HuffPost: Where did it go wrong?
Yesterday HuffPost and Fairfax Media announced its joint venture had ended. Zoe Samios looks into why the international publisher struggled in the Australian market and how it fits into a digital media crisis.
‘In trouble’. A ‘cloudy’ future. ‘In doubt’. Those were the words being bandied around about US-based HuffPost’s venture in Australia before the news broke yesterday the publication had ended its joint venture with Fairfax Media and scaled back its local operations.
And now, what began in the US as a left-wing alternative to the Drudge Report, has essentially given up on its local arm after just two years. Not a surprise, if you ask the publishing industry.
It could be argued the brand took a turn for the worse last year, when Arianna Huffington stepped away from the company she founded, and those at the top took it in new editorial directions, moving away from it’s political focus.
Huffington said Australia was “fertile ground” to set up
As Huffington began to lose control of HuffPost – which was owned by AOL – problems arose. Prior to her departure, a story from William Cohan in Vanity Fair revealed the relationship between Tim Armstrong, chief executive officer of AOL and Huffington began to burn.
Then when Armstrong tried to sell AOL to Verizon – a global telecommunications company – Huffington was not involved in the discussions.
This year, Verizon also completed the acquisition of Yahoo, which saw Verizon combine AOL and Yahoo to form Oath – Huffington Post’s new parent company.
Months later there was high-level speculation of sizeable global redundancies at the new parent company. HuffPost’s US operation alone lost almost 40 journalists following the deal.
There’s just over 30 staff in the offices of HuffPost Australia. That’s set to be drastically reduced before the end of the year, effectively closing the local operation with the exception of a handful of skeleton staff.
With the US owners trying to scale back, there is no value for a legacy publisher like Fairfax – which has spent its year trying to rebuild its own product – to continue in the partnership.
So where did it all go wrong?
It’s important to consider the Australian media industry into which HuffPost entered.
When HuffPost first landed on Australian shores, the likes of the Daily Mail, BuzzFeed, Guardian Australia and even Allure Media’s Business Insider were already here.
There was a massive hype when HuffPost launched in Australia, but it didn’t attract the audiences it needed
That’s not to mention legacy publishers such as Fairfax Media and News Corp who were covering the same news and topic areas, and more thoroughly.
When HuffPost entered the Australian market it faced a major challenge; differentiating itself in an already cluttered digital publishing market.
It was simple: Australia didn’t need another publisher covering local news content, particularly if it couldn’t offer a genuine point of difference.
Arguably, HuffPost’s local appeal came from the international content out of the US – which was politically focused, as was Huffington’s intention. And that all changed anyway when Huffington walked last year and Lydia Polgreen, former editorial director of the New York Times global joined in December as editor in chief of the title.
The content here did not have the same impact, despite all efforts.
But Huffington was adamant Australia was “fertile ground” when she first entered the market.
The hires started with local MD Chris Janz (now boss of Fairfax Media’s metro operation). Then editor Tory Maguire – who had also been on the launch team of News Corp’s short-lived comment-led venture The Punch. And after the appointment of editor-at-large Lisa Wilkinson it was clear HuffPost was not lacking in budget.
Tory Maguire, editor-in-chief HuffPost Australia was one of a number of hires by the company as it set up shop in Australia
However, in a market full of new digital publishers establishing their own audiences and legacy publishers catching up to the changing media landscape, HuffPost was going to struggle to build a strong brand – something Australians value – in a market it had never been in, without strong investment.
The publicity surrounding the local launch of the Huffington Post failed to offer much improvement on the traffic the international site was already getting from Australia. Traffic rose from 1.039m in July 2015 to 1.058m in its first month with a local operation.
And although HuffPost’s numbers are strong enough, there has not been any consistent growth over the past year.
Facebook’s diamond but a curse of its own
An area where HuffPost did excel at times was on social platforms, be it Twitter or Facebook. I’m certainly not the first person to see myriad of HuffPost articles scattered across my social feeds.
That success was recognised by JJ Eastwood, CEO of HuffPost Australia, at this year’s Mumbrella Publish, where he argued it was possible to build audiences off-platform.
And earlier this year, as part of the Senate inquiry into Future of Public Interest Journalism, the HuffPost boss said his company’s revenue came from taking advantage of SEO is the early days.
“Huffington Post has always has been a digital innovator and took advantage of SEO in the early days and was one of the first publishers globally to take advantage of digital and social media, and that’s something that we’ve adopted locally, we look at the platforms as partnerships in a lot of ways,” he said.
Eastwood also agreed that Google and Facebook do take money out of industry’s ecosystem but said “they also drive a lot of traffic to our owned and operated sites”.
But he also spoke of the challenges in staying afloat in a competitive digital environment.
JJ Eastwood acknowledged some of the challenges HuffPost was facing earlier this year
“It’s a challenge to make money in this digital landscape, we are coming from a much smaller base, we don’t have a legacy business, we don’t have newspapers support,” he said.
Later this year, Facebook admitted it was paying publishers around AU$126 a day. The acknowledgement of how little Facebook was paying those who used its platform reinforced the challenge publishers were facing with actually making money from the relationship.
If your audience is coming directly through Facebook, therein lies the problem. While there was benefit to being highly viewable on Facebook, drawing people back to the publication itself – where display ads can be monetised – was a challenge, especially since the brand did not have an Australian history.
As a result, Eastwood’s stated aim to become a top five publisher in Australia slowly slipped away.
Lack of interest from the US counterparts
But HuffPost Australia’s biggest problem wasn’t coming from its local arm’s sluggish audience growth.
When Huffington left the title last year, interest in expansion and global investment faded.
And despite all of Fairfax Media’s cuts in other parts of its business, the company was heavily invested in the title. After all, the former managing director Janz now runs the Fairfax Metro business.
But that wasn’t enough. The stakeholders in the US just weren’t interested anymore and with a scale back on operations – the business lacked value.
But HuffPost’s struggle can ultimately be understood if you accept the digital media crisis is at a peak.
Digiday calls it the “pivot to reality” for digital media, after BuzzFeed and Vice missed revenue results. Now BuzzFeed is scaling back its operations too.
A further piece of evidence comes from The Guardian’s editor in chief Katharine Viner (who also launched the title in Australia back in 2015), who described Facebook as the “richest and most powerful publisher in history”.
In a period of time when digital media is facing challenges, you can see why HuffPost felt the need to strip back its operations in markets that weren’t as successful as home.
And HuffPost Australia rested on its laurels – hoping the international brand which had built its reputation in the US could work here. That strategy failed.
The rebrand from Huffington Post to HuffPost this year also did not appear to make an impact.
Add that to a lack of investment from its US counterparts, a failed attempt to build a loyal Australian audiences as others like The Guardian found their niche, and the ongoing struggle for digital publishers globally, HuffPost’s scale back became a necessary and logical exit.
For the US owners who had incredibly high hopes for its Australian operation, it was best to return home.
one area that is worth looking at is:
– HP is owned by Oath … which also has 50% of a JV in AU that is being pulled apart by the JV partner
– Pac Mags has also pulled significant assets out of Y7 JV
– would make sense for Oath to move HuffPo sales into the JV, keep majority of the revenue and have little operational overhead. My feeling is HP will still generate enough audience to get some easy programmatic dollars running via the Yahoo platform
– having a JV in AU that had reasonable overheads was always going to be zero to negative financial return for HP/Oath and also Fairfax. HP is non core to Fairfax and AU is non core for HP as a business so it was always an odd marriage.
– the Janz model of cheap local rebrands was very strong 10 years ago but now the sales model has changed and the need for localisation isn’t there in content and sales … especially for the partners overseas.
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Also worth remembering that the Australian economy is no bigger than a large US state. What works in the USA in terms of finding a niche will not necessarily scale down to Australia.
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Not sure whether this will be a wake up call as HuffPo was never big enough in this market to make people sit up and notice, but there is a crisis in funding for News publishers.
As a vertical News is no longer an attractive environment for advertisers and Banner advertising not an attractive medium to communicate, which is a double whammy because News organisations have a lot of Banners to sell.
If its not Video then Banners are going to be traded programmatically at an average of $4 Cpm if you are lucky.. Do the Maths, $4 Cpm doesn’t pay the bills.
Video is where the high CPMs are, but the costs in producing enough volume make margins very tight.
Native was the saviour, but unless you are prepared to bastardise your product with overt brand messaging, pump money into driving traffic to it and tread that fine line between Commercial and Editorial, then the chances are that it won’t be the answer.
Facebook claim they are doing more to help publishers monitise their content…Thank god for FB eh, letting publisher monitise content that they have produced and spent money on creating. Call me a cynic, but if the publisher is getting a dollar then FB will likely be getting 10 somehow. The publisher will be kept on life support in order to feed the FB behemoth with content and data that enables them to suck even more revenue out of the system.
Advertising cannot support the news industry any longer – Just can’t. The only way is for readers to fund the news they consume and rightly so… The sooner everyone realises this the better..
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I have only ever clicked through to Huff Post, either from my suggested articles on Android, or on occasions from social media. All times, on a mobile and all times the site load seems slow with ad’s all over the shop; the experience is woeful = it aint gonna work, right?
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spot on @ David Watts. Any media business — whether traditional media or digital pure-play — which relies on advertising as it’s main revenue stream is going to struggle to survive. Traditional media have the added baggage of legacy costs to contend with (printing presses, paper, distribution costs of physical product) but even the digital pureplays who don’t — Buzzfeed, Vice, HuffPo, Mashable — are up against it, as their most recent financial results and redundancies show. The question is whether media businesses will already be dead by the time the masses realise that the only way to keep them alive and to keep consuming the content they produce, is to pay for it.
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Second this.. after being apart of Yahoo7 in AU this seems to make the most logically step. Scale back inventory to be a combined audience sell under the Oath brands.. while seven west take some of it’s core asset’s back from the JV with Yahoo it seems logical for Huffpost sales to be traded by the Yahoo sales team and Yahoo programmatic stack
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Yet another venture that I first hear of only when its closure is announced.
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Nailed it @ David watts.
But I still can’t help think there must be an editorial / design model that would provide digital adverting value to news sites, with all the benefits of digital, without being so obtrusive as to be off putting to audience.
Publishers providing content for social media channels (i.e. Facebook) for free is madness…particularly as there’s a discernible growing recognition that social media isn’t a reliable place to get accurate news, rather it’s a place to get entertainment around your own interests.
I have a few ideas if anyone would like to drop me a line…
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It just always felt like such an American brand. Sure – Guardian etc are UK brands – but there’s a tonne more UK migrants and “British Australians” here (56% of Australians report their heritage as British Isles) than American ones. So that works for Guardian/BBC/Daily Mail/Economist.
People are parochial and loyal when it comes to news. There are strong Australian brands – like Crikey – that people here regard as “theirs”. Who feels a resonance or a kinship with “HuffPo”?
Sad but not surprised it failed.
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When a publisher declines your offer for a 50% rev share split of revenue for their audience data without them needing to lift a finger post set-up, you have to wonder if the commercial team really knew how to do their job.
They had an asset and didn’t understand its full commercial opportunity. And they failed!
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50% of nothing is…
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Be interesting to hear from Chris Janz on this.
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I am with you on Publishers providing free content to Social Channels like FB…
I personally think that if the bigger publishers were to withdraw from Facebook (Say, top 10 from each marketplace) entirely and explain to their readers exactly why (ie, FB get ALL the money) then the public might start to understand…Also, if people knew they couldn’t get decent content on FB what would it do to time on the FB platform..I for one would not do my daily scroll if I knew there was no decent publisher content on there.
I’d even go one step further, Premium publishers should charge FB for content – radio stations and Spotify pay to play songs, whats the difference? Why not?.. Put copyright on their journalism and charge for re-publication. If it is genuinely of worthy then why give it away for free.
At present News media is suffering the death of a thousand cuts, barely surviving on morsels, hoping that they are the last man standing and can be sustainable. I’d rather go down swinging…
A modern society needs a healthy news sector, a genuine one, not one that is thrown bones by tech giants whose only interest is their own share price. At the moment news FB and Google are laughing as publishers pander to their whims, if it carries on then Huffpo will be the first, but not the last and if thats the case it has implications far beyond the media industry.
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Exactly what I thought.
Why would they give away their data for potentially nothing? Take on the risk of their core proposition being undermined by re-targeting.Data leakage.Potential brand issues. Slowing the site down by deploying another tag = losing traffic and poor UX.
I’m in a commercial team and often say no to giving away my data for potentially nothing. You sound upset that they didn’t take you up on your offer. Work the offer.
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