Area Woman Writes on The Onion, Questions Not Choosing IKEA Instead
May the ox of journalism always be yoked to the cart of commerce
The Onion is an American media company that satirizes traditional newspapers, publishing parody news, op-eds, and editorials in its signature dead-pan voice. Founded in 1988 out of a University of Wisconsin dorm room, the modest humor rag has since grown to over 30 million website visitors every month across all its online platforms and achieved double-digit revenue growth.[1]
The Onion’s business model relies on the following:
- Creating high-quality, funny material for its readers. The Onion has first and foremost always been about content. The image, the advertising, and the longevity of the brand all rely on the Onion attracting readers to its product.
- Innovating in pace with the industry and viewership demands. Ironically, the Onion suffers from the same economic headwinds as the traditional newspapers it parodies. Circulation decline, the shift to digital, constant demand for new content – all these factors necessitate that the company innovate and experiment in order to survive.
- Generating profit from advertising partnerships. Since discontinuing its print circulation in 2013, the Onion depends exclusively on advertising dollars to sustain its business model. Its approach to advertising has changed as well, with banner and display ads giving way to more integrated, sponsored content.[2]
How does the Onion’s operating model align with its business model? 
- Idea Generation. This American Life aired an episode in 2008 that took the listener behind the scenes of the Onion’s Monday pitch meetings. The requirement is simple: 15 headlines generated per person every Monday, no exceptions. Every writer pitches their headlines, and an idea only advances if it receives two affirmative votes from the room. Headlines are debated seriously through Socratic method: was this joke funny? Why was it funny? What makes this version funny, and that version unfunny? And so on and so forth, until 600 headlines are whittled down to 16 headlines that make the cut. Through this stringent formula of idea generation – the gradual narrowing of the funnel – the Onion is able to product reliably funny material that meets the standards of its brand.[3]
100% Digital. In 2013 the Onion shuttered its print newspapers, a move immortalized in the obituary “Print Dead at 1,803.” Besides cutting the costs of paper distribution, the transition to digital caters to the Onion’s mission of parody. As large news organizations poured capital into revamping websites, the Onion’s business model necessitated that it mirror this industry shift. The website further allows the Onion to publish real-time content that paces with current events, rather than relying on a bi-weekly print edition. In a nod to innovation, the paper launched new formats to stay competitive. In 2014 the organization created Clickhole, a sister website dedicated to mocking the viral “click bait” that catapulted websites like Buzzfeed and Upworthy. Similarly, the 2015 launch of Onion Studios reveal that the company’s future ambitions lie in video (see Youtube video below). Not purely a brand-building effort, the new platforms expand the website’s traditionally narrow reader base (aged 18-35, mostly male, educated) to gain more advertisers.[4][5] Moreover, it denotes the Onion’s aspirational shift from a modest print newspaper to a diversified digital empire.
- The Wheel of Advertising. In response to advertisers’ demands for more clicks and user engagement, in 2012 the company created Onion
Labs, an in-house ad agency that creates sponsored content for the Onion websites and social platforms.[6] Sponsored content is a piece that has been written with the paper’s signature personality, but paid for by an advertiser (see Litter Genie ad to right). It’s written by Onion staff and subject to the same editorial rigor as every other Onion piece. Today Onion Labs is the fastest growing segment of the company’s business, accounting for 80% of the firm’s revenues.[6] Onion Labs seeks to partner with advertisers to tap into the Onion’s writing talent and distribution, while engaging the reader in native content.
- HR Practices. Much of the Onion’s success depends on its talent. As such, writers are home-grown and lateral hires are verboten. The paper has formalized its hiring practices and mostly hires out of its “Writing Fellows” program, targeted at college students. From a Writing Fellow, the promotion path is Writer, Senior Writer, and then perhaps stewardship of a new project like Clickhole. This lengthy investment period ensures that the style of humor and writing is consistent with the Onion’s brand and tries to minimize turnover among the editorial staff.[7]
Alignment Results
Due to the Onion’s investment in operational realignment over the past few years, the company has survived the industry shift. The Onion’s sites are up to 16.5 million unique visitors as of August 2015, a 85% CAGR from 2.6 million uniques in 2012.[8][9] Onion Labs’ revenue is forecast to grow 20% this year.[9] And while the organization is notoriously cagey about sharing its financial numbers, the Onion generously revealed that “profit has grown over the past five years and the business makes money.” [3] Not bad for a 25-year-old college humor weekly.
Works Cited
[1] Chicago Tribune. http://articles.chicagotribune.com/2014-04-13/business/ct-onion-advertising-0413-biz-20140413_1_the-onion-steve-hannah-win-drug-war
[2] American Journalism Review. http://ajr.org/2013/12/09/will-online-onion-make-money/
[3] This American Life. http://www.thisamericanlife.org/radio-archives/episode/348/tough-room
[4] The Atlantic. http://www.theatlantic.com/technology/archive/2015/05/area-media-company-makes-money/392141/
[5] Digiday. http://digiday.com/publishers/newspaper-onion-growing-video-ambitions/
[6] Content Market Institute. http://contentmarketinginstitute.com/2015/04/onion-custom-content-agency/
[7] Interview with Jermaine Affonso, Editor-in-Chief of Clickhole. December 8, 2015.
[8] Digiday. http://digiday.com/publishers/branded-content-growing-pains-onion-goes-back-basics-restructures-onion-labs/
[9] Advertising Age. http://adage.com/article/special-report-digital-alist-2013/ad-age-digital-a-list-onion/239944/
Do you think The Onion has benefited or suffered from the emergence of so many other “click bait” type sites due to the prominence of social media (e.g. Upworthy, College Humor, etc.)? At the beginning, it feels like they were certainly helped (a new, really cheap mode of distribution to a relevant audience) but the ease of the Facebook platform (for example) has really reduced the barriers to entry for competitors.
I would think a rising tide lifts all boats. I think any increased focus or emphasis from Millenials on longer-form comedy content (be it in the form of text or video) benefits The Onion. Clickhole is a great example of how The Onion (which is niche by definition, since its satire-first approach is pretty high brow compared to the 9GAGs and Fat Jewish’s of the world) can potentially rob users from other websites (in this case, Buzzfeed) with its own unique take on humor.
Super funny! Loved the MacBook Wheel video at the end 🙂 I think this was a great approach to take a slightly non-traditional company and dig into the operating and business models. A former colleague works at a media & entertainment focused private equity firm and I know they were taking a look at The Onion as a potential acquisition target earlier this year. I would be interested to know the revenue mix, whether the business model could sustain any leverage, whether a team of operating partners would be able to get under the hood and drive additional revenue growth opportunties and expand margins. Thanks for the fun read, Alice! Great writing too!
Harvard Student Replies with Insightful Yet Non-Provocative Analysis
As a regular reader of the Onion, I was surprised to learn that StarWipe and ClickHole were sub-brands of the Onion. What is your point-of-view on their niche-targeting branding strategy?