Full Podcast Transcript
Eric Enge: Hello, everybody. This is Eric Enge, I am the CEO of Stone Temple Consulting an online marketing firm that does SEO, Pay per click, social media consutling. Here today, we have Dennis Mortensen the CEO and founder of Visual Revenue, who is known in the industry for his also being founder of a company called Index Tools, a leading analytics package that got acquired by Yahoo a few years back. Thanks for joining us today, Dennis.
Dennis Mortensen: Thank you very much.
Eric Enge: Alright. So, I think we are going to talk today about the media industry and the online environment for that industry. And, I was hoping we could start by talking a little bit about just how far along traditional media players are in their shift towards a focus on online?
Dennis Mortensen: So, I think you can look at this in two ways. You can look at it from a view of how far they are in processing their revenue from offline to online, or you can view at, look at this problem from a viewpoint where you think of how far they are in their thinking of the fact that their business should move online. And, I think from a monetary point of view that’s certainly not where they want to be. I think from them deciding that they must move from a printed channel to an online channel, I think they are pretty far ahead. And, most of what we read which is that they don’t get it, they will never get there, half will die in the next six months is in fact too aggressive.
Eric Enge: So, they’ve got the basic idea, but they’ve got work to do in terms of getting there. So, that would suggest that they are facing a number of different challenges along the way. Can you talk a little bit about what those are?
Dennis Mortensen: Certainly. So, my opinion is actually slightly aggressive in the viewpoint of a journalist. But, if we are just honest for a second here, what they do and forget about the idea of some institutions keeping democracy in place or them being the fourth estate, think of what they do as not very different from any other business. They produce a set of products. Those products just happen to be content. And, if you are in the business of producing content, you should make sure that you have a decent return on that investment.
If you are the telegraph, you might produce eight hundred pieces of content on a daily basis. You want to make sure that you have a fair return on that. And, I think if you look at it from that viewpoint then you do have multiple challenges. First of you should figure out which products, and with that I mean which specific articles should I produce.
Even before you write that first word, and forget about the specific responsibility which you have, think about this at least for a moment as a business. And, that’s the first challenge that most of the production is based on gut feel. There is not much science really that goes into figuring out the demand. The demand is really figured out in a way where the editor decides that you must know this because you are a citizen of Connecticut, and thus this must be on your agenda. Some of it I think is justified; I think a lot of it might not be.
The first challenge as an editor or an organization and as a publisher you must figure out that demand. Then I think the second challenge is around being able to produce the content in the most cost effective way. So, that means some content, you should probably not even produce that, it’s been produced already. All you should do if you believe this is important to your audience, you should link to it. You should see no shame, just like you are seeing folks like The Huffington Post, or any other blogger being willing to do, link to a story or you might choose that this is the story that we are not going to write an in-depth story about how we believe this should be approached over the next four days or five days, you might just write a short abstract and that’s that.
Or, it might be one of those stories where you believe that we should heavily invest. This is the one way I should stand my own photographer, or we should do a small video that goes along side the story itself. We should follow-up tomorrow or we should create a topic pace, we would go all in the story. So, there are certainly a set of decisions around how to produce in the most cost effective way. That of course means also selecting where to invest, that’s the second point.
Then comes the third point, and I think this is where most people start today. They almost forget the two prior points which says demand, yes somebody figured that out, produce yeah we’ll do what we did yesterday. But, the third point is the ability to promote this content as effective as possible into the channels that you want to participate in. When I speak of channels that can be anything from your own homepage or your own section front to social and every in connection whether that be Facebook or Twitter through your RSS feeds, through your emails, through what have you.
Then finally, I think the last element which we need to take into consideration, and you can’t forget is how people are going to consume it. So, the consumption itself could be selective. It could be that some content doesn’t go on my website, it only goes in the iPad version, that’s the willingness of somebody being okay with paying me four ninety-five, they get the luxury of having a certain set of content. I am not saying that’s right, I am saying that’s an opportunity. And, you certainly need to kind of figure that out.
It kind of happens already. So, if you signed up for the New York Times RSS feed, you don’t receive five hundred stories a day, you receive a selection. So, we need to take that into consideration. So, that’s my view of the world which is very firm on figure out the demand, produce it the most cost effective way, promote it to the maximum extent into every channel that you want to participate in, and make sure that the consumption is thought about before you just randomly and haphazardly just post stories out to everyone single channel.
Eric Enge: Right. So, if I were to try to summarize all of that, you go from a world where you always produce a comprehensive piece, and you have a captive audience inside a traditional media vehicle like a newspaper, to one where the production changes to scaling to the incremental need. In other words an abstract that links to somebody else’s piece or comments on someone else’s piece might be all you produce because that’s the incremental need in your piece. So, that’s one thing that’s different. The promotional channels are different. Instead of having subscribers and going out to newsstands you are promoting in methods where the quantity that might be consumed changes in a dynamic way from day-to-day depending on how effective you are producing things that meet the incremental content need.
Then, the third thing is recognizing that you can get audiences not even just through websites, but through maybe as a mobile version, an iPad version, and various things. I mean now you have to tailor to a lot of different environments, and when I add all those things up that’s a lot of changes in a pretty different structural, or a very different sounding company and a traditional media company.
Dennis Mortensen: I think you are right, but I think we have other industries which we can learn from. So, if you and I were to walk into the trading floor of Deutsche Bank on Wall Street this morning, I’ll be very surprised if we would not see two hundred something traders looking into a Bloomberg up terminal. And, they would get efficient support for whether to trade a given stock. They might even have some automated trade setup so that’s when a stock reaches a certain threshold, a sale or buy will happen automatically, or they might even go completely against the market, but knowing that they are doing exactly that.
If you and I walk into the newsroom of some organizations, would you see a hundred a fifty people looking out the window trying to decide what to do. If that was the setup of Deutsche Bank, that is not where you are going to put your money, it seems almost ridiculous that they are about to setup a new fund saying so what is your trading philosophy, you know what, we are just going to wing it. The fund is going to be a $100,000,000 and we are going to wing it; that seems silly.
Eric Enge: Yes.
Dennis Mortensen: It seems okay for media to go out with similar sized budgets. And, figuring out demand, figuring out production, figuring out promotion in a nonscientific way, I do understand that the difference between trading a stock and publishing a news piece in a local region is different. But, I want to, and I am saying this with the utmost respect. I do think that some of these applications are businesses like anything else. And, you really need to be unique to hide behind the idea that your responsibility goes above and beyond revenue, which is that you are supposed to uphold democracy, or you are the fourth estate, or you are anything which is different from you being supposed to generate revenue off of this content.
So, I am not sure really that what used to be very manual in trading stocks, and what is very manual today which is producing content and promoting content will not be a whole lot more scientific in the future. We’ve already seen some companies, and it doesn’t matter whether we like or dislike Associated Content, or Demand Media. They are trying to apply science to at least the tail end of the market. And, you know what, in current events you see the exact same thing happen.
Eric Enge: Right. And, all this suggests to me, it feels like a very dynamic environment. So, it seems to me like there has got to be a huge need for freshness.
Dennis Mortensen: We’ve done tons of studies at Visual Revenue as part of us building our model on what stories to promote where on the homepage, and so on and so forth. And, you are absolutely right. One of the conclusions that we came to was, if I take just one of our customers as an example, the average article lifespan for them is about eight hours.
Eric Enge: Yes.
Dennis Mortensen: Eight hours, that means from when you produce the content to the point where it ends up in the archive, that’s eight hours. That means your opportunity to create revenue off this piece of content that is eight hours. After eight hours it doesn’t matter. That is an aggressive environment to be in. I think that’s if anything even more stressful than working at the New York Stock Exchange. So, if you want to work in that environment, you certainly need tools, technology, decision support, and other elements to make sure that you can survive in that.
Eric Enge: Right, yes absolutely. And also, it seems to me that you need a lot of tracking assistance so that you can tell what’s going on, right measurement and tracking systems?
Dennis Mortensen: So, I am of the opinion that collecting data in itself is a commodity. Anybody who is willing to collect and store data can do so for little or no cost. Deriving some sort of insight from it comes cheap, and it’s certainly something which you can work at; making sure that you take action and create value out of it that is a lot more difficult. So, when you see people handing out credentials to Omniture or Google Analytics if you will to editors or journalists or people in media in general, I think that if anything, it is more dangerous than not giving them access at all.
I would like an analyst to be the analyst. I would like editors to be editors. So some, and I like the analogy of traders, some people are not supposed to have access to raw data, but the access to raw data and the ability to slice and dice it doesn’t really assure you that you get to right conclusion. That might just be a conclusion which you will kind of pack your stuff on the back and say I am data driven, but it might be a completely wrong conclusion.
Anyway, you would want analyst to figure out whether you should produce more political content, or less political content, or whether you should write your stories longer or shorter, whether you should publish them in the morning or in the afternoon, whether you should have editors in place from midnight till morning, long-term strategic decisions. But, what you want to have in place in front of your editors are decision support systems that collect all the data, model out suggestions and conclusions which they can act on. You can say no thank you, or yes please, but they shouldn’t turn into mini analysts. Well, that’s not what you learn at Columbia over four years, and you are not supposed to.
Eric Enge: Yes, understood. So, can you take a minute or two and tell us a little bit about what Visual Revenue is doing?
Dennis Mortensen: So, absolutely. I would like to give you the daylong seminar, given the fact that we don’t have time for that, what we do is decision support for editors. So, we’ve come up with this model where we can take any piece of content and we can predict exactly how well that will perform in any given position on the homepage or the section front. And, based on that ability we can come up with a set of very specific recommendations for what content to put where, and for how long to keep it there.
So, in essence if you will, we created a really smart editor. And, we are not trying to change the workflow of the process really. All we are really trying to do here is if you will to become that Bloomberg terminal of the newsroom. We want the editors to be empowered; we want them to be able to take better decisions faster that are more profitable. But, we don’t want to take their job; we just want to make sure that they do their job really well.
Eric Enge: Right. So, you actually play the role of being the analyst to help them make better decisions about what, like you said what content to put up for how long, but also as you told me before they have an option of where they can just get it as passive information which they act on or not, or you make a recommendation and they can say yes, let’s implement it, and you actually do the backend part of making the change on the site as well.
Dennis Mortensen: Exactly. So, if we go back to my four points from earlier, what I really do here is once they figure out the demand, and once they produce the content, they reach that point of not being able to turning back the clock or the point of no return if you will. That means now the time starts, and you need to promote, sorry for being blunt, the hell out of that story. And, you have eight hours to do so. That’s where I start. So, once that piece of content entered the article tentative pool, I help you make sure you make the most of it such that telling you that story on Libya; we should put that into the hero spot. That story on Egypt, we are going to put that in right rail #2. That story on economics, that is not working at all, let’s pull that from the front page, put it into the second position on the section front. And, they’ll take me up on some of those suggestions, and some of them they’ll leave. But, the value of doing this and the change in the workflow process that we’ve seen is that they end up doing many more updates during the day, much more correct, and at a much higher value.
Eric Enge: Yes. And, that sounds very exciting. And, you obviously have landed a number of significant brand name customers already, which indicates that you are getting a good acceptance for this notion among major publishers. I see CNNMoney, Wall Street Journal, Forbes people like that.
Dennis Mortensen: I think we’ve been able to pull this off, but we started out with the idea that it was not us against the editors. It was us and the editors against the rest of the world. And, that means that any of the modeling that we do, we do that with what we call editorial tone modeling on top of it, simply assuring that I don’t turn The Financial Times into the New York Post or vice versa because they are supposed to stay exactly who they are. So, we assure that we don’t make recommendations that are outside the tone of who they are, and the integrity which they have we keep that intact.
Eric Enge: Right, now that’s great. Hey, thanks for joining us today, Dennis.
Dennis Mortensen: You are most welcome. Thank you very much for having me.
Dennis Mortensen is the Founder and CEO of Visual Revenue. He’s a pioneer and expert in the analytics, optimization and online marketing space and has been since its inception – he is also a fully-fledged entrepreneur and successfully delivered a number of company exits. Dennis is obsessed with the marriage between News Media and Analytics and this passion triggered the formation of Visual Revenue. He’s an accredited Associate Web Analytics Instructor at the University of British Colombia, the Author of Data Driven Insights with YWA from Wiley and a frequent speaker on the subject of analytics and media.