Spot.Us’ Version of Advertising – What Are Your Thoughts?

Perhaps it’s ironic for me to write about advertising. Fellow Knight News Challenge winner Dan Pacheco can quote me as once saying “f*&# advertising” and one of the initial inspirations for me to get into journalism was Adbusters Magazine. Below I want to describe a potential advertising model that Spot.Us hopes to employ (and others can steal) along with general thoughts about the diversification of revenue streams.
Community Centered Advertising

The underlying inspiration for Spot.Us is to give the public a freelance budget so they can help set the editorial agenda. Right now that is done via contributions from their own wallet. But what if they directed an advertising budget? What if the people to whom an advertisement was directed had a say in where the money it generated went? I imagine it would look something like this.

A button on Spot.Us that says “Earn Credits.” Upon clicking a user is sent to a blatantly sponsored page. We even have our first sponsor Mortgage Revolution. They are holding a fundraising event in San Francisco and part of the proceeds will go to sponsor our first Community Centered Advertising campaign which will try and stir up conversation about the real estate and mortgage industry.

In Community Centered Advertising the sponsor is looking for some kind of engagement with their brand, cause, business, etc. In the case of Mortgage Revolution they hope to stir up a healthy conversation about the real estate and mortgage industry. But let’s use Levi Strauss purely as an example.
Perhaps Levi’s provides survey questions:

• What is your favorite cut of jeans?
• What is a memorable Levi’s moment you’ve had?
• You buy Levi’s jeans because… (multiple choice answer).

Or it can be a branded survey simply to get the customer to think more about Levi’s

• What year was Levi’s invented? (Multiple choice)
• Guess how much of material X Levi’s produces a year?

Or a quick video that people have to watch Hulu-style.

Upon engaging with the advertisement the Spot.Us community member earns X credits, which represent real dollars, and they can direct those credits toward funding the story (or stories) of their choice.

The community still makes the decisions about what stories get funded but they are doing so with our advertising budget, not their own money.

At this stage it’s just theory but we have our first sponsor and hope to roll this feature out soon and I hope more sponsors will follow (if interested in details, send me a note: david@spot.us). Then again, we may find that the Spot.Us community reacts negatively to it. Who knows? That’s why we need to try it — even new media experiments need to experiment.

Depending on the level of the sponsorship Spot.Us would probably take a small overhead fee. But even if we didn’t, I would feel encouraged that with a low overhead we will be funding independent reporters. (Want to know when this feature is live so you can be one of the first to try it out? Sign up for our newsletter).

Journalists Awash at Sea

I bring this up because like all news organizations Spot.Us needs to diversify revenue sources. An analogy I often use is that, “Journalists are awash at sea. Previously we could rest the majority of our weight on a few revenue streams — advertising, classifieds — but now we need to get many revenue streams and a piece of rope to tie them all together in order to make a stable raft that distributes our weight.”

This also requires re-thinking and re-inventing our relationship with classifieds, advertising and even coupons.

One of the problems I’m observing is that instead of re-inventing our relationship with classifieds, advertising and even coupons, news organizations are assuming they can take the old models and stick them on the web and move on.

Craigslist as Counter-Factual; GroupOn as Factual

I hate when journalists point to Craigslist as a “killer.” But let’s talk about why there is so much tension there. The fact is Craigslist was not a technical innovation. Any newspaper company could have invented it. They didn’t because it would have drastically re-thought their relationship with classifieds. The bummer in this is that newspapers were really always in the advertising and classifieds business and used their profits to support journalism. That business has dwindled and journalism has suffered. Imagine if Hearst had created Craigslist? The profits from that would most likely be pumped back into newspapers.

This isn’t to knock Craigslist either. With his profits Craig Newmark has created the Craigslist Foundation which is a HUGE boon for society. Craig has also supported journalism here and there. Understandably this isn’t his top issue — but at least it’s on his radar.

Now look at GroupOn. Take a good hard look. I think Michael Skolar is right in his post “I‘m suggesting you steal the idea for your local news operation fast before national competitors own the market.”

These sites represent a new relationship to coupons, one of the last great revenue streams is being revolutionized right underneath newspapers’ feet. And once again the technology isn’t mind-blowing. I’m talking to the big guns (Hearst, McClatchy, Gannett, etc.) when I say “start something like this up now or buy one of these startups.” The revenue you make can be reinvested into journalism because that’s what your companies do.

I consider the founder of GroupOn a friend, but I doubt his company would just take profits and subsidize journalism — that’s understandable. The few companies that historically used profits from advertising, classifieds and coupons to prop original reporting are few and some of them are going bankrupt.

Re-inventing our Relationship to Advertising

One of the reasons Facebook is worth so much is because of the relationship they have created between advertisers and users. As an example a little birdie at the NY Times once told me that the number two country for registered users on the New York Times was…Afghanistan.

Before you start scratching your head as to why so many Afghans are reading the NY Times, consider the image of this registration drop down from NYTimes.com:

Now you can stop scratching your head.

Compare this to Facebook where most people freely reveal their age, religion, relationship status and more. Now ask yourself: As an advertiser, where do you want to be? The site with lots of people pretending to be Afghans or the site where you can target the customer you most want? Privacy issues aside, it’s pretty ingenious. And some might even argue that a good advertisement is good content. If the advertisement is exactly what you were looking for, it isn’t annoying — it’s helpful.

Interestingly enough the new relationship to advertisers is predicated on the new relationship with the audience. The more the audience is ready to reveal about themsleves the more advertising is valued. Same with GroupOn. If a customer freely reveals they are interested in a deal before it becomes official, the small business offering the deal starts licking their chops — rightfully so. And in all cases the user is incentivized to reveal the information because it’s in their benefit. For the Facebook user they are connecting with friends. For the GroupOn user, they are looking for money saving deals.

With Community Centered Advertising our hope is that community members are encouraged to reveal something about themselves in exchange for the ability to fund the original reporting of their choice. Most news organizations don’t have a system by which individuals can direct cash towards stories but perhaps they can offer something else?

What incentive can a news organization give to a user so that they freely reveal more about themselves in an effort to become more attractive to advertising? I would argue that it’s best if the end goal, to become attractive to advertisers, is done above the table — as with Spot.Us’ model and GroupOn’s. There is no deception. You are engaging with an advertisement. I wouldn’t argue that Facebook is being devious, but certainly they have come under criticism because users aren’t sharing their info with advertisers in mind, but rather with their friends as the goal.

So Now What?

As always, I never claim to have solutions. Just crazy ideas that I want to execute. Keep your eye open for Community Centered Advertising. If you’ve never donated on Spot.Us before, I hope this inspires you. Instead of having to reach for your wallet, you can just donate a little time and a little bit of your own knowledge. Register for our newsletter why doncha!