Wall Street Journal’s digital strategy amidst the digital revolution
NOTE: The following is my final paper for my class in business media at UNC Chapel Hill. A big thank you to WSJ’s Alan Murray, Rahul Chopra and Luke Miller for speaking with me for this article!
Alan Murray, Deputy Managing Editor and Online Executive Editor at The Wall Street Journal, in 2012 stated that â€œmedia now becomes popular by consumer choice, not lack of choice.â€ With low barriers to entry and non-existent switching costs, digital consumers today are not only less loyal to any one news organization, but less willing to pay for content that they have, up until now, assumed was free.
Thus is the root cause for why newspaper organizations are now strategically reshuffling their business models in order to adopt and adapt to the changing digital landscape. Wall Street Journal, on the other hand, continues to enjoy the strong revenue flow from its tried-and-true digital subscription model and has become the de-facto standard from which all other print news organizations benchmark their latest digital strategies.
Wall Street Journal Protects Its Nest Egg
According to NewsCorpâ€™s 2011 annual review, both print and online circulations have risen every quarter since NewsCorp acquired Dow Jones in 2007. More specifically, print and digital circulations were up 12 percent in 2011 compared to 2010, and print and digital advertising revenue increased 11 percent over the year prior.
Murray disclosed that in 2011 the digital business made half as much as the print business and that print still garnered 85 percent of the total advertising revenue. Digital revenues were split almost evenly between advertising and subscription.
Murray said that there are approximately 1.3 million subscribers and if a print subscriber was worth $1, then a digital subscriber is only worth $0.25. Called â€œdigital quarters,â€ Murray said that the value falls by at least 75 percent when moving subscribers from print to digital, and that in some cases it could be called â€œdigital dimes.â€
â€œThere is no way you can command the same kind of value for the advertiser,â€ Murray said. â€œIn order to make the digital transition you have to invest and NewsCorp has the resources to make those needed investments.â€
General Manager Alisa Bowen told Beet.TV in a 2011 video interview that more than 200,000 people digitally subscribed to Wall Street Journal on their iPads and Android tablets and eReaders in 2011. In addition to the flagship English app, they have also deployed versions in multiple languages, including Japanese and Chinese.
Bowen noted that the Wall Street Journal tablet application user spends approximately twice as long on their app and views roughly twice as much content versus an online PC user. Moreover, new subscribers who begin viewing Wall Street Journal content on an app more often switch over to also read content online and in print than vice-versa. This suggests that mobile technologies is driving loyalty back to the flagship paper and website and creating additional value for its subscribers.
On the revenue side, Bowen acknowledged that they still have a long ways to go in integrating advertising into mobile technologies but that they are starting to offer cross-platform advertising packages for its advertisers.
News Sites Clamor for Online Advertising Revenue
According to Nielsen, digital news consumption has increased by double-digit percentages since 2009, most recently up 17 percent from 2010 to 2011. This increased readership helped account for a 23 percent online revenue increase during this period.
While online revenue continues to increase at an impressive rate, however, the opposite is true for print advertising revenue. According to the Pew Research Center:
â€œIn 2011, losses in print advertising dollars outpaced gains in digital revenue by a factor of roughly 10 to 1, a ratio even worse than in 2010. When circulation and advertising revenue are combined, the newspaper industry has shrunk 43% since 2000.â€
Thus, news sites scramble to monetize their Web properties to offset the dwindling print revenue. By 2012 approximately one in ten daily newspapers have erected a digital paywall or subscription plan. More than 150 papers are using a similar metered-usage model that the New York Times enacted in 2011 and another 100 are expected to do so in 2012.
Google Ad Network still rules the online advertising industry according to comScore, with 205.4 million unique visitors in March 2012. This equals 91.7 percent reach, with an estimated total U.S. Internet audience of approximately 224 million visitors. In comparison, Facebook saw 70.9 percent penetration, and Microsoftâ€™s Bing network garnered a mere 40.1 percent reach. Google may not be the foreseeable strong hold in online advertising, though. According to the Pew Research Center, Facebook is projected to garner one out of every five display ads sold in 2015.
Regardless of the advertising source, display ads continue to be the dominant advertising medium, generating $12.4 billion in revenue in 2011, a 24 percent increase from the year before. Banner advertisements make up the largest share of display ads, seeing a 21 percent increase from 2010 to 2011, according to the Pew Research Center.
Display ads also make up a large percentage of the mobile ad sector, but significant revenue is also attributed to text and search-based ads, which online news sites have yet to fully optimize. Search ads on mobile devices brought in $653 million in revenue in 2011 according to eMarketer.
Optimizing Video Advertising Potential at WSJ
Rahul Chopra, Director of Video for Wall Street Journal Digital Network, said that they recently began partnering with YouTube to produce a daily 30-minute show based on their lifestyle and culture content called â€œOff Duty.â€
As of May 1st, 2012, the YouTube channel has attracted more than 20,000 subscribers with more than 18 million views to its 45 videos.
â€œIt is an experiment for both of us,â€ Chopra said, referring to both Wall Street Journal and YouTube. He is assessing the â€˜experimentâ€™ on a daily basis before deciding whether or not to roll out other versions.
When asked how advertising revenue differed between hosting the video on Wall Street Journalâ€™s servers and capturing 100 percent of the ad revenue versus hosting the video on YouTubeâ€™s servers and splitting the revenue with Google, Chopra said that the partnership gives them â€œsignificantly higher CPMs than average for the media industryâ€ and on other video sites, such as Hulu.
Although sources vary, a conservative range for average CPM in the online media industry is $3-$10, with targeted content sites and media-rich content ranging anywhere from $10-$20. While not disclosing an exact CPM for YouTube videos, Murray said that a $50 CPM for video advertising was not impossible.
According to eMarketer, video ads are expected to double in the next three years, to a projected $8 billion.
In order to fully monetize video on WallStreetJournal.com, Chopra said that all video is stored in front of the paywall in order to develop a strong brand and attract new users. However, Murray acknowledged that this may change:
â€œAll videos are free for now because of high demand,â€ he said, â€œ but we may move some behind the paywall in the near future.â€
Murray said that currently the YouTube partnership is not as profitable as in-house video, but that there is great potential. Moreover, he stated that they have sold more video ads on their site than they currently have space for, thus resources is currently their limiting factor.
Chopra said that there are currently 16 full-time video producers for Wall Street Journal. In addition, Murray said that there are 2,000 full-time reporters around the world and that in the near future there will not be a difference between its journalists.
â€œOver time the difference between newspaper and TV will disappear and the tv reporter role will go away,â€ he said. â€œEveryone will be journalists who can both report and produceâ€ all types of stories for various channels.
While Chopra said that they use a combination of pre-roll, mid-roll, post-roll and display advertising to monetize their videos, he said that pre-roll ads are their fastest growing ad unit.
Murray disclosed that its new program â€œWSJ Liveâ€ viewable by TV using Xbox and Apple TV is 100 percent monetized by these various advertising options. After stating this fact, Murray acknowledged that this makes him wish that there was an online version of a cable subscription in which Wall Street Journal could take part, presumably in order to diversify its revenue more evenly between advertising and subscription.
On the other hand, rather than envisioning a new technology or revenue model, Chopra said that he expects video advertising revenue to still be the dominating force into the foreseeable future due to the ability to better target advertising to its viewers. Specifically, they currently do not use demographic data collected from its subscriber base, but consider using publicly available viewing history and patterns to detect user interest and tailor ads accordingly.
The SoLoMo Craze (Social, Local, Mobile)
According to the Pew Research Center, nearly four in five U.S. adults own a computer, two in five own a smartphone and one in five own a tablet in 2012. Moreover, more than half of mobile owners use their devices to consume news, and a quarter use more than one device for their news intake.
Luke Miller, Lead Mobile UX Designer at Wall Street Journal, said that his team prioritizes revenue prospects in their mobile designs from the beginning. For example, he said that a premium paid mobile channel would be designed to better optimize traffic more so than free versions.
Since mobile has on average 80 percent less content than an online news site, Miller noted that, in his opinion, the traditional â€œabove and below the foldâ€ ad placements is not relevant in mobile design. However, he still has to battle with â€œbanner blindnessâ€ where users get accustomed to typical ad positions and tend to overlook them on future visits.
When asked how to fix this issue, Miller noted that tension arises when advertisers want to design standard ads that can be used across organizations, whereas his team would ideally like to design custom ad spots to fit more strategically into their UX framework.
Miller acknowledged that his team did not design different interfaces for free versus paying subscribers — likely due to budget constraints — and that all users see the same number of ads on iPad devices regardless of their subscription. If they had the resources to develop two distinct mobile apps for these two segmented groups, he noted that advertising potential could increase since they could then better target ads depending on customersâ€™ willingness to pay.
An increasing number of U.S. consumers are turning to social, with more than 133 million active users on Facebook and 24 million on Twitter. However, according to a Pew Research Center survey, only 10 percent of those surveyed state that they frequently visit news links recommended from their social networks.
Regardless, news organizations are continuing to flock to social sites to establish presences and join the B2C conversation. For example, Yahoo recently stated that its social reader has more than 25 million users and saw a 600 percent increase in traffic coming from Facebook. According to the blog AllFacebook.com, The Washington Post recently launched a social reader app on Facebook with more than 3.5 million monthly users.
Google also launched a social reader, called Google Currents, in December of 2011. The mobile app provides content from 150 news organizations and expanded to include international availability in April of 2012. Example partners include Forbes with 1.3 million subscribers, The Huffington Post with nearly 230,000 subscribers and Wall Street Journalâ€™s AllThingsD with more than 170,000 subscribers.
Other News Sitesâ€™ Attempt at Pricing Users and Assessing Loyalty
New York Times Companyâ€™s freemium model allows free access to a limited portion of its articles, and then moves to a tiered subscription model for more loyal readers. According to comScore, New York Times Digital saw 75.7 million unique visitors in March 2012, making it the 14th most visited website. The Timesâ€™ now boasts more than 390,000 digital paying subscribers and, in April 2012, reduced the number of free articles for non-paying consumers from 20 to 10 a month. Thus, so far only .5 percent of its monthly visitors are paying for access to its content. It is still to be determined whether the reduced number of free articles will convert more readers to paying subscribers.
According to PaidContent, Gannett will implement a paywall on all 80 of its community papers by the end of 2012. The paywall, not to include its flagship paper USA Today, will be customized in terms of bundling and pricing for each market. Gannett community newspaper chief Bob Dickey told Poynter that he expects these paywalls to be worth $100 million by 2013. Gannett sites garnered 50.3 million unique visitors in March 2012, placing it as the 22nd most visited website according to comScore.
The Washington Post Company, in contrast, has publicly announced that it does not intend to enact a paywall until two events occur: The Post attracts more loyal viewers to its site and it has improved its information technology, including both hardware and software.
Approximately 26.1 million unique visitors trafficked sites owned by the Washington Post Company in March 2012 according to comScore, making it the 41st most visited online property. Traffic to WashingtonPost.com was not disclosed.
In defense of its free access, Washington Post op-ed writer Patrick Pexton wrote on the site in March of 2012, â€œThe other thing to consider is that if everyone else is putting up paywalls, and The Post doesnâ€™t, it has a huge opportunity.â€
Which Way is Up?
Whether or not remaining a free resource can be viewed as a financially-savvy â€œhuge opportunity,â€ the four distinct actions — subscription model by Wall Street Journal, metered-usage plan by the New York Times, paywall by Gannett, and free access for The Washington Post — prove that there is no set strategy for news organizations on how to attain digital financial independence.
Regardless of the organization and situation, everyone is faced with Murrayâ€™s â€œdigital dimesâ€ and â€œdigital quartersâ€ reality and must invest accordingly in order to strategically shift its consumers to digital while monetizing it sufficiently in order to offset its dwindling print revenue.