Tale of a Small Town Retailer

My 80-year old father started up a contemporary furniture boutique in 1959, and has weathered the cyclical and catastrophic ups and downs of his local Buffalo, NY, economy -- particularly the 1970s when Buffalo dropped from a top 20 metro market to a top 50. That slide represented population -- and dollars lost. Never large enough to expend huge dollars in advertising, he reached out to neighboring Toronto and Rochester by placing ads in the local YellowPages.

His turning point was the web. In 1995, his son-in-law John Kenyon and I put his store on the web, and for the next 13 years, the online drove the success of the store. The last 12 months have been a tough one for a luxury retailer -- although ironically enough, the local economy is doing pretty well. So online sales are down, and not wanting to stand still, the family business is looking to put a satellite store into a local shopping mall which attracts nearly 20,000 a day, 20 percent Canadian. The purpose of the store is to be a representative outpost of the larger, more secluded location.

The objective of this post is to show how real-world retailers, small business owners who represent employment for more than 50 percent of the population, are grappling with high costs of advertising and declining margins. When we in the media industry get together to pontificate -- we forget about this half of the equation: the small business owner.

In the past it made better sense to go for the long-ball, as these folks could be a pain in the ass to service, since they money they spend is usually their own -- and they are more emotionally tied to results. However, with the winds of change, the ball ain't sailing out of the park like it used to and media is forced to figure out how to serve that other half. But here's the thing, that other half doesn't feel they have a lot of viable, affordable and effective options when it comes to getting their messages out there. My dad's business is lucky; he had a son-in-law who understood the vision of the 'Net and a daughter in the digital business and the combination yielded a top-notch site long before others thought to get an email address. Many others his size didn't have the vision or know-how.

For newspapers and magazines to thrive on the web, they need to figure out how to serve this end of the market: the folks who would rather spend $500 a day to open a second location to reach 20,000 people daily -- because they aren't sure that $150,000 in advertising will yield the same results.

FT's Newssift: Power of Metadata Exposed (Finally!)

There is so much to celebrate with the Financial Time Group's debut of Newssift. Like a debutante at her coming out ball, Newssift turned heads and received appreciative glances. The question is will the market step up and marry itself to the new business search engine (a flirty glance is one thing, parting with actual dollars is a real commitment). The site, which is currently in beta is free -- for now. The goal of FT is to get visitors to consider the site their home for business intelligence -- after parlaying subscription dollars.

The real beauty of Newssift is in what you can't see: The metadata generated by semantic analysis. Yes, the interface offers visitors a very simplified mechanism from which to find the information they need. But it doesn't matter how sexy the interface or powerful the search engine (in this case Endeca) if the metadata extracted is not linguistically and computationally sound. As the online media expert for Nstein Technologies, I've been aware of this project for some time -- and am thrilled with Nstein's role in generating this rich metadata -- and am further thrilled that my job of educating others to the value of semantic search - is being made so much easier with Newssift's launch!

Unlike most search engines, which basically start with a blank slate and require users to type in a phrase, Newssift anticipates that a reader might be interested -- in what others are interested in. A data table presents top news of the day -- broken down by People, Places, Organizations, Business Topics & Themes. Readers can select one of those parameters -- or use the search bar to type in their own queries.



Now here is what makes Newssift unique. Like the name suggests, readers can continuously sift through information until they find the pearls of wisdom they are looking for. Each time a result is displayed -- readers can refine their search (mine down) using the table or the search bar. This may be one of the best instances of having these two querying mechanisms coupled to work together - because both are searching the metadata! (Too often the two methods are exclusive of each other.)

The result is that the interface provides a type of funnel to the information desired. The constant changing of the column parameters allows people to see what other information may exist -- enticing them to read things they may not have even considered. This process is critical information publishers for several reasons:

1. The process itself means people will likely stay longer and consume more pages. (Robin Johnson, CEO of Newssift, told me that early metrics showed a 3x increase in page stickiness -- all through contextual linking).
2. People don't know how to find information -- because they don't know what question to ask! (A fine list of why search engines are typically broken here.)
   
3. Seredipity is brought back into the equation. I may want to find out what's new about Swine Flu, and when I see Italy as an option -- it may entice me to discover what the Italian slant might be.
   

This initiative was in the works for nearly two years. And if you have ever hatched a brand new business within the walls of an old stalwart one, you know it is no small task. Johnson and his team not only had to create a business model that worked -- but they had to assemble a team of vendors like Nstein, Endeca and Lexalytics who could see the vision, adapt to the clients' needs and make the whole thing crystalize.

Newssift has accomplished much just by just package news in a faceted format that will entice many to dig deeper and in backing up this form with semantic metadata to make sure that the most relevant information is provided. I don't have a crystal ball, but my sense is Newssift will become a shining example of how information can be found, explored and digested -- putting to rest forever the idea of mere search.

A-B-C Revenue Generation: Do the Little Things Well

In baseball, lots of singles and doubles are more prevalent than a grand slam. More games are won with what former Yankee's Manager Joe Torre called "A-B-C baseball," a reference to doing all the little things right in the game.

On a hunch, while at the min day Summit in New York, I bumped into Hanley Wood President Peter Goldstone, and asked him what percentage of ad sales came from grand slams (major accounts). "Great question," he said, "we're doing an analysis right now and more and more it is the smaller accounts -- no doubt we need to do much more for this audience." Philippe Guelton, COO of Hachette told me it was dependent on the title, with Car & Driver supported mainly by eight large accounts, while the ratio was flipped for shelter magazines.

As large ad expenditures ebb (hopefully for just the short term), it is A-B-C baseball that will increase web revenues. But setting up an ad department predicated on selling grand slams is not the way to get there. "We had to reduce the cost of sales," explained Jeff DeBalko, Chief Internet Officer for Reed Business. "We can't be flying people around the country for $30,000 accounts."

Look for inside sales departments and self-serve ads to be the new norm, with many of the execs telling me that they are looking to set up directory listings. The key, said Jim Spanfeller, CEO of Forbes.com, is to look for ways to monetize differently. "Move your brand to the web," he told the audience, "not necessarily your product."

It's Mine -- But Not Just Mine Alone

Was on vacation last week, so just opened Mine, Time's new effort to give me news I will peruse.

The slim magazine features a silky matt cover and a compilation of stories decided by choices I made of whether I prefer sushi or pizza (both) or dinner with Socrates or Da Vinci (I can't remember my choice). Whatever I opted for provided me with an article from Travel& Leisure, Real Simple, Food & Wine, Time & Golf magazines. Each story maintained the brand of its parent -- so formating jumps from a serifed font, to non, back to serif, which was odd feeling. I understood what the marketing team was thinking, but it felt less like a magazine directed to me -- rather than a sales book for the brands.

I Googled one article, "South Africa's Beautiful Wine Country," and was stunned that the story was over two years old. I wondered if the nine restaurants listed were still even in business (in which case, that would be another story, "Restaurants Live Longer in South Africa."

The sole sponsor for the project was Lexus, and one ad touting it's Navigation System personalized "my ad" by inserting "fine food," "bistros" and the name of my town. I only know that these words were inserted because inexplicably they changed they shaded those words in the copy. Looked contrived.

I'm not saying this wasn't a good idea -- indeed I give huge kudos to Time, American Express & Lexus for being so innovative. Indeed the buzz it generated and the fact that I spent hours reading every morsel and dissecting what I was reading certainly surpassed the mere seconds people otherwise might spend on a page.

Yes, there were some glitches, mailing, stories chosen, old stories, and questionable decisions on layout and creative. But the bigger story is that the trio were willing to try something new, to get people excited. And in that regard, Mine is a huge success.

Quick Notes

• Bad news follows good for the New York Times, as it reports losses of $75m. Guess that is $15m per Pulitzer.

Schmidt's Advice to Publishers

I was stuck at home with the flu so couldn't get out to the Newspaper Association of America's conference in San Diego. Bad one to miss. Most of recent years' events would have tested an insomniac's affliction, but this year, Eric Schmidt was brought in as a headliner to kick some -- er, motivate publishers to seek new ways to reach out to readers and focus on, wait for it, advertising.

Now, really, that is priceless: The 10-year old Internet prodigy telling the century old media scions a thing or two about audience development and making money from eyeballs. According to my friend and Nstein colleague, Christopher Hill, who bore witness to Schmidt's carefully chosen words in his closing keynote, Schmidt attempted to move the dial from foe to friend, appealing to publishers' egos by calling papers trustworthy and curators of the public record. He almost sycophantically exalted the printed form versus the web presentation. Simultaneously he wove in bits on cloud computing, networking and data mining. All of these strings were tied up with the meme of innovation. With these technological tools and newspapers' strengths for story-telling, he gave advice on how newspapers be more relevant -- and make money. But the fun began when the Q&A started. Someone asked Schmidt to speak frankly about what newspapers have done right -- and what would he do if his 'fantasy' came true and he woke up to find himself a publisher! He praised them for getting onto the web back in the 90s. Then he took a circuitous path to a direct hit: "What have you done for a second act?"

He said that first and foremost he would try and figure out what his reader wanted. Ha!! Those words transported me back to 1995 -- when we were launching two new "ezines" for IN Jersey's portal: The Surf Report and Neo. The duo were unapologetic in its embrace of Gen Xers who shunned pro-sport coverage (a staple of newspapers) in favor of X-treme action like surfing and (snow & skate) boarding. Our coverage was superb (yes we used real writers) and our national and even international following for both were robust and enthusiastic. At the time we asked our sister dailies if they wanted to repurpose our efforts in print. I might have just as well asked them if they would like to pepper their food with cockroach feces.

Newspapers thought they could shovel their product from their editorial systems to their web content management systems, and all would be right with the world. Any attempt to create content outside the bastion of the newsroom was met with contempt. There was no room for innovation for a newsroom back then. Neither in how they presented the news online - nor in their understanding of what was news.

While everyone blames the Internet for eroding print sales, could it be that the real problem was that newspapers didn't adopt coverage to their changing audiences? As if playing hot potato with NFL and MBA coverage "no, really, you take it" the major tv networks realized they just couldn't get the fan following particularly in the 18-35 audience -- and cut back accordingly. And that was a decade ago. And yet, papers devote proportionally massive real estate and man-power to covering pro sports, yet are derisive when they cover surfers who "flaunt the laws, and surf during rough weather." Just whom are they appealing to?

Last month at NAA's MediaExchange, Chris Dorsey, Digital Media Sales Director for Forum Communications paper in Fargo, ND was on a panel on contextual advertising. Dorsey was explaining how contextually speaking, Fargo is a cold place, and what is of interest to his constituents is what to do when it is cold -- or when the river rises. Beer blasts and drying up wet basements. So Dorsey created a home-page product called "Marketplace Offers." For $149 a month, businesses can advertise Ladies' Nite Specials or offers to remove mold. Every listing has a print or mobile response -- all facilitated by the paper -- a vendor doesn't need to have an IT staff at the ready to do this. Readers can subscribe for daily emails of specials. This morning's count: 125 business offers, or nearly $20,000 in monthly revenue for something with that should be exceedingly high margin (self-serve sales origination page).

This is what Schmidt was talking about. Know your audience and create a service that reaches it. Don't try and lock your content behind a paywall -- unless you cover a niche market and have created value for that information. What information do people find valuable? Is it alerts to buy a new car or to be notified of job opportunities?

The lesson is not just for newspapers, but magazines, bloggers, ecommerce folks, anyone. People pay for that which they perceive to be valuable – whether it is a lead, a job tip, where the ladies' night specials are -- or how to dry a wet cellar.

Ad Placements -- Contextually Speaking

In the biz we call it "make goods:" when an error or omission with an ad calls for the publisher (or broadcaster) to make an adjustment. An example would be running a car ad next to editorial about a car recall. In fact, in print, there are proof readers who are responsible to catch just those types of errors.

The online world is a bit more dicey, as ads (or even editorial) are usually served dynamically, which is how the Drudge Report had this unfortunate combination of a gun promo above the tragic massacre in Binghamton, NY. So if proof-reading is not the answer, how can online publishers safeguard themselves from this type of truly disastrous positioning?

The key is to be able to contextually understand the nature and tone of a story. General Motors would no more want its advertisements next to a story of its current economic malaise than it would next to a recall article. One solution would be to have the editors tag the story as being negative or positive. It's a great idea but limited in practicality since stories may run that are from wire services, stringers or archives where tags would be limited. Further, it's debatable whether editors would take the time to tag (accurately) anyway.

A better solution would be to automate the process of tagging and create metadata by semantically analyzing the content; using a taxonomy for categorization and sub-classification, authority files for entities and analyze by tone and sentiment. This would prevent specific categories of ads from running on certain types of stories. True, the challenge is made more difficult if the ads are being served from a network. However, this should be an easy programming work around.

If I were a brand advertiser advertising online, as part of my risk management I would want assurances that my ad would not run under conditions that might damage my brand's reputation. Or else I would want a make good.