Ian Burrell: The News Business

Covering the most powerful media companies to the smartest startups, former Independent media editor Ian Burrell examines the fraught problem of how news is funded today. Follow Ian @iburrell.

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Is this the monetisation model that will sustain open access journalism?

Four of Britain’s best-known magazine brands are in talks to use their websites to trial a new advertising model which claims it can be the commercial saviour of open access journalism.

The four titles, from two large UK publishing stables, are set to test supporting their digital operations solely through Rezonence’s FreeWall system, which requires users to engage with a single ad per week for unfettered access to a site.

In an interview with The Drum, Rezonence co-founder Rowly Bourne says: “We will be launching later this year with four publishing sites who are going to turn off all of the ads and just use us. That will actually make them more money – even though you are getting fewer ads.”

Dame Frances Cairncross, in her recent government-backed review of the sustainability of journalism, highlighted Rezonence’s model of using only a single ad on a web page and demonstrating reader engagement by requiring an answer to a brand-related question.

Bourne argues that by making 20p a week from advertising through FreeWall publishers will generate £10.40-a-year from each reader, compared to around 50p-a-year per reader currently generated by mass market news sites. “You make significantly more from one engagement a week than from 10 ads to a page, where there is too much supply,” he says.

Publisher backing

The trial of FreeWall as a sole ad strategy is a major step forward for Rezonence. It currently has 14 publishing partners on board, all of which have been using its model alongside other ads.

Those publishers are Reach, ESI Media, City AM, Conde Nast, DC Thomson, Haymarket, Hearst, Bauer, Immediate Media, IDG, TI Media, Incisive Media, Contentive and Netmums.

But four years after launching its Freewall idea as a so-called “third monetisation strategy” for publishers (alongside subscription paywalls and current digital advertising models), Rezonence has not yet won the support it needs from advertising agencies and clients. Bourne says he has had to be patient. “Until we had all the publishers on board there wasn’t the supply to interest the demand. It was pointless walking into Chanel if I didn’t have Conde Nast, or walking into Lloyd’s if  I didn’t have the mass market.”

He claims that the “only reason” that the FreeWall model has not “proliferated across the web” is that Rezonence is not generating sufficient ad revenues. “For The Mail or The Mirror to launch us to sustain their entire business we need more ad demand”.

The London-based marketing and insights company, which employs 25 people, has worked with clients including Sky, Unilever, Procter & Gamble, Nestle, Visa and Carlsberg but needs to be able to offer publishers a greater spending commitment. “It’s about getting the agencies and brands on board,” says Bourne of his future strategy. “The next 12-24 months is about demand, demand, demand.”

During her review, Cairncross referred to Rezonence (and micropayment publishing model Agate) as “entrepreneurs with ingenious schemes to help newspapers improve online revenues”. In her written report she celebrated its efforts in the fight against clickbait journalism. Her support has prompted “five direct approaches” to Rezonence, from three publishers and two advertisers, Bourne says.

The Rezonence model pays 75% of revenues to publishers because “they have done most of the hard work in writing the editorial”. Yet even now newspaper and magazine companies are reluctant to fully embrace his model, Bourne admits. “Most publishers see us at the moment as a vendor not a partner – and we would like to get to that partner relationship.”

The idea of the FreeWall came from Rezonence co-founder Prash Naidu, a former research analyst at Deutsche Bank. Bourne is a former M&A specialist at Citigroup, where he covered technology, media and telecoms. He previously worked at the online video platform Blinkx, where he “got my teeth into ad tech” but endured a “horrific” company controversy over client traffic data.

Combating clickbait

He claims FreeWall can enhance the quality of journalism by discouraging clickbait. “We have flooded the internet with impressions and it’s driving journalists to write stories which are about getting clicks, not about getting people to read to the bottom of an article,” he says, quoting Chartbeat chief executive Tony Haile’s observation that 55% of readers quit a page within 15 seconds.

“The CPM (cost-per-mille) business model was never designed for and cannot meet the needs of an open access internet,” says Bourne. “It works for social media and for Google who aren’t paying for content and editorial, it doesn’t work for editorial media.”

Rezonence was pleased that the online advertising body IAB, in its submission to Cairncross, flagged up the cost-per-engagement (CPE) approach as a viable alternative to CPM. “There are some advertising products that are designed specifically for this purpose that are designed to directly engage individuals with the ad, creating active engagement that advertisers are generally willing to pay a higher price for.”

FreeWall, which loads after two paragraphs, presents publishers and writers with a challenge, Bourne argues. “It says prove that this content is worthy of being read – you have two paragraphs to get the consumer interested.” If the reader wishes to go on, they must answer the question to have unhindered access to the site for seven days.

“It’s the oldest form of communication in the world and the way the education system works with tests and exams. What easier way for a brand to know that their key message was looked at and understood by a human being than to ask a question?"

Readers must engage fully with what they are being asked, unlike users accustomed to being able to “skip” pre-roll video ads without absorbing brand messaging. Some FreeWall answers are bogus and require the user to respond to the question again. “We are training consumers like Pavlov’s dog that the quickest way to get on with what you want to do is to pay attention.”

FreeWall ads, limited to 52 per year per site, should attract premium rates and, in time, will be associated with high quality content by readers, Bourne argues.

Convincing readers and reporters

One commercial chief at a publisher that works with Rezonence told The Drum that FreeWall had divided opinion. While the model had generated “some nice traction” there was also concern on the editorial floor that user engagement with content was being interrupted.

When Rezonence begins its pivotal project with the quartet of magazine sites this year it will attempt to educate the public on how digital journalism could work differently from the current choice between multiple ads per page or paywalled access. “We are going to do a whole education piece about why Freewall is a better experience – because consumers are oblivious.”

Research conducted by Rezonence found that many Londoners could not distinguish between sponsored content and editorial and thought that online banner ads were worth thousands of pounds in ad revenue per impression.

Bourne argues that advertising needs to face a reality check that “consumers don’t like ads” and to shift online media to an editorial-advertising balance that is closer to broadcasting. “The way the TV and radio ecosystem exists is that 20% of the hour is advertising and 80% is editorial,” he says. “In digital editorial 75% of the real estate is advertising, and 80-90% of page loading and data usage is for ads. We have got it completely the wrong way round.”

Advertising on editorial media has become “too difficult” for many brands, he claims. “You almost need to be a rocket scientist to understand the multiple DSPs and SSPs and the like. But it’s so easy to buy an ad on Google or Facebook.” Unless this changes quickly, “there will be fewer and fewer places” for ads to run. “I keep on shouting to advertisers – ‘Use it or lose it!” Bourne says.

Cairncross might have been impressed with the FreeWall model but she was equally interested in why it hasn’t yet taken off. “She wasn’t asking whether we had the right answer, she was asking why we haven’t solved it yet,” Bourne says. “My answer was that I’m a UK startup competing against 6,000 other (UK advertising) vendors. I need time to do this.”

For all the media industry’s talk of it being fast-moving, it is “bloody slow” to change, he complains. But with its publishing trial arriving later this year, FreeWall’s time might have come.

Ian Burrell's column, The News Business, is published on The Drum each Thursday. Follow Ian on Twitter @iburrell

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