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AOL’s new automated content-generation strategy is a smart move. It will:
- Help the company produce more popular (and, therefore, more profitable) content
- Align editorial costs more directly with revenue.
THE MOVE IS ALL ABOUT SEARCH
Sure, journalists will cry foul at an editorial strategy that is driven in large part by what terms readers are searching for online. But as content becomes more fragmented, search has become the most important driver of outside referral traffic for many sites. AOL’s new strategy will allow it to take better advantage of search as a traffic driver.
How much traffic is driven by search? Anecdotally, for some large branded publishers, search generally drives 30%-40% of traffic. For smaller publishers, the percentage can be much higher. For example, an ad network named Chitika says that a startling 97% of outside referrals to its sites came from search engines:
It makes sense to make editorial decisions based on what readers want to read about. And by automating much of the process AOL should be able to generate a significant amount of targeted content and publish it quickly.
A private company called Associated Content employs a similar strategy to the one AOL is implementing (AOL CEO Tim Armstrong is founding investor of Associated Content, and we would not be surprised to see AOL buy the company early next year). Associated Content has nearly doubled its US visitors in the past year. 90% of the company’s traffic is driven by search referrals.
THIS WILL ALSO HELP AOL CREATE BRANDED CONTENT FOR ADVERTISERS
Advertisers are looking for better ways to engage audiences, and many are creating their own platforms and producing their own content. With the ability to quickly generate a lot of targeted and even custom content at scale, AOL positions itself well to compete for these branding ad dollars, which typically command higher rates than the average display ad campaign. The company said that it would work with advertisers to tap into its freelance network to create content specifically for them.
THE MOVE BETTER ALIGNS EDITORIAL COSTS WITH REVENUE
The old publishing model of staff writers churning out content based on an editor’s guess about what is important is in permanent decline. This is a big reason why some traditional publishers are having difficulty competing with sites that incorporate in-house, user-generated, and aggregated content.
In addition, display ad rates are coming under increasing pressure from ad-networks and a proliferation of small, niche sites. So online media properties have to figure out a way to generate as much content in as efficient a way as possible.
AOL’s strategy addresses this by opening the editorial process to anyone (anyone can submit an article on a given topic). It also aligns the compensation paid to its freelance writers with the amount of revenue generated by the content. This makes more of its editorial costs variable versus fixed, so margins won’t be squeezed as much if the company has problems selling out its inventory.
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