Portal Primer I

For a friend, I volunteered to contribute my 5 cent to Portal Wisdom. Here comes Part I of a three-part series stating the obvious.

I. Intro

Portals are Websites for the lazy. They try to provide entry points for every need a surfer might feel while using the Internet. Because they tend to serve to the masses, they are neither picky nor subtle. They only know one major purpose: catching as many eyeballs as possible and luring them into profitable transactions.

To secure the necessary broad range of audience, most portals occupy spaces every surfer has to pass on a daily basis. Historically these have been mostly the entry points to Internet access (AOL, T-Online, MSN, freenet.de), catalogue and search interfaces (Yahoo), or webmail administration (GMX, Web.de).

So the term portal gets a double meaning: portal providers occupy entrance gates, and they use this privileged position to open a set of conveniently placed additional doors to other core functions of the Internet which are suitably commercialized. Mostly the business then is not done directly by the portal provider, but in cooperation with dozens, if not hundreds, of business partners.

Problem is, gates are narrow spaces whereas the useable needs and business opportunities are numerous. So the first task tends to be one not of maximization but of optimization: On the portal page you have to provide as many choices as the restricted space allows, and you have to select them optimally according to their expected profitability. As users of the premium segment tend to be less prone to pre-selected offerings, you are less likely to find high-quality elitist content and services. Portals are for the masses.

The typical portal structure is a mirror of the most profitable consumer markets: sports and entertainment (especially music and film), fashion, lifestyle and travel, cars, computer and (as a rather recent addition) food. (One noticeable but not very surprising exception: no perfume yet – smell is difficult to digitize, even with the means of multimedia.) All these markets are triggered on the front page and they subsequently spread across a branching tree of more specific pages.

But of course portals are not only plain virtual department stores. They attract and direct the customers using a panoply of content and services that are cleverly arranged to distribute customer attention into the different commercial areas. Also they use a multitude of business and revenue models. How this is done, is the topic of the next sections, where we will try to honour the true multidimensionality of Internet portals.

II. The Context Principle

One obvious rule that good portal business is following is contextualization: Whenever the user (seen as a potential customer) articulates a specific need or shows himself to be in a specific situation, try to answer his needs or situation as precise as possible.

Let me give you one example: Someone is looking for a house. In pre-Internet times she would have bought the weekend issue of a local newspaper in the area where she wants to live, for classified real estate ads. The internet offers searchable up-to-date databases that allow an automated selection of tailor-made housing offers. But to do just and only this would be very bad business: Someone who wants to buy a house normally has a lot of connected additional needs: she might need a loan, decoration and moving services, or simply information about the potential neighbourhood, information about crime statistics, childcare and schooling, shopping malls etc. A good portal thus anticipates these needs and answers them accordingly. Whether this is done in form of entry points to further business transaction or just as free service to bind the customers’ loyalty has to be carefully weighed and considered.

As important as the context principle is in different branches of the portal structure, at the front door no such specificity is possible: On the portal homepage we have minimum contextuality. Following the branches down the tree we get to ever more specific customer interaction.

So the portal website mostly follows a classic hierarchical structure. But of course this in itself is a very static and boring media design. Consequently one of the most important skills of a portal manager is to know when and how to break this rule. The homepage has to provide prominent space for current content and campaigns, following (or even triggering) current trends in society and public attention. This is quite obvious with seasonal events (Christmas, spring festival), sports events (World Cup, Olympic Games) or business events (Car Fair, World Expo). But of course there are other opportunities to highlight specific, up-to-date content in the framework of your site.

Quite generally, the portal has to create the illusion of a highly dynamic organism if it is to keep and control the notoriously volatile customer attention, while at the same time presenting itself as reliably and recognizably structured. Confusion is as dangerous as boredom.

III. Content and Topics

Let’s have a closer look at the typical topic areas you might find in portal websites. Keep in mind that we are to strike a balance between addressing a maximum number of users on minimal space (at least at the entry points). It’s like differentiating the marketing profile of Joe Average to maximum specificity, highlighting the areas where he is most likely to spend his meagre income.

The results are, again, pretty obvious. First of all, news is indispensable. News for most people is like an itch that has to be scratched regularly. Portal websites use this predictable affliction, but on a rather low-scale basis, as it is not in itself something easily turned profitable. Usually they don’t put too much money and effort into the proper journalistic content provided in the news section: they buy some customized syndicated content either from the big newswires or from some major journalistic brand. Focus is not on in-depth reporting, but you’ll rather find some quick and shallow updates on current events served only with some minimum explanatory background.

Like in all tabloid news business, there are two areas likely to be focussed upon: celebrity gossip and sports. For the users these are areas of dream, fun and leisure, for the business they are places to pick up their customers in a relaxed and therefore available mood.

The revenue models for the proper news areas are mostly restricted to classic banner advertising, typically serving branding and image campaigns.

Then there are a lot of content areas where news is just the sugar coating on a big cake of much more easily commercializable service journalism, combined with specific web-based services. The most obvious examples are lifestyle and fashion, health, cars and computers. For each of these there is a small science worth of knowledge about how to properly play them in an online environment, combining static media content with interactive applications.

Let’s take health for an example. Worries about health and dreams about perfect fitness provide for a highly motivated audience and a suitable leverage for selling all kinds of products and services. Normally you would of course try to draw a line to ‘unpleasant’ topics like sickness and old age, but there is sufficient room left. You can address the current health scares – as long as they are sufficiently abstract (take Mad Cow Disease or Bird Flu as an example), you can capitalize upon never-fulfilled and never-ending self-improvement projects (quit smoking, lose weight) of your audience. The opportunities are endless, but we don’t have to go into that.

Compared with the general news sections the specificity of these sections is much higher. So even with advertising you will find much more specific campaigns, say for health insurance programs, for fitness equipment etc. In contrast to the brand and imaging advertisement these campaigns are mostly sales-oriented and their success is more easily monitored by the number of actually triggered transactions. (You are also more likely to find transaction-based revenue models in these areas.)

Also the portal provider might see here the opportunity to offer carefully selected items of paid content, like dietary or stop-smoking schemes.

Some of the topics are rather culture-specific. So in European countries you are more likely than in America to find areas serving more or less explicit erotic content, normally with some significant entrance barrier (registration and payment required) protecting minors from ‘hard core’ content areas.

Also the degree of content about personal finance varies with the amount of mass-commodification of financial products to be found in a society. Where this is common, there opens a whole range of highly profitable services and products properly suited for the online market, like online banking, up-to-date market information and qualified financial community interaction. Apart from providing an environment for sales-oriented advertisement, many of these products qualify for potential paid content.

IV. Services

One thing that portal websites are famous for is the seamless integration of online services. Many of these are database-related information services, like localized weather information, searchable classified ads or customized route-planning. Other services are transaction-oriented, like online banking or auctioning. A third family of services is distinctly community-oriented, like online chat and discussion, or – highly successful! – dating.

A rather new addition to this family are micro-publishing platforms. Precursors, like the notorious personal homepage, have of course been known from the very beginning of portal publishing, but the recent Web2.0 boom has added considerable momentum to this sector. Many portal providers allow their users to publish their own weblogs and/or photo and video galleries under the portal brand.

The revenue models for these platforms are not yet properly known and developed, but the Google AdSense model (automated text ad placement according to the classification of the pages by the Google search algorithm) seems to point to a rather promising direction. Another model is based on so-called ‘affiliate marketing’: on their pages the micro-publishers link to vendors like Amazon, and in case of successful transaction earn their share of the revenue (as does the affiliate agent, suitably provided by the portal provider). Also there is a lot of value in the tremendous amount of information to be collected from the voluntary self-presentation of a big number of users.

V. Revenue streams

Even now it should be clear that the ways to earn money with a portal are diverse and, at least some of them, rather complex. Most of them depend on business partnerships with other media companies (content syndication, ad sales) or vendors (shopping environments).

Generally speaking, one of the most challenging demands of portal publishing is to know as much as possible about the nature and behaviour of the portal users, and respond appropriately. Traditionally, this is done with two means: First, by providing specific usage environments that pre-select the targeted audiences; second, by observing the actual usage patterns with tracking mechanisms as fine-grained as possible. If you monitor not only click rates but also transaction rates on a daily or even hourly basis, you are able to constantly adjust your editorial operations, thereby optimally positioning the whole system.

Problem with this approach is that it is still rather superficial. You get the big movements but there remain many hidden depths that you don’t reach. Again, there are traditional ways to address this problem: One is to monitor not only the click-paths of your users but also the search entries, giving you an impression of their (still) unfulfilled wishes. One other method is to get as much as possible information out of registration procedures. Registered users not only fill in registration forms, they also leave a continuous personalized trace and profile. Some portal providers offer special ‘club memberships’ to cash in on such an environment.

An involuntary form of registration is the proper placement of so-called ‘cookies’ through the browser software, making an individual client recognizable across several sessions. Also note that the registration benefit makes portals based on Internet access or Webmail especially interesting: here the user is always ‘logged in’ and thereby known.

But even more advanced methods of user and customer targeting are showing up in the recent Web2.0 craze. They are going to be the topic of the next part of this little primer, along with some reflections on multimedia content.