A Politico political cartoon.
© Matt Wuerker, politico.com.

The fiercely-contested election year of 2008, with its dramatic political ebbs and flows, was a boon to journalism with seemingly endless grist for news stories. The contest for the Democratic presidential nomination was particularly hard-fought. Senators Clinton and Obama were in a dead heat at the beginning of the year, with Senator John Edwards (D-NC) in third place behind them. January’s Iowa caucuses, the first of the Democratic votes, delivered a surprise victory to Obama; Clinton prevailed in the New Hampshire primary a few days later. Edwards dropped out of the race on January 30, but Obama and Clinton continued to compete through early June. July saw the Democratic convention, when the Democratic Party formally nominated Obama for the presidency. August was the Republican convention, with an electrifying speech from newly-selected vice presidential candidate Palin.

For Politico , the year started well. In February, it boasted a robust 26 million page views and was still going strong in May with 25.1 million page views. It also scored on average 3 million monthly unique visitors. [1] Editor & Publisher ranked it the 10 ^th -most-visited newspaper website that month. Its three-person publicity department was working overtime sending links to Politico stories to bloggers, television producers, and anyone else who might be remotely interested. Said VandeHei, “We’re pretty damn methodical about making sure anybody who cares about a story we wrote knows about it.” [2]

Their ad salesmen were also working hard. They pointed out to potential advertisers that, according to the Nielsen ratings, Politico attracted more male readers in the 18-49 cohort; more readers with annual household income over $150,000; and more readers with post-graduate degrees than business websites like Forbes.com, WSJ.com or CNNMoney.com. [3] Politico was also able to offer interested advertisers an attractive multi-platform ad delivery system: via Internet, newspaper, television, and radio.

But interest in the site seemed to be eroding by July, when Politico attracted only 12 million page views. Even within its politics-only niche, Politico did not appear to stand out. The left-leaning, Web-only Huffington Post attracted almost triple the number of Politico ’s page views in July. It also drew more unique visitors in the same month—3.9 million to Politico ’s 2.3 million. [4] Meanwhile, though Politico was intermittently profitable on a month-to-month basis, the enterprise was still losing money overall—despite evidence that online ad revenues were gowing. In August 2008, VandeHei told Forbes magazine: “I won’t say it’s a slam dunk that we’re going to be a success… The truth is we’re spending a lot of money.” [5]

Media Group . In September 2008, the three founders saw an opportunity to increase revenues in anticipation of the post-election season. Small to mid-size newspapers were suffering the effects of a nationwide downturn in advertising and subscriptions; they were cutting staff and closing bureaus—especially Washington bureaus. Politico decided to offer newspapers its own content. Instead of a membership model like the Associated Press, or a paid subscription model like Reuters, Politico came up with a novel strategy: a content and ad distribution network it dubbed Politico Media Group.

The Politico Media Group was a network of some 30 hand-picked news organizations, including major newspapers (Atlanta Journal-Constitution , Cleveland Plain Dealer , and others), TV and radio websites, and political news websites. Politico offered advertisers—targeting especially national brands—a deal: access with a single media “buy” to an exclusive, national audience of educated, affluent, and politically engaged consumers logged onto websites that interested them. Politico would handle the ad placement with its media partners. [6]

For its partners, Politico offered to share revenue from the ad sale. [7] So partners could earn money without having to make the sale themselves. At the same time, Politico offered partners the opportunity to print Politico articles for free, both in their print products (if applicable) and online. It was a win-win proposition for publishing companies in the beleaguered news industry. They would have access to high-quality, free content to replace the articles lost with their disbanded Washington bureaus, and Politico Media Group would pay them to run ads. “We were looking for new ways of providing original political content, and business models to fund that, without charging the publisher directly,” said Roy Schwartz, vice president of business development and marketing. [8]

As Politico set its budget for 2009, it saw reason for optimism. [9] The budget, says Harris, “called for a substantial increase in ’09 revenue. We placed a very large bet on a ‘governing’ year from a publishing viewpoint” because most Politico advertisers came from advocacy organizations which would be eager to swing congressional votes, and public opinion, their way. [10] Politico planned to hire new reporters, and it predicted respectable revenue growth. Whether it could maintain readership, however, was another question.