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Summary:

Some media outlets are hoping that launching iPad subscriptions and paywalls will supplement the meager revenue they get from traditional online banner advertising, but AOL’s Patch and Hearst Magazines’ digital media are experimenting with some more innovative ways of monetizing their content as well.

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It’s great that your magazine or newspaper website has millions of page views or unique visitors a month, but those kinds of statistics mean less and less when traditional banner ads bring in virtual pennies for the media companies running them. Some see iPad apps and paywalls as the solution, but several major media outlets such as Hearst and AOL have started experimenting with other ways of monetizing their content — and even Google says it wants to help by making traditional online advertising more efficient for publishers.

Google’s contribution comes in the form of an acquisition. The search giant confirmed on Monday that it’s buying AdMeld, which provides tools that allow online publishers to make their ad buying and placement more efficient. According to several reports, Google is paying $400 million for the company, which makes it one of Google’s largest acquisitions. The web giant says it’s buying AdMeld because “we often hear from major website publishers that ad management today is still mind-numbingly complicated and inefficient.”

Meanwhile, both AOL’s Patch and Hearst are experimenting with different forms of advertising that they hope will convert browsers and readers into shoppers: AOL, for example, has partnered with a service that American Express runs called Serve to launch a Groupon-style “daily deals” offering. As part of the deal, customers can get a co-branded AmEx  card that lets them redeem offers at the point of sale without having to print out coupons (something Groupon users apparently complain about).

The AOL unit has more than 800 Patch sites across the U.S., a hyper-local project it has spent more than $100 million on since it launched last year. But while traffic to Patch sites has been climbing — according to some recent estimates — the revenue being generated by the operation is still minuscule. Will local readers be attracted by daily deals from merchants in their area? That’s the bet AOL is making, and some traditional publishers such as the Toronto Star (which acquired a Groupon clone called WagJag last year) say they have been using a similar strategy with some success.

Hearst Magazines, meanwhile, has formed a partnership with a company called Pixazza that allows readers to click on images, find out more about products in the image, then click through and buy them if they wish. This kind of interactive ad has been the dream of advertisers since the commercial web was first invented, but it has never really paid off in the way most had hoped. Hearst is also partnering with Buddy Media to develop Facebook-based apps that allow more interactivity with the magazines’ content.

Whether any of these monetization attempts will ultimately be successful is anyone’s guess. Patch is a gigantic bet by AOL that locally relevant content will draw enough readers to make an advertising-based revenue model work, and the Serve deal is just another twist on that — if not enough readers come to Patch sites, it won’t really matter what kind of advertising the site has. Likewise, Hearst could be trying to squeeze revenue out of a smaller and smaller group of traditional magazine readers.

That said, however, at least there is some experimentation going on, rather than just the same old creatively bankrupt banner advertising campaigns that media sites have been relying on forever. No one has found the formula for generating revenue from online publishing, so the more experimentation that occurs the better.

Post and thumbnail photos courtesy of Flickr user Emilian Robert Vicol

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  1. MONETIZE ONE WORD – bitcoin

  2. Man, this local move sounds like a very expensive venture. It will be interesting to see what the quality of this local content ends up being like.

  3. Magazine Design Tuesday, June 14, 2011

    The way things are progressing in magazine publishing, I wouldn’t be surprised if mags were significantly more like catalogs in the future — with product promotions tied into issues as another revenue stream for publishers (paid for, of course, by advertisers). I know some of this is going on already, but with digital magazines just beginning to get a foothold (barely), this will be a trend to watch. If such “catalogization” were to take place, a big question would be: How much camouflaged advertising are readers willing to put up with? In any case, somewhat sadly, monetization of magazine brands seems to be already in progress. Hopefully content quality and editorial integrity won’t succomb to commerce (as quality and integrity in general often do).

  4. Interesting to see these creative monetization efforts taking place. As far as sell-side platforms go (i.e. AdMeld), it’s also interesting to look at the potential connection between the monetization challenges and the changing privacy landscape… Attempts to squeeze better yields from the same advertising real-estate often involve (at some point) challenging the perception of privacy. And as advanced yield optimization technologies are coming of age, privacy concerns are also cropping up and getting public and political attention (with and without connection)… These two game courts will have a big effect on each other.

  5. This kind of approaches to the issue of digital publishing monetization are certainly interesting and inventive. But – in my view – they do not adress the key point at stake: the renevue share of the new digital media business model.

    When people say the digital media are still looking for a suitable business model, that is only partially true. In fact, digital media consumption is already today part of an established business model in which consumers pay ISP’s a significant fee to get acess to all kind of digital content. The problem is that the producers of that content – the publishing industry in the first row – do not receive a fair share of that revenue. This is the real problem and all other solutions that do not adress it are merely scratching the surface of the real issue.
    In the traditional media landscape, the publishing industry prospered because the dolar paid by he who bought a newspaper or a magazine was channeled through the distribution chain and rewarded all the actors in that chain. And because the publishing industry prospered, our society grew more informed and civilized. Now, only the carriers are rewarded, and for content that really is not theirs. It’s not fair and – most of all – it’s not enough to guarantee a sane and efficient system of public reliable information.
    We already have today all the technology we need to put much more inteligence in our information networks. Our networks should be able to indentify, measure and even reward all de bits and bytes that flow through them according to a fair revenue share.
    I have written a paper up for discussion proposing a new business model for the digital media. You can read it fully here: http://josemoreno.posterous.com/a-new-business-model-for-the-media. And, of course, all opinions on it are welcomed. In the view that I argue, this is really the only way the media can restore its functioning balance and continue to play its necessary social role. This is an issue that can be solved by technology, but has to be decided by policy.

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