The Challenge: ROI at the Story Level

September 18th, 2008; 8:31 am by Ryan Thornburg

Disaggregation of traditional news sources such as the daily newspaper is one of the most disruptive forces in journalism right now. And there was more evidence of it’s impact in yesterday’s layoffs at McClatchy Interactive.

For a long time I’ve worried about the new ability to calculate a news operation’s return on investment at the story level. With Web analytics software, we can literally calculate how much it costs to produce a particular story and how much revenue that particular story brings in. And it appears that contributed to some of the decisions about who to cut at McClatchy, according to a quote from Christian Hendricks in The News & Observer.

“That particular line of business is covered by a lot of other people,” he said. “It wasn’t really driving a whole lot of traffic to our sites, and the pages that were being delivered weren’t delivering a whole lot of revenue to us.”

I’m unclear what “that particular line of business” is, so I’ll try to find out. But the N&O story sure makes it sound like McClatchy Interactive leaders are calculating that replacing human editing and production with an automated process will be “good enough” to reduce expenses without taking a commiserate hit in revenues. While it may depress me as a human journalist, this is not an unreasonable decision for a company to make.

This effort to reduce expenses is also a driving factor in the citizen journalism movement. While “giving voice to the voiceless” may be the goal of us do-gooder newsroom types, obtaining free content against which advertising can be sold is the business model of everything from CNN’s i-Report to Twitter and Gmail.

So, what content is still worth the cost of production? Well, basically any topic that is covered by blog aggregators Weblogs, Inc. and Federated Media. Why are those good bellwethers? Because those companies are buying content in niche categories and selling ads against it. Their whole job is to calculate the supply and demand for various narrow categories of content.

What kind of journalism is not worth the cost of human production? Basically, anything that has to do with death, destruction, or politics. No advertiser wants to stand next to those skunks at the picnic. Those categories only work for advertisers if they’re part of larger ad deals across a breadth of content.

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