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In 2013, BI made more than $19 million, most of it selling this traffic to advertisers. It said it was profitable in the fourth quarter (usually a good quarter) and that it won't be profitable in 2014.It has to produce lots of content — quantity tending to trump quality — to realize these traffic goals. But Business Insider is seeking to be not just a content mill (a site that uses bulk amounts of low-level content to attract mass traffic) but also a significant new brand, which adds costs. It has hired, if not quite a seasoned staff, young journalists with at least a bit of experience: about 70 of them now, costing upwards of $15 million a year. 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. This is a result of expanded inventory, general unhappiness with the results of digital advertising, lower-valued mobile space and the increasing prevalence of what's called programmatic buying (wherein a targeted audience can be assembled more cheaply outside of brands). In addition, as a site grows and its inventory expands, its CPMs decline. MailOnline, one of the most trafficked news sites, averages 160 million unique visitors a month — more than six times what Business Insider receives — but produces only $60 million in revenue, just three times more than Business Insider.
First, we now have more than 125 people on the team and 1-2 million readers a day (30+ million a month), which would have been inconceivable back in our loading-dock days. Last month, this readership made us the third biggest digital business news publication, behind only the Wall Street Journal and Forbes. (We now have more readers each month than Bloomberg.com, BusinessWeek.com, CNBC.com, the FT, the Economist, and many other awesome publications. That's pretty cool!) Second, I have come to understand that great media brands take decades to build, not a few years. The other 8 big business publications, for example, have been around for a combined 737 years. CNN launched in 1981, and it was at least a decade before it really went mainstream. And it was 16 or 17 years before Ted Turner finally sold it to Time Warner. Third, as I suspected 6 years ago, successful digital journalism really is different — as different from print and broadcast journalism as print and broadcast are from each other. To build a successful digital journalism business, you have to build a native digital newsroom, native digital distribution, a native digital business model, and a native digital cost structure. And building those things isn't as easy as it may seem.
Most of the earnings miss, meanwhile, came from Google increasing investments in new products, including mobile, smartphones, tablets, "Chromebook" PCs, Google Fiber (a cable-company killing TV and Internet subscription service) and other initiatives. In the short term, these investments reduce Google's profit margin. But over the long haul, at least some of them should pay off.