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Online News Startups Feeling Ad Dollar Pinch

April has been a sobering month for online news startups, as BuzzFeed and other industry leaders were forced to cut budgets, layoff workers or slash revenue expectations for the year. The struggles stem from a perfect storm of plateauing web traffic and faltering ad revenue in the competitive online marketplace. 

April has been a sobering month for online news startups, as BuzzFeed and other industry leaders were forced to cut budgets, layoff workers or slash revenue expectations for the year. The struggles stem from a perfect storm of plateauing web traffic and faltering ad revenue in the competitive online marketplace. 

The story of newspapers struggling to escape an industrywide die-off amid an explosion of digital alternatives is nothing new.   

But you might be surprised to hear that the rising startups of the online news world aren’t exactly raking in the profits either. In fact, as John Herrman of The New York Times wrote last week, some of the biggest brands in online news are already being forced to tighten their belts.

“This month, Mashable, a site that had just raised $15 million, laid off 30 people,” Herrman said. “Salon, a web publishing pioneer, announced a new round of budget cuts and layoffs. And BuzzFeed, which has been held up as a success story, was forced to bat back questions about its revenue – but not before founders at other start-up media companies received calls from anxious investors.”

BuzzFeed appeared to be doing fine until The Financial Times reported earlier this month that the company fell $80 million short of its $250 million revenue goal for 2015. Building upon the dismal picture, BuzzFeed lowered expectations for the near future, slicing revenue projections for 2016 in half from $500 million to $250 million.

The news was a stunning development for an online world that has come to look to BuzzFeed as a content strategy leader. BuzzFeed has become a trend setter over the past several years with the popularity of its punchy listicles and quirky quizzes. Impressed with BuzzFeed’s ability to draw a massive online audience, struggling newspapers looked to the site as a model for how to get clicks. Building on that early success, BuzzFeed later expanded from a news and entertainment aggregator into providing its own news coverage. Fast-forward several years to today, BuzzFeed now fields a formidable investigative political reporting team, which has broken numerous stories about the 2016 presidential candidates.

But altogether, the revenue struggles of BuzzFeed, Mashable and Salon indicate it’s a dangerous time for publishers and a tricky time for advertising, both on the web and in print as neither sector appears to have found a stable business model for the digital age.

“The trouble, the publishers say, is twofold,” Herrman said. “The web advertising business, always unpredictable, became more treacherous. And website traffic plateaued at many large sites, in some cases falling – a new and troubling experience after a decade of exuberant growth.”

Numerous financial challenges have emerged for online publishers in the past several years, Herrman said. That includes anything from ad-blocking tools and automated advertising to the growing trend of readers gathering their news from stories posted on Facebook and other social networks.

“Audiences drove the change, preferring to refresh their social feeds and apps instead of visiting website home pages,” Herrman said. “As social networks grew, visits to websites in some ways became unnecessary detours, leading to the weakened traffic numbers for news sites.”

Of course, advertisers have taken notice of the metrics, leading them to invest heavily in ads on Facebook (and Google) than with online news startups like BuzzFeed, Morgan Stanley analyst Brian Nowak said.  

Posing further challenges on other fronts, Facebook just unveiled a big 10-year expansion plan that looks to give people fewer reasons to navigate away from Facebook. Chief Executive Mark Zuckerberg recently spoke of Facebook’s ambitions to launch “TV-style live video.” Some like BuzzFeed and Vox are racing for their own video production deals with sights set on TV and film, and others like Mashable are investing more heavily in expanding their presence on Facebook.   

“Other companies are looking to focus more on branded content like videos, sponsored stories and full-fledged campaigns,” Herrman said. “But publishers have quickly learned that those efforts are labor-intensive and put them in direct competition with advertising agencies.”

The bottom line is if you thought the online startups had it all figured out, well, not just yet at least. The future of the news industry is still just as unclear as ever before. 

Justin Runquist is CFM’s communications counsel. He is a former reporter for The Oregonian, The Columbian and The Spokesman-Review. Away from the office, he’s a baseball fanatic with foolhardy hopes that the Mariners will go to the World Series someday. You can reach Justin at justinr@cfmpdx.com and you can follow him on Twitter at @_JustinRunquist.

Think Before You Post Online

Venting on social media can feel good in the moment, but could bring your career to a jolting halt. 

Venting on social media can feel good in the moment, but could bring your career to a jolting halt. 

Think twice before you post.If you ever feel the need to sound off, find a secret spot and vent. Don't spew on social media.

The latest reminder of this online truth is Elizabeth Lauten, formerly the communications directors for a Tennessee congressman. After her Facebook bashing of the Obama daughters, Lauten finds herself embarrassed and unemployed. 

The spark that blew up Lauten's career was the sight of Sasha and Malia Obama looking and acting like teenagers when their father, the President, performed the annual ceremony of pardoning a turkey. Most people found this scene silly enough that they didn't watch, let alone let loose a social media mega bomb.

Many people may have shared Lauten's views about the girls' behavior, but only Lauten felt compelled to share her views about the girls – and gratuitously about their parents – with the world on her public Facebook account, and the world responded very quickly.

What did Lauten expect? Even teenagers could have predicted the blow-back she received from her Facebook posts. They've seen it over and over when someone posts an in-your-face screed.

Lauten's apologies won't win a crisis response award either. She took her Facebook page private and issued a sort-of apology. Lauten said after re-reading what she wrote, talking to her parents and "many hours of prayers," she realized her words were "hurtful." Her apology was aimed more at offended viewers of her post than the two young girls whom she directly offended.

A Republican Party operative added more gasoline to the fire by telling people to get over the incident, which he characterized as a mistake by a middling staffer for a rank-and-file congressman. That certainly was helpful context, especially in the world of social media where status doesn't matter.

The cautionary tale, acted out once again, carries the simple message of thinking before posting. Venting may be good for your mental health, but public venting often can land you in hot water. Or, as in Lauten's case, in the unemployment line. 

Write Tight, Write for a Tweet

Do your readers a favor and write tight. While you're at it, include a quotable phrase or two that readers will remember and you can use on Twitter to promote what you wrote.

Roy Peter Clark, author of "How to Write Short; Word Craft for Fast Times," says he now edits essays, opinion pieces, anything to make sure there are memorable lines. He says that's what will stick in people's minds and what can be shared, tweeted and retweeted.

In his review of Clark's book, Washington Post Outlook Editor Carlos Lozada says "the veteran writing guru not only praises Twitter's 140-character limit as a tool for 'intelligent cutting,' but dismantles the staid lament that writing in the Twitter era has grown shallow, fleeting, anti-literary."

Even though Clark is "old school," Lozada says he has embraced digital media as a platform for short, potent writing. "We need more good, short writing," Clark insists, "the kind that makes us stop, read and think in an accelerating world."

For the public affairs professional who addresses often hostile audiences, this is excellent advice. Whether or not you are active on Facebook, Twitter or LinkedIn, you need to write like you are. The time for dry, drawn out prose has gone, unless you are taking a college English class studying the collected works of John Milton.

Digital Game-Changers

Make your issue-focused websites and online newsrooms snack rooms for viewers who can munch on chunks of information designed to win hearts, quell fears and redirect a public conversation.Websites, microsites and online newsrooms have become ubiquitous, but not always as useful as they could be in helping to manage a tough issue.

Here are six ideas to make your digital platforms matter — with more relevant, engaging and persuasive content: 

Make your site a "linkable asset"

That requires developing content of interest to your target audience. Dense backgrounders or self-serving fluff won't pull viewers or keep them engaged very long. But solid, credible information will — especially if displayed in visually accessible ways with charts, videos and well-packaged text. Providing valuable information, which is updated regularly, will convince people to bookmark your site and return. It even may lead to your site being linked to other sites, expanding your viewership and outreach.

Give viewers "information snacks"

Giving viewers good content doesn't mean trying to tell them everything you know about a subject. The concept of less is better than more prevails. Design your information as if people were eating snacks instead of a 7-course feast. Yes, provide details —in layers that the most interested and devoted readers will click to find without bogging down the more casual, quick readers. Here is a great example of snack-size information in a CNN post about a host of developments in the Boston bombing case.

Engaging Your Critics, Even When it Hurts

A common question is whether and when to engage your critics. It is the wrong question.

Asking that question implies the conversations by critics depend somehow on your involvement. You may have stimulated their criticism with something you said or did, but their conversation is proceeding on its own propulsion, whether you are engaged or not. 

The right question isn't "whether and when;" it is "how and where."

Not all criticism merits frontal confrontation. Someone who voices his or her displeasure on your Facebook page might be dealt with best offline, especially if you can satisfy the complaint quickly. That person is likely to follow up his or her own critical post with a laudatory one about you.

Sometimes critics need to be confronted. They may be spouting inaccurate or distorted information about you. That requires your direct engagement at the point of criticism or anywhere else that misinformation may have been planted.

People always have talked behind somebody's back. The only thing that has changed with the advent of the Internet and social media is that those conversations occur right in front of your face.

Twitter in a Pinch

Joe Paterno's son dealt with the crush of media inquiries following the death of his legendary father over the weekend by sending a tweet. No media filters. No time delay. Just an efficient, effortless and graceful shout-out to the world.

Twitter has emerged as a go-to tool for the news media and crisis communicators. You can tweet from a smartphone or tablet. It's fast. It's direct. And it demands careful word choices to make your point in 140 characters.

Media outlets and individual reporters use Twitter to alert people to breaking news and provide updates. It might be an earthquake or a presidential debate. You can follow the tweets and know what's going on and what's being said in real time.

The same rapid response is essential in crisis communications. Say there is an accident with environmental impacts. Tweets can demonstrate a business is on top of the situation by communicating valuable, accurate information in real time to employees, neighbors, emergency responders and news reporters. Questions can be posed and answered when concerns are at a peak.

Twitter can work in tandem with other social media platforms such as Facebook, Flickr and YouTube to provide more information, images and video. The immediacy of the information can allay fears and focus attention on remaining serious problems. Twitter can also team up with a website to direct viewers to sources of additional, in-depth information.

Integrity is Imperative, Not Optional

Facebook is red-faced about its failed attempt to use a PR firm to plant stories critical of Google's privacy policies. It should be. The PR firm that took the work from Facebook should be more than embarrassed.

While most finger-pointing is directed at Facebook for violating its own rules of transparency, a lot of blame should be heaped on Burson-Marsteller for agreeing to slink around on Facebook's behalf.

Burson-Marsteller is an excellent PR agency, but apparently the account manager who accepted this assignment forgot the Public Relations Society of America credo that says, "I pledge to conduct myself professionally, with truth, accuracy, fairness and responsibility to the public."

Facebook said it hired Burson-Marsteller to "focus attention on this issue, using publicly available information that could be independently verified by any media organization or analyst." A spokesman for Burson-Marsteller said it approached Christopher Soghoian, an Indiana University graduate student who blogs about online privacy and security issues, asking him to write about how Google's Social Circle collects and uses data about its users.

"The American people must be made aware of the now immediate intrusions into their deeply personal lives Google is cataloging and broadcasting every minute of every day – without their permission," one of the Burson-Marsteller emails said.

Burson-Marsteller didn't disclose the name of its client and Soghoian declined the suggestion. Instead, he blew the whistle, which led Facebook to admit it should have been upfront about what it was doing, as it requires of users on its own social media site.

However, the situation never should have gotten that far. Burson-Marsteller knows the rules and should have pushed back on Facebook, even if it meant not getting the gig. Better to be right than on the wrong side of a publicity backfire.

Facebook faces its own critics on privacy. Burson-Marsteller would have served as better strategic counselors by advising Facebook to deal with its own privacy issues, so it could talk about its improvements, not Google's alleged shortcomings.

In a statement, Burson-Marsteller admitted it erred by accepting the work. "Whatever the rationale, this was not at all standard operating procedure and is against our policies, and the assignment on those terms should have been declined. When talking to the media, we need to adhere to strict standards of transparency about clients, and this incident underscores the absolute importance of this principle."

Our colleague, Jim Hoggan of Hoggan & Associates in Vancouver, B.C., is writing a new book tentatively titled "Duped" that explores how the PR industry has gotten off track, contributing to deeper public skepticism. Hoggan, whose first book is titled, "Do the Right Thing," believes PR professionals need to rediscover their compass and perform the service our profession was created to deliver – giving sound advice to sustain and build reputations over the long term.

Great effort goes into PR campaigns to engage customers, stakeholders and employees. But genuine engagement is undermined when PR professionals aid and abet their clients in dissembling, deflecting criticism and dissing critics or competitors.

As Hoggan says, doing the right thing isn't always easy, but in the long run clients and the public are better served.

[Hoggan & Associates is a member of Pinnacle Worldwide, a network of independently owned and operated public relations agencies in key markets around the world. CFM Strategic Communications President Gary Conkling is president-elect of Pinnacle Worldwide.]