Photo: Business Insider
A tighter integration of commerce and traditional content is coming to the web and it’s a good thing: Right now most online media is getting screwed out of its rightful share of online ad dollars.A fundamental problem of the online media business is that sites don’t get their fair share of advertising dollars relative to the purchasing intent they generate.
Media gets money from advertising. The reason companies buy advertising is because they get you to buy stuff; in other words they create purchasing intent.
But this comes in many flavours. Marketers use the analogy of a funnel. Marketers try to get us to buy stuff by pitching us through the funnel with messages that start wide, and finish narrow.
You might see a billboard, which might make you visit a website, which might get you to sign up for a newsletter, which might lead you to use a coupon, which might lead you to become a long term customer.
At the top of the funnel, you’re trying to generate purchasing intent. At the bottom, you’re trying to harvest it. As consumers move down the funnel, they get closer to buying whatever they’ve seen advertised.
What does this have to do with online media?
On the internet, marketers want to measure everything. But not everything is so easily measured, and ad dollars tend to flow not to the ads that work the best to generate intent, but to those whose effectiveness is most easily measurable. (Chris Dixon explains how this works in more detail.)
Think about it: which contributes more to purchasing intent? A favourable review by Times gadget god David Pogue, or the sponsored link atop a search for said gadget after reading the review? We would argue the former. And yet the latter is much more profitable, because it’s much easier to measure.
This problem sucks for everyone; it makes online media businesses harder to run, but it also means advertisers aren’t spending money as wisely as they could. Integrating media and commerce more tightly is one way to fix that.
New York startup Thrillist is a master at integrating media and commerce. Thrillist started out as an email newsletter for dudes, but it acquired private fashion sales site for dudes JackThreads, and built its own Groupon clone. Another great online media startup that does this very well is Sugar Inc, which runs a network of women-focused blogs which integrate shopping well.
The Times (which now has its own Groupon clone) looks at Thrillist’s model and frets that it might endanger the wall between the editorial and business sides of media organisations. But JackThreads’ founder Jason Ross says it best about Thrillist, “Their editorial voice is their credibility, so hurting that in any way would be pretty harmful.” There are zillions of gadget sites online. If one dropped its editorial integrity for short-term dollars, its readers would drop it like a hot coal.
A simple way to integrate commerce and content is through affiliate deals, where a post includes links to buy the product it’s talking about, with the site getting a cut. It can also involve a more elaborate linking of media sites and social shopping sites the way Sugar does. Or it can involve building commerce experiences tailored to your audience, like Thrillist does with men’s fashion and daily deals. There’s many ways to play this.
In the end, integrating media and commerce can be a win-win-win for online media, advertisers and consumers.