Politico: A sharp focus on digital audience

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Few industries have been disrupted more brutally in the last ten years than the news industry. More people are reading and sharing news stories than ever before, but few of the companies that create those news stories are in a position to capture the value they create.

The Internet destroyed geographic barriers that had given local news companies easy monopolies and kept national news companies from achieving easy scale. What’s worse, platforms like Facebook and Twitter, and search services like Google, wrested control of news distribution from companies that never had to share it. News sites are making lunch, and these digital behemoths are eating it.

Any news company that’s managed to thrive in such uncertain times could be considered a digital winner. Especially one that was born into them.

Politico is one such company.

Politico was founded by two former Washington Post reporters in 2007 to cover the 2008 election — with the financial support of Allbritton Communications — and quickly made its presence felt in a political news scene dominated by slow-moving legacy media hampered by the demands and conventions of print.

Politico’s focus and pace, as well as what some would call its knack for political drama, met the demands of a hungry digital audience when others did not. When most news home pages mixed political articles in among a busy mix of other topics, Politico covered politics exclusively. When other news sites published long articles with straightforward headlines, Politico reporters blogged fresh content in bite-size chunks that caught the fast-moving eyes of digital readers. While other media companies desperately laid off staff and worked to rile up free content, Politico hired strong reporters with years of experience, and in many cases, strong presences on social media.

The result? While other news companies struggled to hold onto the value they captured in the pre-digital era, Politico mined its hard-won audience of influential “politicos” to capture value in ways that went far beyond the harsh, dollars-to-dimes business of online display advertising. In October 2008, it was ranked as the ninth most read newspaper website in the country. In 2010, it reached profitability and net profitability. In subsequent years, its command of its digital audience’s attention helped the small operation grow into a formidable news brand.

Today, Politico’s 300-member staff runs an agenda-setting website, which gets more than 7 million unique visitors and 50 million page views a month. “Politico writers and editors are masters of knowing what will make prime time,” Gabriel Sherman wrote in The New Republic in 2009.

“They are always first with stories, and they’ve redefined the way I do my job and the way the internet-based journalists work,” CBSNews.com political reporter Brian Montopoli told The Wrap in 2011. Most of Politico’s revenue had come from its small-circulation print newspaper until that year, when revenue from print ads and online ads reached an even split.

But Politico runs more than the news site that helped it lead the political conversation. It also runs the POLITICO print newspaper, which distributes 35,000 copies in the high-demand Washington D.C. area; POLITICO Magazine, an online and print publication that features long-form stories on issues in the political landscape; and a recently launched European edition fueled by bureaus in London, Berlin and Paris. In addition, it manages its own line of mobile news apps and sells tickets to its monthly events, where Politico staffers interview top newsmakers like Nancy Pelosi, Marco Rubio and Bob Woodward.

Politico’s most lucrative product, though, the one that shows how successfully it’s captured value from its niche audience, is its thousands-of-dollars-a-year subscription policy news service, POLITICO Pro. Launched in 2011, it supplies insiders with scarce policy news in a host of verticals, including health care and agriculture, that have been expanding ever since.

“The idea with Pro is to go niche inside of a niche, to take slices of what we do and try to create a little politics for people who care just about energy or just technology and charge a large premium,” founder Jim VandeHei said the year of its launch.

Notably, Politico is also an early seller of native advertisements, a lucrative type of online ad in which advertisers’ messages appear not as sidebars or banners but as content. These ads, though controversial among traditional news organizations because of how much sponsored messages can look like news stories, make more sense in an increasingly mobile digital space of small screens and busy spaces.

Politico recently started a New York venture, and in April, announced plans to expand to more U.S. state capitals in New Jersey and Florida. With another presidential election around the corner, Politico should have another rare successful year in the news industry.

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6 thoughts on “Politico: A sharp focus on digital audience

  1. It seems to me that native digital news organisations are proving much more successful than legacy news businesses at capturing value in the digital news business. Compare Politico with the big, traditional mastheads which have a huge head-start in terms of reputation, sources, branding and infrastructure. Seems to me many legacy news players still see digital as a subsidiary business, rather than being their core business. This is proving a huge disadvantage.

    I also think many of the traditional players are STILL trying to sand-bag audience for their existing print-runs, to prevent the digital dollar-to-dime revenue shift.

    Can they keep doing this for much longer in the face of Politico etc? I think not.

    1. Yeah, I doubt it. And you’re right: digital native publications have proved they have a huge advantage, which would seem counterintuitive, considering the head start of legacy organizations, until you consider how unbelievably unsuited to innovation newsrooms have been for decades, and how ill-equipped newsroom leaders have been to problem solve those kinds of deficiencies and find new ways through them. End result: Starting from scratch has actually proven easier than starting ahead, but without much sense of how to change.

  2. Interesting post! I was thinking along the same lines and wrote about how The New York Times is a loser in this industry.

    My question to you is why will Politico win versus other digital media companies who follow the same business model (i.e. they have the same pace, bite-sized chunks, native advertisements, etc.)? It is a very competitive space with an easily replicable formula (if not readership), and I wonder what will make Politico succeed above and beyond the rest of the digital media outlets. Perhaps it comes down to the quality of reporting and access to information (i.e. ability to break news stories).

    1. Agreed. One thing that sets Politico apart is that it’s established itself as a leading source of insider information for a very influential audience that consumes information constantly — policy wonks. Its subscription policy news service, POLITICO Pro, was founded in 2011 and continues to grow, charging thousands of dollars per subscription. So they’re kind of like The Wall Street Journal in that the reliance of their audience on insider information, and the amount they’re willing to pay for that information, serves as a kind of buffer other news sites about other niches (or other political news sites who don’t have their command of their niche) don’t have.

  3. Good read. I wonder if this could lead to news agencies being specific for certain fields. I.E. if NYT-esque, cover-all papers were to fade out and instead you had specialization of new sources into industries. It seems like if the NYT isn’t going to be the best in politics, or technology, they might as well not waste resources on covering every subject. Just let those like Politico cover politics, and Wired cover technology. That way they have core competencies and can spend all their resources on a concentrated endeavor. Maybe traditional news outlets are like the conglomerates of news.

    1. This is one theory many in media share about how the future of journalism might pan out. One big downside: It doesn’t take into account the fate of local news. Niche sites can scale wonderfully at a national and international level, but local sites in smaller metro and rural markets about just one or another topic have a hard time staying sustainable, and end up staying small-scale, do-it-for-love blogs rather than legitimate businesses. The future of local news is a particular interest of mine, and it’s disheartening to know that what sites like Buzzfeed, Politico and the New York Times have learned barely applies.

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