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Facebook’s Instant Articles starts populating with news stories this week, as questions abound about the shape and impact of Apple News. Meanwhile Twitter is figuring out how to hire editors for its Lightning curation product and Snapchat is strategizing its moves beyond the success of its Discover news product. It does seem like the Age of Distribution, all of sudden.
Our biggest distribution platforms have rediscovered the enduring value of news. Publishers’ eyes are widening as they look at the potential of reaching huge younger audiences through the windows of today.
Yet, some publishers have worked the distribution game for years now. They’ve learned something, and that learning helps them think about what’s on the table now. For Apple News, both its Atlantic and Quartz brands find themselves included at launch, with Atlantic also in Facebook’s foray.
Michael Finnegan, Atlantic Media’s C.F.O. and S.V.P. for Corporate Development, joined the fast-growing company four years ago, and has built an operation supporting Atlantic’s overall growth and its launch of Quartz, the business start-up that has managed to take on the big boys in its field.
Finnegan has worked many of Atlantic’s distribution deals, and can offer a rare big-picture view.
“Let’s say we reach 35-40 million people through owned and operated sites today. Five years from now, our brands could be reaching 300-500 million worldwide, but not if we insist that all of them have to interact with us on our terms on our site,” he told me.
“That’s the future I see. That’s the future a lot of major media companies see. Some of them are running towards it faster than others.”
While many critics have likened this recent publisher sprint as one akin to running with knives, Atlantic has developed a system for thinking about distribution deals—how to approach them, measure them and compare them. They involve metrics, monetization and some sense of the end game.
Given that experience, the company’s view of this new emerging distribution landscape is extremely timely.
Atlantic Media’s fundamental goal: growth. We can see in the self-reported stats of this private company how much of that it has produced:
· Audience: Up about 30% in digital audience growth;
· Revenue: Up 19% for calendar year 2014 to more than $100 million in revenue for first time in its history, as it has added and extended its product suite. The company says it’s on “on track” for 20% revenue growth this year. “Growth in digital advertising overwhelms any print declines,” the company says. Events growth year over year is closer to 15%.”
· Staff: Atlantic Media now employs 610 staffers, up 28% from 475 last year.
Finnegan believes that Atlantic’s wider distribution strategy has stoked that success. The company has developed tools to monitor off-site business performance of content.
Though the direct new traffic that Atlantic may get from its direct partnership deals may just be in the five percent range, it’s a five percent that offers follow-on benefits.
“That percentage is a first-order effect,” Finnegan said. “Another five to 15 percent might come through from other sources as secondary effects. We measure what actions visitors take after an initial visit driven by a partnership distribution deal, like conversions to paid subscription, repeat visits to Atlantic products, signing up for a newsletter, or a ‘follow’ initiated by a new referral. If they say ‘I like you so much, I’m going to follow you on Facebook,’ then that’s a strong conversion for us.”
Finnegan’s staff also tracks across referrals more deeply. “When someone discovers us through one source, what percentage of the time do they come back through the same source, or from some other source? Facebook may be the initial referrer, but we try to see how else our audience might encounter our content.”
This data—run through increasingly sophisticated analysis—is one key to understanding the willingness to play with Facebook and others, and to weigh risk.
Risk cuts both ways. There’s the risk of action, and of inaction.
“We want to be a leader in experimentation, with letting content running far and wide. We let it go a little farther and wider than what we’re comfortable with and then we pull back when we see the damage outweighing the gains. We’d much rather quantify what the potential risk is and then react accordingly, maybe mitigating damage, but at least you have a full view of the risks.”
That risk is mitigated through analytics, allowing cross-comparison of distribution deals—some of which Atlantic has exited.
“You risk more by delaying,” he said. “That’s why you see so many new media organizations jumping in.”
What metrics help assess those risks?
Finnegan emphasizes the huge audience growth and argues that distribution deals don’t need to be held to same revenue-making standard as Atlantic’s own sites and apps.
“I don’t think we hold distributed content revenue deals to the same standard as we do our owned and operated sites. We can offer our clients a much better value proposition on our site, where we can customize, integrate and tailor the experience. Holding distributed content deals to equivalent standard as our sites is an unreasonable expectation because we believe our sites offer advertisers better value propositions.”
So what percentage of offsite monetization would be a benchmark? Finnegan, like his peer leaders in publishing, acknowledges it is fairly impossible to create a benchmark in 2015.
“It’s dependent upon the scale of the distributed content opportunity.” Hypothetically, “if we could get 20X the audience and only 10 percent of the ability to monetize, that would be something we’d want to look at. ”
The math here seems tricky, but then again, it’s worth remembering that the monetary cost of these Facebook, Apple, Snapchat and other extensions is close to zero. Sometimes, we forget that such distribution—fraught as it may be with existential questions—is almost free. In that light, the 20X/10% monetization metric makes sense, even more so if Finnegan’s notion of multiplying the audience by 10X in five years.
Cannibalizaton? Finnegan acknowledges that is real—and inevitable: “There is an opportunity cost, you do create potential to lose audience on your site.”
It is the overall metrics of the business that tell him it’s worth managing that risk.
“Across all Atlantic Media, we see our direct audience grow, and we see distributed audience grow even more. Then we see revenue growth to match audience growth in both.”
Over the last four years, Atlantic has worked a variety of deals, with its one with Flipboard—an early curation model now about to be taken anew to the market by Apple News—emerging as a key one.
Finnegan notes at least three kinds of significant distribution deals.
There are those with companies like Flipboard, MSN and now Facebook, which have an ad monetization component
Then there are the classic deals, with “portals” like Yahoo and also other digital news sites, like the one Atlantic has had with Business Insider. In those, Atlantic provides some full content for some “links back.” As social media has emerged as a major referrer for links, these kinds of deals, which date back to the ’90s, have been scaled back.
“Super-classic” describes a great, if flat revenue world for publishers. In it, business aggregators like LexisNexis and Factiva license content for redistribution and compensate that with pre-web currency, dollars.
Those are just the direct deals, not counting the great traffic poured into news sites around the clock from Facebook, Google, Twitter, Pinterest and LinkedIn.
Those all require tracking and comparing, as business models seem to evolve almost on the fly.
Then, there’s the angelic metric, one hardest to pin down: the brand halo effect.
“Once you flood the zone with your brand, does that make people more willing to click through when they see your brand?” he says. Of course, it does, but then the issue arises for a chief financial officer and industry metrics leader: “It’s really tough to quantify that return.”
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