March 26, 2024

Gannett & McClatchy Ending AP Deal Shows Auditing Content is Necessary

We’re about to wrap up Q1 here at A Media Operator, and I couldn’t be happier with the state of the business. I will do a deeper dive into the business, what’s working, and what’s not for AMO Pro members, so if you’re interested, sign up today.

Here’s the truth: Your business is probably generating a ton of data that could inform its health, but you’re not using it. Because of this, we’re operating blindly, making decisions without that additional context. 

But here are some statistics for you:

  • Media companies that are data-driven are 22% more profitable than their peers
  • Having reliable analytics can lead to 32% higher customer retention

The issue is that there are so many systems beyond the CRM, that knowing where to start and how to get it all talking can feel like a burden. 

That’s where H2K Labs comes in. H2K Labs has worked with dozens of publishers—including being one themselves—and understands the intricacies of these businesses. If you want to make a major leap forward in data in your business, take advantage of a completely free consultation with the team

Request a call today.

It’s important to understand content ROI

The relationship between the Associated Press and newspapers worldwide has always been pretty tight. The AP hires reporters in all states and the vast majority of countries and then licenses that content to newspapers for good coverage without needing people working everywhere.

It was a good deal when newspapers had geographic monopolies and could justify running wire stories. No one reading a Boston-based newspaper would also read a Seattle-based newspaper, so having the same story in both wouldn’t be such a problem. But in the internet era, multiple websites taking the same content just doesn’t make sense.

Gannett and & McClatchy finally realized this and will no longer run AP content across their portfolios save for political data. According to The New York Times:

“Between USA Today and our incredible network of more than 200 newsrooms, we create more journalism every day than The A.P.,” Kristin Roberts, the chief content officer of Gannett, wrote in a company memo.

“With this decision, we will no longer pay millions for content that serves less than 1 percent of our readers,” Ms. [Kathy] Vetter [SVP of News and Audience] wrote in the email, which was viewed by The New York Times. “In most cases we have found replacements. However, we are still working on a universal solution for state ‘wires’ content.”

This isn’t the biggest deal in the world for the AP, which published an article saying:

In an earlier era, when fees from U.S. newspapers provided AP with virtually all of its revenue, such decisions would have represented a financial earthquake for the news cooperative. But AP has diversified its services with the decline of newspapers and U.S. newspaper fees now constitute just over 10% of its annual income.

What’s worth hammering home, though, is Vetter’s point regarding paying millions of dollars for content that “serves less than 1 percent of our readers.” Far too often, publishers focus on creating or paying for content simply because “they always have.” McClatchy is no different. It has always run the AP, so it should continue running the AP content.

And yet, no one cared. If you were to do a similar analysis, you would find that there are categories of content on your sites that very few people engage with. I see zero reasons to continue investing in that content, then. Here is how I’d audit your content.

Before anything, you need to understand the two broad categories of content you might be creating, and they go by several different names. I look at it as either acquisition or retention content. Acquisition content is about bringing new users to your site—this might be search or up-to-the-minute news. Retention content, however, is all about keeping users on your site—this might be niche deep dives on topics without a ton of scale that are being promoted via a newsletter.

Once you understand these two buckets, you need to see if either content category is doing its job. For much of the history of the internet, acquisition content was simply about driving traffic to the site. However, we now know that traffic alone is pretty useless. And so, in the audits I’ve done with editorial teams, we look to see what is actually converting users to something more substantive, such as a newsletter sign-up or a paid subscription. If you know what is getting people to give you information or money, you know what content is worth investing in.

On the other hand, if the reader hits your site and then bounces compared to other pages, perhaps that content is simply not worth it. I’d rather have a lower-trafficked site that actually converts users than a bunch of flyby traffic. I recognize this isn’t how many search-first sites think, but if we get less traffic from platforms, we should be prepared to focus on what converts.

You want to do the same analysis on retention content. If your current readers are not engaging with that content, and it’s equally not bringing in new prospective readers, why make it? I think this is the ultimate point that Gannett and McClatchy made. They were spending a ton of money on content that no one cared about, so why spend it?

If you find that there is content in either bucket that you’re investing in simply because you always have, then it might be time to cut those things off. Refocus those resources to other categories. Find what really gets your subscribed (free or paid) audience engaged and focus on delivering that value.

Should Advance give Condé some of its windfall?

On Thursday, Reddit went public, and Advance Publications, the owner of Condé Nast, found itself significantly richer. According to The New York Times:

The Newhouse family, the media dynasty that controls Condé Nast through its holding company, Advance Publications, is set to reap a windfall of roughly $1.4 billion on Thursday when the social site Reddit is listed on the New York Stock Exchange. Condé Nast acquired Reddit for a mere $10 million in 2006, later spinning it out into a stand-alone company.

That’s before the nearly 19% jump in the stock’s valuation since going public. So, it’s sitting on something like $1.67 billion in unrealized gains, all off a $10 million investment. That’s really impressive. And while it can’t sell for six months due to a lock-up, you have to imagine that at some point, the business will start taking profits when it can.

At the same time, Condé Nast is planning to lay off 5% of the company, which naturally has the union in an uproar, with threats to add more people to the list. But wait a second… Why would Condé Nast need to lay off people if it’s about to get a $1.4 billion windfall? Shouldn’t that be enough to keep people employed?

I have heard these questions from people over the last week or so. And while it’s a sympathetic one, it’s not the right way of looking at it. Advance needs to ensure that its operating business, Condé Nast, is profitable on its own, irrespective of good investments.

Earlier this month, Axios reported that Condé Nast had missed its 2024 revenue target. According to Axios:

Lynch said moving to a place where the company is consistently breaking even has helped it invest in growth areas, particularly in digital. Those investments will help drive a more sustainable business long-term.

By the numbers: Overall, the company grew its consumer revenue 7% year-over-year, Lynch said. Revenue from events, including major tentpoles like Vogue’s Met Gala, was up 19% year-over-year.

“Print advertising revenue saw a much smaller-than-expected decline and all other areas of advertising together were flat to prior year,” Lynch noted.

So, things are working, but that doesn’t mean that the business is in a healthy place just yet. A publication that cannot sustain itself operates at the whims of ownership, which is an unhealthy position to be in. Back in 2017, Jeff Bezos said to CNBC about the Washington Post:

“This is not a philanthropic endeavor. For me, I really believe, a healthy newspaper that has an independent newsroom should be self-sustaining. And I think it’s achievable. And we’ve achieved it.”

Part of the reason, he said, is that “constraints drive creativity. The worst thing I could’ve done for the Post, I believe, is to have said don’t worry about revenue, whatever you need, just do the job. Because I don’t think that would lead to as much quality when there are in fact constraints.”

I agree with that sentiment. Condé Nast needs to stand on its own two feet.

AMO Podcast: Ellen Hyslop of The Gist

I’m excited about this week’s podcast guest. I’ve long been a fan of The Gist, a sports media company based in Canada but serving both sides of the border. In this discussion, we talked about the early days of the business, what sorts of growth tactics they used to get started versus what works today, how their user onboarding impacts what content readers get in their newsletters, the ad products that they’re offering, and where the business goes from here.

Be sure to listen to the full episode here or wherever you get podcasts. The full transcript is available to AMO Pro members.

Thanks for reading. If you have thoughts, hit reply or become an AMO Pro member to receive an invite to the AMO Slack. I hope you have a great rest of your week.