Please Mr. Ad Man, Don't Put My Ads Near News

Doing paywalls right + Axios goes into software

When brands were doing most of their ad deals with insertion orders, they had a lot of control over where their ads would show. With the rise of programmatic, brand no longer sought out specific websites—instead, the brands sought out audience types. And they didn’t care where that audience resided.

Yet, after the 2016 election, there was a big increase in the conversation around brand safety. Numerous brands were held to account for their ads showing up on sites like Breitbart and around content that promoted violence and hate. With this rise in conversation, there has been a rush to protecting one’s brand—more specifically, not associating with potentially dangerous content.

Unfortunately, this has resulted in brands going to the extreme. According to an article published on The Wall Street Journal on Thursday, the blacklist of words that brands consider off-limits has started touching on topics that we should expect our best media companies to cover.

If one of those words is in an article’s headline, Fidelity [Boston-based financial-services company] won’t place an ad there. Its list earlier this year, reviewed by The Wall Street Journal, contained more than 400 words, including “bomb,” “immigration” and “racism.” Also off-limits: “Trump.”

I understand why this is happening. I don’t even blame the brands per se, but this is going to create some problems (naturally) for publishers.

If the only type of content that a brand is comfortable associating with is topics that are not hard news, the types of stories we want journalists to cover will be deprioritized relative to ones where advertisers are willing to spend money. If you’re like me and believe that it’s imperative to report on these uncomfortable topics, this is a serious threat to the business models of publishers.

And as a user, it’s not as if you’re going to get content ad-free. Ideally, what’s coming through those programmatic pipes is a private marketplace deal, bringing a higher CPM and some semblance of fill. However, if the high-quality PMP deals start to dry up against this hard news, there will still be ads to show—it’ll just be those low quality ads that no one really wants to look at.

Brands should protect themselves. But there’s a drastic difference between advertising on Breitbart and advertising on an article published on The New York Times about the trade war. Protect your brand, but also don’t throw the baby out with the bathwater.

Nevertheless, publishers need to accept that this is going to continue happening and figure out how to get the user to fund the hard news while the brands help fund the softer lifestyle, sports, and business news.

So you want to build a paywall?

I won’t lie… As I typed that line, I had the hit song “Do you want to build a snowman” from Frozen in my mind. You’re welcome.

Seriously, though, if you’re like any other media executive, you’re probably thinking about a paywall. And if advertisers are going to start backing out of putting their ads next to stories about immigrants, trade wars, and other difficult topics, publishers are going to have to find a way to generate revenue from readers.

But the question is: how do you do it right so that it is successful?

The Shorenstein Center on Media, Politics and Public Policy at the Harvard Kennedy School released a reported called the Digital Pay-Meter Playbook that presents in-depth data on how to get people to sign up, but more importantly, how to keep them engaged.

I’ve been diving into this report since its release and I think any product person who is either already running a subscription business or is considering it really should spend time with it.

There are two pieces that are worth talking about now, but I will come back to this report more often in this newsletter.

Finding your stop rate

Publishers are always trying to find the balance of getting users to sign up without also hurting their ad business. If you don’t let anyone see content, the ads might not be viewed enough. On the other hand, if you allow too much content to be consumed without hitting the paywall, you’re not going to get enough subscribers.

But this fear can have a negative impact on a publisher’s business.

Effectively, 50% of publishers are only stopping 1.80% of their audience with a paywall. That’s just too low. Think about it… If you have 1,000 users, you’re only asking 18 of them to sign up.

Shorenstein found that publishers that had a stop rate over 6% had a “thriving digital business.” Anything above 4.2% is considered “sustainable.”

But how do you actually improve your numbers? According to the Lenfest Institute for Journalism:

If your publisher’s meter rules are within the norm (5-10 articles), but your stop rate is low (0-3.0%), engagement is likely the issue. If 5-10% of unique visitors are viewing 5-10 articles per month, and a site is not stepping them with its meter, your meter limit or other access rules might be too lax…”

Obviously the latter is easy to understand. If you know that your users consume quite a bit of content per month and you’re not getting subscriptions, try experimenting with a tighter wall. Perhaps instead of letting people view 10 articles per month, cut that down to 5. Or, if you’re already at 5, try cutting it to 4. This could move you up into a new percentile.

On the other hand, if you’ve already got strong gating and you’re still not seeing success, your engagement might not be strong enough. And here is where I think everyone’s favorite topic comes into play: newsletters.

Naturally, I love newsletters since I am doing one. But they are also an incredibly powerful tool to get people to pay for news. Wired rolled out a paywall in 2018 and after a year, they’re pretty pleased with the results. And what they found is that newsletters are the best mechanism to convert someone to a subscription.

They’ll particularly pay, we also learned, if you send them newsletters. The propensity to subscribe by people who enter WIRED.com on a mobile device is rather low—unless they come in via a newsletter. (To give one data point, a visitor who reaches us via search is 1/19th as likely to subscribe as one who comes in from a newsletter; a reader coming in from Facebook is 1/12th; and a reader coming in from Twitter is 1/6th.) That’s one reason why we’re launching all kinds of new newsletters, tied to specific sections of the site.

Part of the reason for this is that you’re already building a relationship with the reader by emailing them regularly. And if they really like your news, they’re bound to hit the wall more frequently.

If you’re looking to improve your conversion rate, look at building a longer nurture period with a newsletter. Engage with your reader and with the right gating rules, you should hopefully start to see an improvement in your stop rate.

People will pay for primary (local) news

However, it’s not just how you manipulate the paywall and build engagement. Ultimately, people want to pay for news that is important.

According the publishers surveyed, users who view local news appear to be 2-5 times more likely to subscribe than those who view national and wire-sourced stories. Of news organizations studied, publishers that produce more local (and non-wire-sourced) stories tended to generate greater subscription sales.

This is actually an interesting piece of information that gives me hope for local publications. Many media companies, in their quest to chase the almighty ad dollar, prioritized a greater number of articles rather than focusing in on quality reporting. And if you think about the publishers that have done a good job building a thriving subscription business, it’s those that invest heavily in journalists.

I’ll dive deeper into the local media business in a future issue, because I really think there’s an opportunity to build a new hyperlocal media brand, but for now, it’s good to understand that if your team is focusing on strong reporting, it’ll result in subscriptions.

The problem is that media brands are letting journalists go in their quest to save money. Austerity isn’t going to help. Whether it’s local or national, if you want to build a subscription business, you need a newsroom. You need to invest in hard news. Then with the right paywall tactics, you can start building subscriptions.

One note worth mentioning: this section talks heavily about local news, not national. Many publications, when they do national news, simply regurgitate what others have already reported. Your news has to be primary to get people to pay for it.

I have hope

The truth is, I have tremendous hope in a media brand’s ability to build a subscription product. Ultimately, I don’t see room for many more national products unless you’re going to hire a strong team of journalists that will break stories. People will pay for that.

However, for local publishers who see their ad dollars disappearing, the answer isn’t to cut back on your journalists to try and eek out profitability. By investing in your newsrooms and encouraging them to focus on primary reporting, this report suggests people will sign up.

High-performing editorial and business teams tended to clearly identify the unique value proposition of local news, incorporating editorial and coverage to improve readers’ lives within their communities.

Solve that and you’re onto something. I have hope.


The Information reports that Axios is looking to get into the software licensing business, which is slowly becoming a new revenue source for major publishers.

Axios wants to sell the [newsletter] software, which it is beta testing, to communications and human resources departments at companies with large numbers of employees, according to several people familiar with the plan. Another potential use is newsletters for company investors and customers, said one of the people.

If you subscribe to Axios’ newsletters like I do, you can easily recognize the style they go with: brief, bullet-filled issues rather than long ones, verbose ones. Perhaps I should take a lesson in style…

What isn’t quite known yet is just how involved Axios will be. There are three paths that I can envision:

  1. They just offer software

  2. They offer software and then consult with their clients

  3. They offer software, consult, and then actually write the content

It’s likely that they’ll be focused on #2. Actually producing the content requires staffing up and that brings you far closer to being a true content agency—a potentially risky play. But selling software and then offering consultant hours can work out.

Going into this business can be smart. You build product internally to serve your own needs and then scale it to offer it to other companies. Vox and the Washington Post also do this, but with their CMS.

According to Fast Company, “Post CIO Shailesh Prakash, the company sees the platform [Arc Publishing] as something that could eventually become a $100 million business.”

Any media business that’s going to be offered $100 million in incremental revenue is going to think long and hard. The problem I see is that I don’t know if there are enough major media companies out there who can afford the $15,000-$150,000 a month that Arc costs. Not to mention, they’re competing with Vox, which is licensing both its Chorus and Concert platforms.

I would be more hesitant if these publishers were building software from scratch. But since the owned-and-operated sites need these systems anyway, maintaining them for clients is just an extension.


Thanks for reading! I’ve been thinking about the release schedule and I am starting to think that Tuesdays and Fridays might be a good schedule. If something major happens, I may do a special edition. But two a week feels right.

Be sure to tell your friends about the newsletter, tweet about it, and hit that little heart button. Have a great weekend!