanks for providing a classic example. Lookie-Loos (the term was invented for a real estate campaign in LA in the 1970s -- I was there) -- anyway, Lookie-Loos, as you're using the term, are the readers. And you're right, readers have never been newspapers' customers. They're newspapers' product, they're what they sell to the advertisers. Murdoch is an idiot because he's insisting on turning his product away from his doors. He's going to indulge in fraud -- continuing to sell to his advertisers an audience that's shrinking and becoming less valuable. (And dying off, given his demographics.) But that's before we get to the inherently fraudulent nature of advertising in the first place. The very fact you have to refer to "clickthroughs per thousand" is because "clickthroughs per hundred" isn't granular enough. So 99%+ of your audience isn't responding to the ads to begin with. We're not looking at the death of newspapers here. We're looking at the death of advertising. The audience is going to greater and greater lengths to avoid advertising, and the advertisers themselves are getting less and less value for their ad buys. If things continue as they are, few companies will be able to justify *any* advertising expenditures -- they'll be regarded as an absolute waste of shareholders' money. Bob Garfield's "Chaos Scenario" from Advertising Age continues to come true.

Steve - We just switched to a new CMS and were planning to block spiders from hitting AP stories on the site, but did not get around to adding the code pre-launch. We only live-feed state/region stories so that probably skews our results a bit, but more than 60% of visitors to our wire stories are local and about a quarter came via search engines. Based on those results we probably will continue to leave our wire stories open to indexing. Over the entire site about 20% of our page views are generated by non-local, return visitors who arrive via a search engine. As Martin points out above, those people must be coming to the site for some reason, no matter where they live and how they found us. So yes, half of our SEO is wasted on non-local fly-by visitors. But since we don't know which half and the incremental cost is almost non-existent - that would seem to be a cost of doing business. We certainly don't spend a lot of time trying to attract "Lou" but we also don't spend too much time worrying about the peanuts he might eat. Damon

Martin said "Not all out of towners are Lookie Lous." This is absolutely true and very important -- but it's more important for some types of content than others, and more important in some markets than others.

We have newspapers in great tourist destinations that make good money from destination guides that are part of our newspaper websites, and for that sort of content, inbound traffic from search engines is very important. Real estate is in the tank at the moment, but in a normal economy and especially in a growing market, out-of-town traffic to real estate listings is very valuable.

So I certainly don't mean to suggest that out-of-town traffic is never valuable.

But I'm arguing against the absolutist viewpoint that the search engines are raining nothing but gold on newspapers. Much of the search engine traffic is looking for answers to random questions such as how to get dog pee out of carpeting, and such traffic is of such low economic value as to be effectively worthless.

Anonymous said "anyway, Lookie-Loos, as you're using the term, are the readers. " No, absolutely not. Readers who live in the local market and are interested in local life and become regular, engaged users are solid gold paying customers. As I've often said before, they're paying for content with the most scarce coin of all: attention.

But let me give you an example of readers whose attention is not solid gold. Back in the mid-1990s, the Raleigh News and Observer built the first general news site on the Internet, called Nando.net. Something like half its traffic came from overseas, and the biggest single source of that was Africa. Nando had no ability to sell advertising to businesses that wanted to reach early Internet adopters in Africa, so the attention of those users was valueless, and the traffic -- which hammered the servers and ate bandwidth -- was a liability.

Damon said "more than 60% of visitors to our wire stories are local and about a quarter came via search engines." I think that's another thing that's changed since the early part of this decade. Google News no longer sends any traffic to AP stories elsewhere on the net, if it can avoid doing so, and for general Web searches, other sites such as CNN, BBC and MSNBC are considered much more authoritative by the search algorithms.

"Nando had no ability to sell advertising to businesses that wanted to reach early Internet adopters in Africa..." I've said before that if you take a typical American businessperson and offer them the choice between a) lots of control and little money and b) lots of money but little control, they'll take the control every time. This is a good example. There you were in Raleigh-Durham. You had UNC and Duke both local to you. You're saying you had "no ability" to hire one ad salesperson for anglophone Africa, and one for francophone Africa -- heck, given the universities in question, quite possibly native residents as work studies -- and sell ads scoped by IP the same way you learned your readers were coming from Africa in the first place. No. Money was falling from the sky, and you refused to hold out a bucket. It didn't fit your preconceived notion of how you'd make money, and you weren't willing to invest the smallest iota of imagination or work ethic in adapting to facts on the ground. And here it is however many years later, and you're still blaming your readers for your own oversights. Great.

I got online in 1993 and was immediately plunged into the online news discussions because I first took a University of Colorado graduate class at, and then worked part-time for, the Apple Media Lab, which was based in Boulder. The discussion expanded when the Online News email list was created -- 1994 or 1995. Many of the people talking about online media and online news today were talking about it then. And I think we all explored every possible option in terms of online news. Some outlets were experimenting more than others, but we were all pretty much aware of what was coming, sooner or later. So the people who say newspapers weren't doing anything weren't part of those discussions. People were doing stuff, to the extent that they had the time and resources available to them. The reason the challenges continue today is that there aren't any easy solutions. There isn't enough advertising to support all the online content, and there aren't enough people willing to pay for content to support it that way, either. We do have a lot of people willing to post content for free, so we have news of a sort, but it is different than what it replaces. In some cases it is better and in some cases it is not.

I didn't realize my above comment wouldn't have my name listed. I was the one talking about the Apple Media Lab and the discussions of online news back in the early-mid 1990s. Suzanne Lainson http://twitter.com/slainson

Sorry, Suzanne, I turned off the "identify yourself" feature because spammers had been using it to insert their link spam. I probably should turn it back on.

To clarify, to the previous "anonymous" poster -- I didn't work for Nando. I was in Minneapolis at the time.

As I recall, McClatchy bought the N and O, Chris Hendricks took over Nando, and he hired Eric Grilly to run the one-man ad department. Eric chose to focus on domestic ad sales. I guess Eric was just an idiot for failing to hear the clamor of advertisers demanding to reach the African market. (That's sarcasm, in case you can't tell.)

Yes, I did start with a metaphor, but I followed that up with some very real-life examples. But absurd that the newspaper exec / store owner is saying "get the hell out of my store." No. Not at all. Go back and look at the quotes from the News Corp execs. They're saying these people from Google aren't worth much, if anything -- to the degree that they don't even want them coming into the store, despite oddly the fact that when they walk in, they don't even eat the free peanuts in your metaphor. I mean, let's get clear. With the WSJ, it allows people from Google to freely read stories (just as it purposely puts many stories out for free to anyone coming from anywhere, even directly to the site without a subscription). But Google people don't have to get those free peanuts. The WSJ could be listed in Google and yet visitors coming from there would get a "subscribe" message, if the WSJ wanted. If 99% are the lookie-lous you write them off to be, why wouldn't you want the 1% that's still not costing you a penny? Especially when you're actually going to Google and spending cold hard cash to attract people to your site through ads. Let me come back to your AP blocking. The server loss is minimal. Like really minimal, to the degree as not worth mentioning as an issue, these days. If you have to worry about it that much, you've got a bad host. As for the local ad to an out-of-market users, bad on you. Seriously. OK, if you're too little to deal with IP targeting to filter out showing non-local people ads that are different from your local ads, you wasted a potential revenue opportunity. I mean when I surf over to various UK newspapers, they manage to show me locally oriented ads to my location (the US, California). But OK, so you're doing that now. Of course, eventually if you're serving out those AP articles, the AP's going to be demanding at some point that you block Google -- or try to figure out a way for Google to block those specific articles -- or we'll see. But mainly, you miss the point. These are not "random" people coming to you from a search engine. These are people who have expressed a direct interest in something. They wanted to read a particular story or better, they actually entered specific search terms. Google is still making plenty of money right now, correct? Where's the money coming from? Much of it from search advertising, advertisers who are paying significant amounts in hopes of getting 2-5% of the click through from Google's results. And they do this because a search visitor is anything but random. They have a particular need, a particular desire, and they express it directly. There's real value there. They aren't lookie lous. They can be tapped into. But hey, if Murdoch's empire is that dense that they can't do anything with them, they remain something else -- an audience. Because there are still a lot of intangible benefits to the WSJ having a sizeable audience reading its stories, when it is trying to convince various newspapers that they should be dealing with it. But if Murdoch wants to pick up his toys, pull out of Google and not even try at all to tap into millions of worthless visitors he gets from them (by going all subscriptions but staying in there; by better ad targeting; by other things), then someone else will benefit.

That random query, "how to get dog pee out of carpeting." That's not random. That's classically specific. Someone has a real problem there, and they are in need of a solution. How much more specific could you get? I don't know that this is a typical query that a newspaper site would get, of course -- which kind of skews the discussion. But let's say it was. Suddenly, your news site starts ranking well on Google for this topic, maybe like blufftontoday.com does now, when I look. Well, get some targeted ads on that page. If AdSense won't do it for you (by the way, agree with it being opaque and have written wanting more transparency there for ages), and there's significant traffic, tap into some other resources. I see plenty of ads on Google for dog pee odor removal and deodorizers. Get them up. Remember, this content, you created once, pushed it out the door, probably aimed at your local audience and now probably gets 90% of its traffic since then, if not more, from outside your audience. But they're valuable! You've stumbled into a top ranking that many sites would kill to have -- and if they can't get it, they'll pay to be part of it.

OK, OK ... I've turned on the feature that prompts you for your name when you leave a comment, so that I can tell who's speaking. Yet another spam magnet that I'll have to watch.

Go back and look at the quotes from the News Corp execs. They're saying these people from Google aren't worth much, if anything -- to the degree that they don't even want them coming into the store, despite oddly the fact that when they walk in, they don't even eat the free peanuts in your metaphor.

Yeah, as I said, far be it from me to defend Rupert Murdoch. He and his lieutenants are saying asinine things. But actions speak louder than words. While Murdoch is stomping and huffing about making people pay, and his Dow Jones chief, Les Hinton, is ranting about "digital vampires," the truth is that Murdoch is operating 27 free over-the-air TV stations, and producing and selling content to a thousand others, and Hinton is operating free over-the-Internet Marketwatch.com and a stable of other free sites.

Nothing they say is real. None of it is about rights or fairness or sound public policy; it's 100% poker theater aimed at eventually adding to the pile of money at Rupert's end of the table. It's pretty much the same as how Fox News deals with facts; they're not important. It's a game of power and money.

That random query, "how to get dog pee out of carpeting." That's not random. That's classically specific. ... Well, get some targeted ads on that page.

It's highly specific for the person looking for the answer. But my business is helping local advertisers move merchandise, and from their perspective, that user is random and irrelevant.

This is the scale issue that I identified in my original post. BT ranks #1 on Google for getting dog pee out of carpeting, but that delivers less than a thousand pageviews a month. Try calling somebody on Madison Avenue with a deal at that scale.

So we're left with ad networks that deliver literally tens of dollars. AdSense and Content Match advertising works fine for the ad networks, because they have the scale to compensate for the extremely high failure rate of such systems. For local sites they're the equivalent of finding quarters dropped on the floor.

Local advertising by local businesses to local customers is a huge business, and that's where local newspapers need to concentrate. Any value from random users is close enough to zero to not really matter. The equation may be quite different for the Wall Street Journal, the New York Times and USA Today. But they're three newspapers out of thousands.

BTW, per Compete.com stats, WSJ.com got a pretty nice traffic spike in October. You have to wonder whether all the palaver and bluster about paywalls and Google actually attracted some attention. All publicity is good publicity. Or as Mae West said, "I don't care what the newspapers say about me as long as they spell my name right."

I assume "some responses" above is from Danny Sullivan, and all I can say is, as smart as he is about everything else, he clearly hasn't a clue about local news publishing online. Steve, you're right in both your post and comments. The wisdom of lots of experience in local news publishing comes through loud and clear. I've nothing against Sullivan, but he's provide a good example of how very smart people can go off the rails when they start pontificating about local online news publishing without any depth of experience. For the local news publisher it's just a simple, basic truth: there is some traffic that arrives both through search and aggregation that is absolutely of no value, and possibly even damaging. And to suggest there might be a way to sell ads to them both overstates the reliability of the technology to do so, the low value of the scale of that audience to a relatively small traffic local news site, and how such non-local ads could potentially damage the local sites local branding. To put it more simply, for the local news site, non-local traffic is much too difficult to turn into meaningful dollars. The wasted effort could be better spent building up the local business, not chasing pennies. Google advertising only works because of the significant scale of Google. Even the largest local newspaper publisher can't take advantage of that scale in any meaningful way. Further, you'll not that there hasn't been a mad rush of local businesses to locally targeted advertising on Google, as was predicted would happen a few years ago. It never happened, and it won't. Almost all of Google's "local" advertising is made-for-web, national companies trying to target local, not true SMBOs. And the great challenge for local news publishers is how to better serve local publishers. Anything that takes away from that effort, which takes full concentration, is merely a distraction. From my reading of Mr. Sullivan, he wants to spend more time on the distraction.

Seems to me like the solution to your problem can be found directly in the problem itself - scale. You can make more money by selling to local advertisers and ignoring non-local traffic? Don't display ads at all to non-locals. Better yet, run your ad campaign with an If/Then display. If it's a local visitor, show Ad A. If it's non-local, show Ad-Sense or some other large ad network and let scale populate those extra page views. This improves your click to display ratio, requires no effort from your sales team and pulls in a little extra money.

I value Steve's experience and opinions as well as Howard's, but I have to disagree on this. I think Jeff Jarvis has nailed this topic better than either Yelvington or Sullivan: http://bit.ly/7zZTQ5 In Cedar Rapids, the "worthless" visitors from out of town might be people considering a move to town, and we want to start connecting them with businesses in the community. Or they might be people who used to live here, who still might be valuable customers for local businesses (especially if we help those businesses sell product directly, as we hope to do under the Complete Community Connection approach of moving beyond advertising: http://bit.ly/RtJO7). Or they might be Iowa Hawkeye fans or parents of University of Iowa students, all of whom have varying value to local businesses. And some of the visitors who arrive through Google are local people who do their searching through Google, rather than through our web site. None of those visitors is worthless. And to get their traffic (and their value to local businesses), we need to welcome the Lookie Lous. Howard and Steve are right that local traffic is the most valuable and local sites should pursue that traffic the hardest and recognize that Google will send you some of that traffic. Google also will send distant traffic with significant local value. I'm glad to welcome some "worthless" distant visitors (and try to figure out how we can make them valuable) along with the valued ones.

Nando was started by the N&O and then spun off as a separate entity in 1995. McClatchy bought the N&O, which included Nando, in 1996. Hendricks did indeed take over Nando but Eric Grilly was at sacbee.com, running the online ad operation there. In 1997 Eric left sacbee.com, as he said, to get out from under McClatchy. That he left for The Star Tribune provided no end of humor as McClatchy purchased it less than a year later. In those days I remember Nando.net as having VERY limited ad serving, I'm not sure they could even sell to their local audience very well. As I think about it now, they had one of the largest online news operations anywhere at the time, why would they even WANT to sell to a so-called "local audience". Their audience was world-wide but they were scarcely equipped to handle it. The Nando news operation was scaled back in stages over the last decade and was ultimately completely shuttered last year when the last of the news staff was laid off. An absolute tragedy if you ask me, but no one did ;).

Steve, I don't think either Steve or I are saying all out of market traffic is worthless, just that a class of out-of-market traffic is of much less value and in some circumstances may be worse than worthless, but actually harmful. That wouldn't include people who moved away or are considering a move or visit to the area. And I'm in no way -- and I bet Steve would say the same thing -- endorsing taking sites out of Google. I'm just saying, be realistic about it. Be honest about it. There's a class of digital gurus who are adamant that we should all fall down on our knees in high praise for any traffic we're lucky to get. But the smart local publisher knows that just isn't reality.