Two examples of the shift from horizontal media to vertical have caught my attention in the last week, although both of them have been around for a while.
Monday’s “Online Media Daily” has a story about AOL hiring laid-off journalists for its new(ish) cluster of vertical channels. There are 70 such vertical channels already launched, with 30 more being planned. They’re going for the biggest verticals (duh…) and some, like TMZ, have already become major success stories.
This is an example of what horizontal book publishers have to do. AOL as it was originally became a dinosaur. They built a huge audience by making Internet 1.0 simple and accessible to most people. When Internet 2.0 came along,. the big opportunity would have been to become Facebook, but they missed it. However, they still had a huge audience, a legacy audience. They’ve been able to use the human bandwidth they have from that to build these verticals.
This is analogous to what big trade publishers have to do. They are still placing millions of hard copy books each year in people’s hands. They can drive people to URLs, just like AOL could. Their power to do that will wane, just like AOL’s has. How many of them will have a TMZ when their main franchise is no longer powerful?
The second example is from an agency called Verso Advertising. Verso recognized that what is true of web content — that it works best organized by market niche — is also true for advertising. So they invested the effort to build vertical “channels”: aggregations of web sites that serve a particular interest.
Verso reports that they have 13 channels “built” with more to come. Pop Culture, Teen, and Parenting are the three biggest. Pop Culture includes 650 web sites and touches 21.4 million unique visitors a month. The Teens channel of 300 sites is sub-niche customizable by gender, subject matter, and age range. The Parenting channel includes 120 sites.
Verso started thinking about these niche aggregations two years ago. They saw the haphazard way Internet advertising was being purchased and the big opportunities in targeting. They worked out a partnership with ad aggregator Burst Media (they have as clients the sites that receive the ads; we use them — among others — for our BaseballLibrary.com site) and planned to start the service in early 2009.
Talking to their clients, though, resulted in their just starting faster. Farrar Straus used them for a new Thomas Friedman book last September. And they’ve had notable successes already for Vanguard Press (“Bad Dogs Have More Fun” in the “pop music” chanel) and Berkley Books (using Military History and the Science Fiction and Fantasy channels to put their author Jim Butcher on the hardcover bestseller list for the first time.) Altogether, Verso reports having conducted 40 campaigns for 20 publishers, delivering 55 million highly targeted impressions in the process.
One aspect of Verso’s targeting is that it gets more refined as each campaign progresses. The response loop from Internet advertising allows Verso to shift spending within the vertical collection of sites for each book they’re promoting as they go. So, presumably, the last quarter of the money is spent more efficiently than the first quarter. That kind of refinement, of course, is impossible with print space advertising.
We see the Verso niche site aggregation as a smart strategy, but using it for advertising is only the start. Many of the sites on which they’re placing ads are also potential hosts for content (which should be linked to a “buy” button, of course) and they are home to blogs that take comment posts that open up all kinds of other possibilities. Verso is putting publishers on the right track, but using the same strategy for PR might yield even bigger results than it does with advertising.
It is worth making a distinction here. Neither the AOL nor Verso examples are about “community”. They are about “vertical”. Community right now, oddly enough, is still mostly a horizontal exercise (Facebook, Twitter, YouTube). But that’s temporary; communities require network effects and tools, and the two have not been in place in verticals yet. But that’s temporary. The right vertical strategy today will lead to the right community strategy tomorrow, and both AOL and Verso are putting themselves into a good position for the next turn of the Internet wheel.