Business Insider just received another $12 million in investment last week.
BuzzFeed has collected $46 million in funding and Vox Media has collected about $80 million in venture funds, Quartz reports.
You could make the argument that big media is back in online publishing form. It could also be said bigger is better when it comes to publishing news sites online. But in a recent USA Today post on Business Insider’s latest windfall, journalist and former media entrepreneur Michael Wolff suggests just the opposite.
“Overhead and other traffic-acquisition costs push expenditures well past $19 million. In other words, it costs more to get traffic than what you can sell it for.
In this, Business Insider finds itself in the CPM vice. The cost per thousand page views (CPMs) — a measurement beginning to be as common in conversations about digital media as movie grosses were in the 1980s — slides ever downward.”
To keep its traffic, Business Insider must produce a lot of content. But as the online inventory of content continues to increase, big online media faces another problem. There’s a decrease in the amount of pay-per-click advertising available to drive their revenue. Meanwhile, most efforts to boost traffic will only increase their costs or won’t make enough money long term.
Wolff suggests various solutions:
- Invest more heavily in video advertising which tends to get higher revenue per page view but can also see lower conversions.
- Invest in new traffic strategies which short term bring higher traffic volumes at lower costs until your competitors figure them out raising the bar for everyone.
- Develop a source of revenue outside pay per click advertising (like conferences), though this model also has its challenges.
Finally, Wolff adds:
“You could accept a smaller business and make it profitable by carefully controlling your costs — but in the case of Business Insider, it’s already taken too much investment to settle for a small business.”
In the end, the surprising lesson smaller publishers may be able to learn from Business Insider, BuzzFeed, Gawker and the rest – is to stay small.
It may be too late for big online media to take that advice, but small publishers may still want to consider it.
Lesson Photo via Shutterstock