Dec. 17 (Bloomberg) -- Sixteen hours before Whitney Houston was pronounced dead on Feb. 11, a startup in Hamburg noticed a surge in Web traffic about the American singer after she had been seen drunk and arguing in a Hollywood club. The data analysis company, Content Fleet GmbH, knew Houston would dominate headlines the next day.
Content Fleet has created software that constantly monitors 5 million subjects on some 600,000 websites. It registered a sharp increase in Google searches, Facebook mentions and Twitter posts about Houston. After comparing the volume of traffic to previous peaks and checking how much coverage the story had already received, Content Fleet knew that articles on Houston would draw readers.
Since May, the company has delivered tips to publishers for $1,500 a month in each of 18 topic areas. The company says the stories on its lists, updated as often as every minute, are likely to receive top rankings on Google searches, attracting readership -- and ad income.
Content Fleet has recruited clients such as Axel Springer AG, the owner of top-selling German tabloid Bild, and RTL Group SA, Europe’s biggest broadcaster. Last month, the company opened a New York office to win over U.S. publishers and broadcasters.
“We are not going to cause the death of journalism,” said Mattias Protzmann, a 39-year-old former Spiegel TV-journalist who founded Content Fleet in 2010 with backing from the venture capital arms of Deutsche Telekom AG and media house Bertelsmann SE. “Our program just provides a data-driven base for what people are interested in, showing editors what topics maximize reach.”
As traditional media houses struggle to find a profitable business model in the Internet age, news organizations are seeking ways to identify stories that will keep readers and viewers clicking on their websites. An up-to-the minute understanding of what Internet users are looking for can boost a publisher’s stories to the top of search engine results, the most important driver of traffic to news sites.
Media houses buy the right to use Content Fleet’s software for subjects such as health, celebrities or gaming. The company says story lists won’t be identical for different clients even if they cover the same topics. Each outlet gets results aimed at its target group and playing on strengths in its existing coverage, Protzmann said.
Sportal.com, a sports website owned by Perform Group Plc, started using Content Fleet in July and says traffic from search engines has since jumped 14-fold. While executives credit a redesign for some of that gain, they say the program has helped, for instance highlighting reader interest in Dynamo Dresden, a second-league soccer team. They’re concerned, though, about losing the advantages of using Content Fleet if rivals start buying the service as well.
“Our journalists were very skeptical when we introduced the tool, as they of course thought they know best what to write about,” said Christian Fichter, who runs the site. “But it works. It helped us nail subjects that generate traffic, which is the hard currency in our industry.”
Deutsche Telekom’s T-Online website, one of Germany’s biggest portals, with an average of 25 million unique users monthly, has had 45 journalists working with Content Fleet since July. Since it started using Content Fleet in news, entertainment and digital, the site says, it has gotten 32 percent more clicks via search engines in those topic areas.
Executives at Gruner & Jahr, the owner of the now defunct Financial Times Deutschland, were skeptical when Content Fleet pitched them the software. They brightened up after Protzmann pulled up a graph showing the spike in Web chatter about Houston, the pop singer who was found unconscious in a bathtub at the Beverly Hilton hotel in February.
The company is now testing the service for Gala, a weekly celebrity magazine with a weekly circulation of about 340,000, though it hasn’t finalized any long-term deal.
Content Fleet “allows us to analyze readers’ behavior and adapt our news selection accordingly,” said Pit Gottschalk, managing director of content management at Axel Springer. “In the more challenging times of the digital era, it helps us focus on investigative, quality journalism.”
Publishers need the clicks. Rising online sales don’t yet compensate for falling advertisement in print, according to a survey this year of 38 U.S. newspapers by the Pew Research Center, a think tank in Washington. For every $7 lost in print, newspapers gain only $1 in digital ads on average, which helps explain a more than 40 percent decline in total newspaper revenue, Pew reports.
In the first half 2012, Google generated more cash from ads than the entire U.S. print media industry for the first time, according to Statista, a statistics website co-founded by Protzmann.
While knowing what people want to read might help media outlets attract more traffic, Douglas McCabe of consultancy Enders Analysis in London says it doesn’t change the fact that the traditional business model of selling ads isn’t as profitable as it once was. The bigger issue, McCabe says, is creating brand loyalty and getting customers to stick around.
“Journalism’s real problem is that the advertisement income you can get online is so much lower than what you got in print,” he said.
That doesn’t detract from the value of what Content Fleet offers, says Jan Borgstaedt, European head of BDMI, the Bertelsmann venture fund that has invested in the company.
“Time and cost-intensive journalism, not generic news, tie people to a media brand,” Borgstaedt said. “Content Fleet helps publishers develop the sort of generic news that gets Google traffic and allows readers to discover your brand in the first place.”
Housed in a red-brick building in the north of Germany’s media capital, Content Fleet’s 80-person workforce includes 50 journalists who write news stories with the help of its program for customers who want to outsource newswriting altogether.
Protzmann, a self-confessed “technology freak” who loves to talk about innovations such as his robotic vacuum cleaner (it’s not very good on designer rugs, he says), this fall traveled to Palo Alto to showcase his product. He says he is close to signing deals with two big U.S. media companies as they seek to understand and profit from the ocean of data found online.
“The Americans are very keen on predictive business analytics,” said Protzmann. “There is a lot of potential in the U.S. market, where online media is a step ahead of Europe.”
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