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    A Plan for Spot.Us to Use Community-Centered Ads

    by David Cohn
    April 1, 2010

    Perhaps it’s ironic for me to write about advertising. Fellow Knight
    News Challenge winner Dan
    Pacheco
    can quote me as once saying “f*&# advertising” and one of the
    initial inspirations for me to get into journalism was Adbusters Magazine. Below I want
    to describe a potential advertising model that Spot.Us hopes to employ
    (and others can steal) along with general thoughts about the
    diversification of revenue streams.

    Community Centered
    Advertising

    The underlying inspiration for Spot.Us is to
    give the public a freelance budget so they can help set the editorial
    agenda. Right now that is done via contributions from their own wallet.
    But what if they directed an advertising budget? What if the people to
    whom an advertisement was directed had a say in where the money it
    generated went? I imagine it would look something like this.

    A
    button on Spot.Us that says “Earn Credits.” Upon clicking a user is sent
    to a blatantly sponsored page. We even have our first sponsor Mortgage Revolution. They are holding a fundraising event in San Francisco and part of the proceeds will go to sponsor our first Community Centered Advertising campaign which will try and stir up conversation about the real estate and mortgage industry.

    ADVERTISEMENT

    In Community Centered Advertising the sponsor is looking for some kind of engagement with their brand, cause, business, etc. In the case of Mortgage Revolution they hope to stir up a healthy conversation about the real estate and mortgage industry. But let’s use Levi Strauss purely as an example.

    Perhaps Levi’s provides
    survey questions:

    • What is your favorite cut of jeans?
    • What is a
      memorable Levi’s moment you’ve had?
    • You buy Levi’s jeans because… (multiple
      choice answer).

    Or it can be a branded survey simply to get the
    customer to think more about Levi’s

    ADVERTISEMENT
    • What year was Levi’s invented?
      (Multiple choice)
    • Guess how much of material X Levi’s produces a
      year?

    Or a quick video that people have to watch Hulu-style.

    Upon
    engaging with the advertisement the Spot.Us community member earns X
    credits, which represent real dollars, and they can direct those credits
    toward funding the story (or stories) of their choice.

    The community still makes the
    decisions about what stories get funded but they are doing so with our
    advertising budget, not their own money.

    At this stage it’s just
    theory but we have our first sponsor and hope to roll this feature out
    soon and I hope more sponsors will follow (if interested in
    details, send me a note: david@spot.us). Then again, we may find that the Spot.Us community reacts negatively to it. Who knows? That’s why we need to try it — even new media experiments need to experiment.

    Depending on the level of the
    sponsorship Spot.Us would probably take a small overhead fee. But even
    if we didn’t, I would feel encouraged that with a low overhead we will
    be funding independent reporters. (Want to know when this feature is
    live so you can be one of the first to try it out? Sign
    up for our newsletter
    ).

    Journalists Awash at Sea

    I bring this up because like all news organizations
    Spot.Us needs to diversify revenue sources. An analogy I often use is
    that, “Journalists are awash at sea. Previously we could rest the
    majority of our weight on a few revenue streams — advertising,
    classifieds — but now we need to get many revenue streams and a piece of
    rope to tie them all together in order to make a stable raft that
    distributes our weight.”

    This also requires re-thinking and
    re-inventing our relationship with classifieds, advertising and even
    coupons.

    One of the problems I’m observing is that instead of
    re-inventing our relationship with classifieds, advertising and even
    coupons, news organizations are assuming they can take the old models and
    stick them on the web and move on.

    Craigslist as Counter-Factual; GroupOn as Factual

    I hate when
    journalists point to Craigslist as a “killer.” But let’s talk about why
    there is so much tension there. The fact is Craigslist was not a
    technical innovation. Any newspaper company could have invented it. They
    didn’t because it would have drastically re-thought their relationship
    with classifieds. The bummer in this is that newspapers were really
    always in the advertising and classifieds business and used their
    profits to support journalism. That business has dwindled and journalism
    has suffered. Imagine if Hearst had created Craigslist? The profits
    from that would most likely be pumped back into newspapers.

    This
    isn’t to knock Craigslist either. With his profits Craig Newmark has
    created the Craigslist Foundation which is a HUGE boon for society.
    Craig has also supported journalism here and there. Understandably this
    isn’t his top issue — but at least it’s on his radar.

    Now look
    at GroupOn. Take a good hard look.
    I think Michael Skolar is right
    in his post
    I‘m
    suggesting you steal the idea for your local news operation fast before
    national competitors own the market.”

    These
    sites represent a new relationship to coupons, one of the last great
    revenue streams is being revolutionized right underneath newspapers’ feet.
    And once again the technology isn’t mind-blowing. I’m talking to the
    big guns (Hearst, McClatchy, Gannett, etc.) when I say “start something
    like this up now or buy one of these startups.” The revenue you make can
    be reinvested into journalism because that’s what your companies do.

    I
    consider the founder of GroupOn a friend, but I doubt his company would
    just take profits and subsidize journalism — that’s understandable.
    The few companies that historically used profits from advertising,
    classifieds and coupons to prop original reporting are few and some of
    them are going bankrupt.

    Re-inventing our Relationship to Advertising

    One of the reasons Facebook is worth so much is because of the
    relationship they have created between advertisers and users. As an
    example a little birdie at the NY Times once told me that the number two
    country for registered users on the New York Times was…Afghanistan.

    Before you start scratching your head as to why so many Afghans are
    reading the NY Times, consider the image of this registration drop down
    from NYTimes.com:

    i-355a7c94afd4a82dac227669d367b4f4-NYT register.jpg

    Now you can stop scratching your head.

    Compare this to Facebook where most people freely reveal their age,
    religion, relationship status and more. Now ask yourself: As an
    advertiser, where do you want to be? The site with lots of people
    pretending to be Afghans or the site where you can target the customer
    you most want? Privacy issues aside, it’s pretty ingenious. And some
    might even argue that a good advertisement is good content. If the advertisement is exactly what you were looking for, it isn’t annoying —
    it’s helpful.

    Interestingly enough the new relationship to advertisers is predicated
    on the new relationship with the audience. The more the audience is
    ready to reveal about themsleves the more advertising is valued. Same
    with GroupOn. If a customer freely reveals they are interested in a
    deal before it becomes official, the small business offering the deal
    starts licking their chops — rightfully so. And in all cases the user is
    incentivized
    to reveal the information because it’s in their benefit.
    For the Facebook user they are connecting with friends. For the GroupOn
    user, they are looking for money saving deals.

    With Community Centered Advertising our hope is that community
    members are encouraged to reveal something about themselves in exchange
    for the ability to fund the original reporting of their choice. Most
    news organizations don’t have a system by which individuals can direct
    cash towards stories but perhaps they can offer something else?

    What incentive can a news organization give to a user so that they
    freely reveal more about themselves in an effort to become more
    attractive to advertising? I would argue that it’s best if the end goal,
    to become attractive to advertisers, is done above the table — as with
    Spot.Us’ model and GroupOn’s. There is no deception. You are engaging
    with an advertisement. I wouldn’t argue that Facebook is being devious,
    but certainly they have come under criticism because users aren’t
    sharing their info with advertisers in mind, but rather with their
    friends as the goal.

    So Now What?

    As always, I never claim to have solutions. Just crazy ideas that I
    want to execute. Keep your eye open for Community Centered Advertising.
    If you’ve never donated on Spot.Us before, I hope this inspires you.
    Instead of having to reach for your wallet, you can just donate a
    little time and a little bit of your own knowledge. Register
    for our newsletter why doncha
    !

    Tagged: advertising community centered advertising craigslist new york times newspapers spot.us
    • Why would facing reality and attempting to wean yourself off Knight/grant dollars be deemed ironic in your opening lines?

    • Glad to see your thinking around advertising has evolved a little.

      I have actually moved closer to your original stance after seeing slow initial interest in Printcasting ads, but I think that had to do with the fact that our service is very young, and that we targeted small businesses that were cutting marketing dollars or going out of business during the recession.

      We’re finally seeing a trickle of ad dollars come in from a service called MediaBids that lets our publishers place free ads that they choose, then get paid when someone calls a 1-800 number to act on the ad. It’s an interesting model that we plan to expand on in the future.

      I like your approach with community-centered advertising. But there is always a catch, and with advertising it’s the cost of sales. I think you’ll find that businesses are open to experimenting with new ad / marketing models like this, but expect them to pay experimental dollars that are 1/10 or less of what they pay for newspaper display ads. To get a higher rate, you will need to provide more handholding than you may be equipped to provide right now.

      We like working with MediaBids because they handle the sales and handholding with the advertiser. We simply provide the creative that publishers can choose from. The revenue is shared between us and MediaBids, and we then share our portion with publishers.

    • To Clyde

      The irony isn’t in weening off Knight money. The irony is that in my search for that I am becoming more interested in and want to re-think advertising something that I have taken strong positions against in the past.

      Dan: I’ve heard of MediaBids before and I hear it’s a really cool lead generator for local businesses. w00t.

    • David,

      You know what I’m going to suggest… ;)

      Collapse into some simplicity as Mr Shirky might suggest..

      http://tinyurl.com/yzjvfqp

      best etc

      R

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