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Quartz revenue strategy: ‘We'll do whatever makes sense for the user’

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Quartz revenue strategy: ‘We'll do whatever makes sense for the user’

Mabanta is Director of Marketing and Revenue Products at Quartz. The first part of her title is easy to understand, so we asked her to explain what a director of revenue products is.

“Traditionally in a media organization the editorial, tech and commercial teams are very siloed,” says Mabanta. “Now that everything is digital it has become more important to think about the user experience much earlier on in the process. To give you a sense of how cohesive our product development is, if we take the recent example of our app, the key people in this development process were our head of product, our head designer, one lead engineer, our editorial lead, and then I, who was sort of the monetization lead.

“There was a core team of five people, all working together to do this. I think that's pretty rare, at least in my experience of speaking to others in the industry, to have someone from the revenue side involved that early on. So we tried to do plan for the advertising very early on, and we were very careful about how we put together that experience.”

Quartz claims 17 million unique visitors, with 40 percent of that traffic coming from outside of its home country, the USA. That number “has been fairly consistent since we started out," Mabanta says. “It's important for us this year to be diversifying a little bit more and having more of our revenue come from international markets.” (Editor’s note: last year, international revenue represented about one-third of total revenue.)

WAN-IFRA: You decided late to enter the news app game compared to most media companies. Why launch an app only now? What are the arguments from a user and a monetization point of view?

Mia Mabanta: Quartz has been around since late 2012, and we didn't launch it as an app. And ever since then, we've periodically asked ourselves, ‘Should we create an app?’ And the answer has been ‘no’ most of the time, because news app usage is very low.

If you look at the way people spend time on their phones, only about 2 percent is spent inside news apps. The only way that you can win loyalty from users is to try to end up on their home screen. That's a very difficult battle for news companies. What has changed recently is the rise of notifications and how when you're on your phone you can interact with apps outside of the apps themselves. So you get notifications on your lock screen and so forth.

Because of the expanded user experience options, we decided that it was not just a battle for the home screen anymore. There are different ways to interact with users and an opportunity for a news company to use that channel in a more creative way. So that was the idea for the app as a whole, and then very soon into that, we started working on the monetization strategy for it.

How different was it to imagine advertising in the app context?

We started with the assumption that not many people were going to use the app. We hope for the opposite, of course, but if you look at the past history of news apps, it's been really hard to retain users. So with the ads, we wanted to be really, really delicate with that experience. We started out with two formats. One's a sponsored message format. It happens in the form of a chat bubble, like every other interaction in it. That, to date, appears only once per user. So you would download the app and then for the campaign running currently, you only see that one time until there's a new campaign running.

That was a bit controversial, that decision to have it only be shown one time per user per campaign because that's really unusual for advertising. Normally the strategy is to get as many impressions as possible. But this is where our user experience convictions came in, where we said to ourselves, ‘We're just not really sure how users are going to react at all so let's try to be very respectful.’

The second ad unit is a display ad, a full bleed. It goes from one edge to the other edge of a screen, but it's not too tall. So it's more like a horizontal rectangle that shows up whenever you open the app for a new session. So it shows up subsequently for that kind of brand recall.

Now that we are about a month into the app, we've found that reception is really good overall. People are actually very curious about that sponsor-messaging unit, so we are going to probably look into ways to use that space a little bit more, and more creatively.

Those advertising offers are very closely aligned to the formats you propose on all your platforms. Has that always been the advertising strategy since you started in 2012, or has it evolved?

Broadly, the ad strategy is to create high-quality experiences that are built and designed to fit that native environment. Maybe an easier way to understand it is this: The default with online advertising now is to think about ads in terms of all of the standard boxes and banners that you see everywhere. So there are all these set 300-by-250-pixel standard units, and basically that's typically the way that advertising is thought of.

What we've tried to do is, rather than think, 'What are we going to put inside that box?' we think, 'What is it the advertiser wants to achieve and how can we create the best user experience in our environment based on that?'

For example, with our video player, when we launched our video team, in the middle of last year, we came out and said, 'We will never run pre-roll advertising on our site.' Which is the only way really that most places are monetizing these days.

But you don't even have to look at the stats – you and I as users of the internet, whenever we see pre-roll, probably we're going to hit that 'skip ad' button as soon as possible, but it's fundamentally not really respectful. The user comes to a video, wants to watch it, and then before they can, you interrupt them with this experience.

So for us, it's all about creating high-quality, respectful experiences. So rather than pre-roll, we thought, 'Let's try to create a new type of video ad unit that the user has to initiate on their own.' We basically did the hard work of putting a lot of design effort into it. It's worked out quite nicely because it's very elegant, but it's still very attention-getting. So you watch this video and you see these actions that there is an ad there, but you don't have to engage with it if you don't want to. It's all up to you. It's an invitation to engage.

In the bottom right corner of the video player is a small, animated button with the Lincoln logo. Mousing over it launches a TV-style ad. Move the mouse back to the center and the video tucks back in place, and the original video resumes where it left off. Mouse over the downsized ad unit again and the ad resumes where the viewer left off. Lincoln Motor Company signed up because it wanted to find a less intrusive way to engage prospects about its MKX sport utility vehicle. (Click on the image to watch the video.)


Quartz hopes its solution will recalibrate video advertising. “We think there is value in a user choosing to engage in content from an advertiser,” Mabanta said. Lincoln and Quartz measured every interaction with the ad unit, including when people rolled over the animation and how much of it they watched.

Beyond video, how are your other typical ad proposals distinctive from other advertising units?

Broadly, we have both images and content units, and our high-impact display units. We also have smaller ones called ‘in-line’ within articles. I would say the formats we call ‘engage’ and ‘marquee’ are our main ones.

Marquee occurs at what we call Much of our traffic comes through the side door, meaning people click on a story link from somewhere else, whether that's on Facebook or email or wherever; they're coming in through a link, as opposed to the home page. The marquee at point of entry means that when they do come to our site through that method, the first thing they will see is that ad unit at the top of the page.

But it's not like an interstitial – that's what we are trying to create a substitute for. The way that most sites do it is, ‘We'll give you this full-page interstitial,’ where the user has to wait five seconds or whatever before they can get to the content. With marquee, it's at the top of the page. You can very quickly scroll past it if you don't want to see it any more. But the theory is that we're going to try to design that space to be as inviting as possible – click if you want.

We use HTML5 for that space, which means that we can pretty much do anything in there. So it can be interactive, it can have videos. There's many different things you can do in there.

I think an interesting point there is that our head of ad engineering, before coming to Quartz, actually built his career doing web development, not specifically ad development. The benefit of his leadership has been that when a client comes to us and says, ‘We want to pursue this objective and we have these constraints, the way that he thinks about it is, ‘This is the goal. What technologies, what coding languages and libraries can we pull into this to solve that?’ As opposed to defaulting to the standard ad.

The format we call 'engage' is much like marquee. It's also an HTML5 canvas. Engage is a full bleed unit that occurs in between every story. Basically it's just a space where advertisers can do anything they want. And we will help design an experience that's custom to it. Both engage and marquee are responsive.

So all the formats are native advertising in a way. It has to be really built for Quartz and within the Quartz context, graphic context, and visual context. It's not a campaign that you could see somewhere else, you mean?

That’s correct, yes, and that's really what we try to do. We have a creative services team, and there are many different kinds of people on that team. There are writers, and designers, and researchers. We try to match how our journalists speak about things. In terms of their voice and their method, we try to make it feel as native an experience as possible. So yes, it's very intentionally built for our site. However, when we try to help with social distribution, which is of course an important part of the concept offering, we'll again adapt the content strategies for the social platform – Facebook, and Twitter, and so forth.

Every bulletin we create is created in the voice of the site. What's been an important part of the content offering for clients is social distribution. Quartz has a social audience for each of these content pieces. So we help them craft the voice for all of the social platforms, whether that's Facebook or Twitter, or something else.

So it's like having an advertising agency within Quartz? Are some advertisers asking you to create campaigns for other platforms?

Yes, we are increasingly being asked to do exactly that. Basically, advertisers who have seen a lot of success on Quartz, who have worked with our teams, know that they're very good at really understanding what the client's brand is and how to connect the brand to the target audience. And something unique about Quartz is that our target audience is business-news readers. So that tends to be business professionals and a lot of high-income customers. So when you think about a business professional, there's a lot of opportunity for a business brand to offer them information.

There's intrinsic value in the content, and increasingly our advertisers are recognizing that we're pretty good at going through all of their white papers and other brand assets and figuring out the best way to get that to a digital mobile audience today. We've done this for GE, and we've also done it for HPE, formerly known as HP. With HPE we actually created our first original sponsor video, which was a thing about CIOs and how Santa Claus's workshop operates on CIOs. And then the CEO of HPE, Meg Whitman, actually ended up posting that on her LinkedIn holiday message last December.

So they're using your content for their own platforms. But not yet suggesting to other media platforms to use that material?

Well, sometimes they do. We, of course, will give them some guidance and make recommendations. For example, if we write an article for you for Quartz, it might not make as much sense to the user if you republish it on another media platform. But, it's up to the client, ultimately. Also, if you go to HPE's own website, they will have some stories there that Quartz created for them (see example).

Creating bespoke campaigns as you do leads to high CPMs. The downside is that it's awfully expensive for Quartz to create those campaigns because you need a huge team. Quartz has around 150 employees, and probably half of them are busy creating the campaigns. It's good business but it's very expensive, correct?

It's true. It is very expensive and sometimes it's a challenge for us, but the way that we look at is, the standard online advertising model is very broken for the most part. Pre-roll is a great example. The market dynamic is that more and more brands want to move their TV budgets online. And so right now the default place to put it online is pre-roll, but you grow to hate pre-roll. I read somewhere that 94 percent of users, when they encounter pre-roll, and they can skip it, they will skip it.

So those CPMs might be a lot lower, but where is that money really going? If you're ultimately really trying to engage actual human beings, the current model doesn't really work so well for that. You have all these issues now with ad blocking and viewability.

I think it's important to take into account all of these dynamics when you are thinking about the economics of it all. It's definitely an industry in transition, where right now our CPMs are very, very high compared to the average, but we're also trying to offer a fundamentally different kind of product that we hope is much more effective.

If I were a shareholder, I would say, 'Where are we going?' It's fine that revenue is growing, but the team is growing a lot as well, and you are limited in revenue.

We're making it work. I think another advantage that we've had is that we started out from day one planning around this theory. We designed our business, our culture, our operational model around this gamble that quality would win over quantity, and so we don't have a lot of the costs. We've been able to quickly optimize for this model as we've grown.

And I think a few things are happening. One, I think the industry is maturing a bit more. Three years ago we would get a lot more objections from the marketplace, with people saying, "This is so expensive. Your audience is so much smaller than some of your competitors. Why would we pay for this?" In that case, we would sell them a test campaign. And now we see those budgets from those particular clients have grown three or four times. And we've seen 90 percent of our advertisers repeat their business with us and, more often than not, in larger deal sizes. So we're growing in that regard.

And then international is an increasingly large revenue source for us. We have a pretty thriving business in the UK and we go to Paris as well, and Geneva and other parts of western Europe. We're also increasingly talking to brands in other parts of the world. We launched Africa Edition a couple of years ago. In some markets like that, when when it comes to the question of CPMs, there is probably a lot more 'sticker shock.' It really is very expensive there. Those markets are a little bit earlier in their development, and as they mature, hopefully we'll be able to capitalize there as well.

Does that mean right now you are essentially running international campaigns, or do you do regional campaigns as well?

It depends. It's very complicated, the way that the industry is structured. For any brand, like GE, it might be a regional campaign, it might be international, or it might be global, which is actually different from international. So it really depends on each case.

Each client has different budgets that we can talk about. Right now we're probably tapping into a lot of clients' global or international budgets, and then there are also these regional budgets. In southeast Asia, for example, they might only want to target Indonesia. As those markets mature, maybe we'll start to move into those a little bit too.

You have a lot of traffic coming from social platforms, but I read somewhere that you are trying to have some control over that – that you don't rely too much on Facebook or Twitter or LinkedIn, or other platforms.

The way we looked at it is, every person out there has a very different set of preferences when it comes to how they get their news. And that's true of everybody and that's increasingly true as many more platforms emerge. So we've seen Snapchat Discover come out, we've seen our messaging app come out, and a lot of newsletters. Each user will have their own preferred way, and our approach is to basically try to accommodate each user in whatever way they prefer.

As an example of that, some people get our daily email newsletter and that's it. They love it, they read it every day, but they don't regularly visit our site. For us that's fine. Users just have so many choices and are bombarded by so many different things all day. So our whole thing is, let's just try to be there in the format that they prefer.

And so they'll see your brand maybe, or they recognize it, but basically they would never have to go to your website or to your app. You don't think that's a risk?

Looking at our data, that's certainly not the case. We have a lot of people coming in from Facebook.

I think we'll do whatever makes sense for the user. For example, for our video products, a lot of that distribution is only taking place on Facebook. We launched our video team, I think, in May of last year and we started out publishing those videos on Facebook and not on our site. Now we publish them on both qz.com and Facebook. But we started out publishing them on Facebook because it's such a great platform to experiment with video and see what the followers of Quartz like to watch and share and so forth. In that case, we were very much pursuing on a Facebook-only strategy at the time because it made sense for the user.

But back to your point about brand loyalty. If users know that they're not going to get a terrible, ad-filled experience when they tap on a Facebook link, then they're more likely to keep doing that.

For people who download the app and really like that as a way of getting their news, we are going to try to provide the best experience for them in a way that, yes, keeps them coming back. Right now we have all these 'download our app' promotional modules on qz.com, the website.

We're not expecting that all of these 17 million people are going to download the app and just use the app and we've captured them, because not everybody prefers to get their news that way. It's more about refining the experience for users who really prefer to get that. And, by the way, with the app, you maybe have noticed, it's a very short, finite session every time. It's not like an endless scroll.

It would be great if people were using the app at least once a day. And we try to schedule the updates at certain times throughout the day. Wake up, good morning, good evening, that sort of thing, to try to build the habit. But we've actually gotten this feedback from a few users who are saying that they've barely been going to the app, they just read the notifications. And they love the notifications; they love that market haiku that we send out every day. And that's fine too, if that's what they prefer.

You have this daily newsletter, with more than 150,000 subscribers – a very small number compared to the millions of visitors you reach with the other platforms. So what is the purpose of this daily newsletter?

The daily newsletter, we think, is very successful. We would like to see it have a larger audience, of course, but we're also fine with how it is now, because of three things.

One is that users are super loyal, so the engagement for everyone is very high. It has a 40-to-50 percent open rate, which has stayed consistent since we launched it, which is not so common for email newsletters. So to your point earlier about habits, the real value of the newsletter is that we are a daily habit for those subscribers. So that's really valuable to us, really loyal users.

The second is that the demographics of the daily briefs are really good too. About 48 percent are senior-management level people.

The third is that we're monetizing it very successfully because of those two first things. Even though the numbers are smaller than the millions and millions that you might have on Facebook, the quality of the audience and the deep engagement of the audience makes for a really good sponsorship experience.

You say sponsoring is successful for the newsletter, but do you mean specifically for the newsletter, or as part of a bigger bundle?

Most of the time we sell it as a package, including the newsletter and the website and whatever else the client wants. Some clients just love the newsletter and want to run in the newsletter only, so we'll do that as well.

Do you plan to expand the newsletter concept, creating verticals, for example?

The way we think about the current newsletter is that it's a general briefing covering multiple industries. So for a business professional in any industry, we hope this is a good enough experience. We are not opposed to having maybe more specific ones. It's something we'll explore, but we have no specific plans.

That said, we do have a weekly email that we do for Quartz Africa that's just about Africa news.

Author

Valérie Arnould's picture

Valérie Arnould

Date

2016-05-17 11:06

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