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The story behind setting up a news site

October 28, 2012 by Richard in Feature, Internet, Small business with 1 Comment

Every day an estimated 1 million new internet sites are launched. Once you peel away the numerous dummy sites that exist to feed SEO links networks, the vast majority are new ventures, small businesses or personal blogs like this one. Sites cost money and time to run and in the main they are started with the hope of a financial return.

This is the story of how and why I set up a news site called Asian Business Daily, the economics of running it, and why after nearly a year of operation, I am closing it.

If you are setting up or running an advertising funded site yourself, what I’ve learned will help you, so read on.

I’ll cover

  • business and personal objectives
  • the highs and lows
  • the economics of running a content site funded by advertising

Business and personal objectives of Asian Business Daily

About Asian Business Daily

Asian Business Daily (ABD) is/was a site containing business and finance news about Asia, primarily aimed at business people from outside Asia who had business interests in the region. If you worked in a multi-national with operations or suppliers in Asia, or if you were trying to set up a deal with Asia, I wanted ABD to help you understand what was going on.

We get to what I hoped ABD would turn into below, but for its one year of life ABD was a WordPress site, living in a slightly customised version of a $50 theme. News articles were added by writers based in the region, supplemented by editorials from myself and other people who contacted me along the way. Revenue was entirely advertising based with some dabbling in affiliate referral fees.

If I was being generous, the venture broke even. If I was being critical and honest, as I have been below, I lost money.

Business objectives

I felt there was a market niche to be exploited. Trade with Asia was growing and I felt the standard business news services in America and Europe didn’t provide much insight. Even sites like the Financial Times only seemed to cover what Western businesses were doing. If you did business with Asia, you were lacking information and insight.

My objectives were

  • 3 months
    • Get the site working and registering in the first five pages of Google for key search terms like ‘Asian business news’, ‘China business news’
    • Gain credibility such that respected blogs and sites on related topics would link to ABD
    • Be awarded page rank 1 or more by Google
  • 6 months
    • Hit 10,000 page views per month
    • Gain a link from a major news site
    • Achieve page rank 3
  • 12 months
    • Break even
    • Be growing traffic by 10-20% per month
    • Have sufficient potential to warrant investment in additional revenue streams
      • Market data on Asia
      • Webinars and conferences
      • E-learning centre for speaking business languages
  • 5 years
    • Have gained enough credibility and traffic that a major news media business (e.g. Fairfax Australia) would buy ABD to enhance its business and Asia credentials (Aim high, why not?)

At each stage I intended I would review performance against these objectives and pull the pin if not. Sounds good right? Sounds disciplined? Well I just about achieved 3 and 6 months targets, but I did give myself more leeway than I should. By 10 months though, it was clear I wouldn’t succeed and I finally got real.

Personal objectives

I had worked in business consulting for 7 or 8 years, and then taken the plunge to work with some small internet businesses. To begin with I knew very little about the practicalities of the web and learned a lot fast. The overwhelming sense I got was, “everyone else has taught themselves, just got on with it, thrown some money at an idea and either succeeded, or learned a lot for next time”.

On a personal level then, I wanted to experience that, do something that was mine.

The highs and lows

The highs

  • Getting my first story up
  • Receiving my first email from a reader
  • Being awarded page rank 2 from ‘n/a’ and seeing an immediate traffic uplift
  • Selling my first direct ad
  • Everytime I received an encouraging email from another site owner

The lows

  • Two weeks after launch and my traffic was no more than 20 visitors a day
  • When my main writer went AWOL for a week without warning… and then did it again a month later
  • The first time my traffic took a dip after a Google algorithm update
  • Telling other bloggers who had been supporting me that I was closing the site

The economics of running a content site funded by advertising

Income came from three sources

  1. Banner ads
  2. Direct sale ads
  3. Backlinks in articles

1. Banner ads

The revenue equation from banner ads is straightforward for most advertising platforms

Revenue = Traffic volume x CPC[1] x CTR[2]

or

Revenue = Traffic volume x CPM [3]

[1] CPC = cost per click. The rate you get when someone clicks on your ad
[2] CTR = click through rate. The proportion of visitor to a page who click on an ad
[3] CPM = cost per thousand visitors. The net effect per thousand page views

Simple though the equation is these all important ratios can make or break you. If you run a platform like Google Adsense then these are exactly the ratios you work with. If you sell your own ads, as I started to do, you can do so on a straight time period basis (e.g. a month), a number of views basis (CPM), a number of clicks basis (CPC). However, you price it, you will end up coming back to the same metrics.

Typical CPC, CTR and CPM for Asian Business Daily banner ads and references
CPC CTR CPM
Asian Business Daily $0.30 – $0.60 0.3% – 0.6% $1.50 – $2.50
‘Benchmark content site’ $0.30 – $0.60 2.0% – 3.5% $5.00 – $7.50
‘Metro newspaper website’ $20 – $25
‘Metro print newspaper’ $55 – $70

The ‘benchmark content site’ is based on observed analytics of a couple of well run sites that pull in around a million visitors per month and monetize that traffic from ads inserted into the content.

The ‘metro newspaper’ metrics are based on analysis I did of Fairfax’s Sydney Morning Herald and Melbourne Age. The CPM of the print version is in terms of income per page per thousand copies.

The immediate observations ofare

  1. ABD’s achieved click through rates (CTR) are poor, running about a fifth of the benchmark
  2. The Metro Newspaper website achieves a significant premium in CPM not only over ABD but also our benchmark

CTR can depend on the strength of the context of the ad to the content and unless you directly pick your ads, you are reliant on those you get served by your ad platform (e.g. Google Adsense). If your traffic is low it doesn’t get the chance to refine the ads that will work for that page. The benchmark site has sufficient traffic that Google can optimise each page much better. I got approached by several ad platforms as alternatives to Google, but I found Google not only generated similar rates, but had a better quality of ad. One platform Lijit, seemed to rely on using annoying ads that were not contextual and in my opinion heavily detracted from the content of the site.

Another factor of CTR is placement on the page relative to the content, which unfortunately is reliant on programming skills to implement

In terms of the Metro Newspaper’s CPM, this is probably determined by CPC rate. The newspaper is able to sell ad space directly and therefore achieve a better price. Its brand and known readership means it can command higher rates than general ads served up by someone like Google. Not to mention that Google must also take its cut.

 

2. Direct Sale Ads

Its no secret that Direct Sale Ads command better CPM than generic contextual ads. The problem is you can’t sell ads directly until you can prove your traffic and longevity, and selling ads takes time and money.

I sold three series of direct ads, all from people who approached me directly. All were done on the basis of monthly deals. Perhaps I could have done better being proactive but I didn’t have the time to spare. As you can see below, I achieved rates similar to our benchmark site this way.

CPM Rate Comparison, Adsense and Direct Sale Ads
CPC CTR CPM
ABD – Google Adsense $0.30 – $0.60 0.3% – 0.6% $1.50 – $2.50
ABD – Direct Sale Ads $7.00 – $7.50

I sold my direct ads on a ‘per month’ basis with no clever rules about when the ads were shown. If you do want to implement rules about when to serve up your own ads, the Google’s Doubleclick is pretty easy to use.

3. Backlinks

High quality backlinks are the mainstay of most SEO strategies and a decent site can supplement its explicit advertising income with this more indirect form of advertising. Once Google grants you page rank of 1 or more, you will start to get enquiries for selling or renting links to sites. Everyone wants links from genuine sites with real content and real visitors.

Often the advertiser will provide the article that contains the link too, but these are generally poorly written and your reader can spot them as an SEO article a mile off. I tried to find a story that fitted with the enquirer and fit the link and their keyword anchor text into the news story.

The price paid for links goes up with site page rank and would start about $25 at page rank 1, moving to $50 or more for page rank 3. You shouldn’t put more than a couple of links on the page, and you should allow the advertiser to have exclusivity to the page.

Operating Costs

Over the ten months the site operated, the main costs, apart from my time were:

  • News articles $1,050
  • SEO $100
  • Hosting $100
  • Email marketing $0
1. News Articles

News on ABD was sourced from various local asian news outlets including the business pages of Chinese newspapers. I employed local writers through ODesk, a freelance contracting portal, for around $2.50 for a 250 word article. The writers rewrote the stories in English, and were supposed to provide a western context. They then logged on to the ABD WordPress portal, picked an image from the library, loaded the story in, categorised it and published it.

I kept an eye on what was going live through the WordPress mobile app and although I frequently had to edit the material, it mostly ran itself. Keeping the articles on the right topics was challenging, as was getting frustrated at their lack of insight. I had to keep reminding myself that not only was I only paying $2.50 an article, but they had grown up in a culture that was not naturally sceptical of government controlled news.

The stories from the writers were supplemented with ones that I came across and my own longer opinion led editorials. In fact, if I got one great thing out of Asian Business Daily, it was that I became truly engrossed in what was going in Asia.

I was also grateful to receive very good contributions from American and English business people in China which I published in return for a link back to their site.

At around $2.50 an article therefore, the content would pay for itself when viewed around 1,250 times. (Advertising income ~ $2 per thousand page views).

Even at 10,000 page views a month therefore I was losing money since I was publishing about 40 articles a month. On average, that means each new article is viewed just 250 times. I would need 50,000 monthly page views, or much better CPM to breakeven on articles.

2. SEO

SEO, search engine optimisation, covers a host of techniques and there are many people who can make a better claim than me to know how best to deliver traffic to websites. Indeed, part of ABD’s failure would be due to my poor SEO.

I had the fortune to work with some people who knew the subject quite well and attended a couple of conferences in Las Vegas such as Pubcon. So, I was self taught, and part of building ABD was to learn more.

I got ABD to page rank 3 at its peak through careful link building and promotion on sites that were associated with Asia, China and business. At it peak Google Webmaster Central was telling me I had 3,875 links to ABD, of which 2,564 were to the homepage and these came from 201 unique domains. I’m really not sure whether that is good, bad or otherwise, but I’m told the number to focus on is the number of unique domains, which assuming they are all hosted from different places, gives reasonable diversity. The number of links seemed to grow at about 20-30% a month, and after the first couple of months, I didn’t have to add many myself (again, my hands off approach could be the cause of the traffic problems).

I had four types of self generated links:

  • Blog comments
  • Blogroll links
  • Directory links
  • Dirty links (!)

Blog comments

I made sure that I added comments to business news and current affairs sites that mentioned a China or Asian business subject, along with my website URL in my profile. Where possible I referred to a specific article we had written and left the website’s name in my profile. I avoided an comments that would appear ‘spammy’ or any sites that did not appear genuine. Many of the influential sites (e.g. ft.com) would allow links but they did ‘not follow’, so the contained no link juice. Their traffic was worthwhile though.

Blogroll Links

I exchanged homepage links with a number of sites covering similar material. ‘Blogrolls’ are the list of links that appear somewhere on the homepage as ‘resources’ or something similar. This was hard to do to begin with but after I had gained some traction and proved I had a site worth linking to, it became easier. Most of the people running the site were very happy to exchange tips by email as well, and seemed to be in a similar position.

Directory Links

I know. Most SEOs count these as bad links. But to get going they seemed to be the only way of getting anything. I didn’t have the luxury of owning a proprietary network of sites which many SEOs seem to have. On the other hand, directories that listed news sites actually delivered a reasonable amount of traffic, so they couldn’t all have been bad. I also paid to have articles for library sites written and although they probably add nothing in the long term, they did at least get the site initially ‘powered up’.

Dirty Links

These are really bad, cheap and possibly the cause of the later traffic problems. $5 on fiverr.com will buy you a set of dirty links from a dark distant forum on harvard.edu or similar. They really aren’t worth it.

This article on backlinks, their value and practically what a start up site can do, is worth reading from Search Engine World – The Seven Golden Rules Of Link Building

3. Hosting

My hosting ended up costing $100 or so. You can get it cheaper, but I did that and had to get a different host very quickly afterwards because the first cheap host was so slow and more often than not, offline.

4. Email marketing

Traffic from daily or weekly emails started to become a significant source (2%+) once my email list got beyond 100. Obviously it could do with being more, but I was surprised how readily people signed up once I’d added a ‘sign up’ icon next to the story.

Technically setting up a daily or weekly email of the latest stories and managing the subscriptions was so easy thanks to Mailchimp which offers a free service for the first 12,000 emails you send per month. I love business models that help new businesses get started!

 

Why I closed the site

  • The economics were not working and were unlikely to work without significantly higher traffic
  • ABD was unlikely to get significantly higher traffic unless the content quality also increased significantly – which would cost a lot more, raising the required traffic level higher again
  • I did not have the time to devote to search engine marketing, advertising sales and alternative revenue sources needed to make it work

Sadly since the site was closed I think my understanding of what is going on in Asia, China particularly, has reduced. However, I think it was the right decision, despite the effort and funds that I had put in.

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One Comment

  1. Johnson BrierleyOct 30, 2012 at 8:50 pmReply

    A very complete and informative dissection of how to make a functioning site and how to gauge the success of that site. I though i knew a few things about running a website but i guess you dont know what you dont know until someone spells it out like you just have. Thanks – i think!

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