“The Sell Sider” is a column written by the sell side of the digital media community.
Today's column is written by Greg Mason, CEO at Purch.
The New York Times made its own headlines when it recently acquired Wirecutter, the five-year-old online product review site, for an estimated $30 million.
For one of the world’s biggest and most respected publishers, the acquisition of a niche site like Wirecutter is a low-risk and small-scale investment and builds on its roots in service journalism, as reflected in its news and lifestyle coverage. The New York Times sees itself as an essential service and Wirecutter is an extension of its commitment to servicing users.
But the real reason for the acquisition pertains to publishers' concerns about the future of the traditional advertising market. Wirecutter is a way to combat this. It’s a very utilitarian site, and with so many lifestyle sites and general content, these niche plays that go beyond entertainment have tangible value, particularly to augment a generalist media entity.
The Times and other publishers aren’t just suffering from the decline of print ad dollars. They simply aren’t seeing the growth they expected or need from digital ads. Facebook and Google are taking 70 cents on every new digital ad dollar and the fight for the remaining 30 cents is hypercompetitive.
Clearly, the Times wants to diversify its monetization and revenue lines. Acquisition is the quickest way to do so, but The New York Times will now have to think about strategically linking the systems or whether to keep Wirecutter as a standalone brand.
It’s not just the Times that is looking to diversify. More publishers are wading into ecommerce and affiliate waters because it’s a lucrative business when done right. I would advise them to do so cautiously.
Publishers can’t add affiliate links and buy buttons to their pages and expect new revenue automatically. Wirecutter serves a very unique purpose and attracts a very specific audience that is looking for specific content. For publishers that have built a following based on general news or entertainment, the same strategies do not apply. Like the Times, it’s important to consider the users’ standpoint, thinking first of their needs and how publishers can service them before weaving in affiliate links and buy buttons in a contextual way.
This sort of monetization belongs on low-funnel content that attracts consumers making buying decisions, rather than general news pages where buy buttons and affiliate links would appear out of context and feel more like an ad than a native, helpful tool.
Before trying to marry content and commerce, publishers must first ensure the ecommerce strategy extends directly from their core content strategy. Publishers must ask themselves where the natural bridges for commerce exist and what products and services actually extend their brand mission overall. They must also have a deep enough understanding of the core demographic profile or interests of their audience to truly provide a valuable service.
Then there’s the consideration of integrity. With all forms of advertising, there must be a separation of church and state with editorial on one side and advertising on another. With affiliate marketing, publishers must also be transparent about how they’re making money so users understand this model. Consumer expectations are evolving and they commonly see affiliate links all over the internet. The key to maintaining trust and integrity is clear communication and sitewide rules for placement and usage of affiliate links.
Any entity focused on service-oriented publishing must ask what problems their readers are looking to solve and how their content can help – then they can monetize in ways that make sense off of these two pillars, as not every revenue line makes sense for every publisher. For product review sites, it’s helpful reviews and comparisons so consumers can make the most informed purchase possible and then some suggestions on where to buy. It’s content that helps address a fundamental question, then naturally leads to a product or service – essentially working them down the funnel.
The New York Times didn’t acquire Wirecutter just for the revenue it will bring in – it did so because it can learn from Wirecutter. Publishers looking to wade into ecommerce can adapt this model for a host of products and services beyond just tech – but the same principles will still apply. It’s a profitable business when done right, but requires user focus and quality content.