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Minding the gap: How to make the case for online ad spend

According to Publishing 2.0, there is a tremendous disparity between rates for online and print media. According to their article, The New York Times, for example, is able to charge advertisers between three and 10 times as much per 1,000 exposures than the popular blog TechCrunch.

Although the numbers are only estimates and there are some flaws, it is clear that print media are able to charge a rate many times higher than online media. While some of this is due to costs of production and delivery, it is clear that other factors are playing a role as well.

However, as newspapers and magazines suffer declining readership and see more of their audiences reading and viewing online, filling that gap is going to be important. For example, if The New York Times derives barely 10 percent of their revenue from their popular website and, if they suddenly stopped their print publication, they would be forced to lay off nearly all of their staff.

Filling that gap will not be easy, especially in the current tough advertising climate on the web. It will not happen quickly. But it is important for new organisations to begin making the case for online advertising now, in order to secure their future in the long term.

Why online ads are cheap

Online advertising rates vary wildly from site to site. Some get only a few dollars on average per CPM while others are able to command rates closer to some of their print counterparts. Still, online advertising lags behind overall.

There are a lot of factors that contribute to this, but three in particular seem to be the cause for keeping the rates low:

• Competition: In most print markets, there are a limited number of publications available. As one drills down into specific regions or areas of interest, that number decreases even more. However, the barriers of entry that prevent new magazines or newspapers from starting up don’t apply to blogs or websites. Newspapers used to having a virtual monopoly in a market now have to compete with dozens, if not hundreds, of other web properties.
• New format: Unlike print advertising, which has been bought and sold largely the same way for many decades, Web advertising a fairly new product offering. Though some standards do exist, new technologies like interactive ads are constantly being developed and are changing the game. Advertisers are slow to pay full price for untested technologies and until online advertising has been proved to be a money-earner, it is likely they will continue to be conservative.
• Lack of tangibility: Where newspaper, magazine and even billboard advertisements are all tangible things that a company can touch and hold, web advertisements are not. Web advertisements are as fleeting as television and radio spots, but have limitations content similar to print.

In short, online advertising is an untested, more competitive marketplace that is at times critiqued for having significant drawbacks from traditional print media.

While these drawbacks mean many advertisers will likely stick with print publications, even as their readership declines, it also means that there will be resistance to the idea of adopting online advertising as an alternative, making it difficult to develop a strong revenue stream from the web.

Making the case for online advertising

Currently, many newspapers and magazines offer online advertisements as a free gift to existing advertisers or as an add-on to new contracts. While this has been a great way to introduce advertisers to the web at a low cost to the client, it has also contributed to the low rates for online ads.

If advertisers are to pay a higher price for online ads, newspapers and magazines need to start making the case. Although much of the problem, namely how new the technology is, can only be remedied with time and success stories, there are steps news organisations can take to encourage online spending:

• Clear explanation of benefits: Online ads make it easier than ever to track and interact with potential customers. Online ads are no longer static images, but include a wide variety of formats. Furthermore, it is also easier to track the effectiveness of an online campaign than an offline one. Measurements of viewer-ship and response can be taken down to each individual. Finally, online ads are easier to target since the ads displayed can be tailored based on keywords searched for or contained within the article.
• Filling advertising inventory: While it makes sense to give away some inventory as well as to use one’s ads to self-promote, slashing rates just to fill spaces only cheapens the market. Using services such as Google’s Adsense or Microsoft’s Adcenter to fill short-term gaps not only offers new revenue streams but helps cut down on the urgency to fill ad space.
• Promoting high-quality web-only content: Since the web does not come with printing costs, new organisations can put content on the web that doesn’t fit in their print version. Having high-quality but web-only content routinely appear on your site gives advertisers an incentive to look harder at the web presence. The desire to be associated with popular content is a big driving force for many advertisers. Offering it on the web only gives them a reason to pay a premium.

While no action on the part of news organisations is going to bring online CPMs to parity with their print counterparts, the goal is to start trending the numbers upward for when print editions cease to be viable, whenever that day comes. The revenue will be available from the web to pick up the slack.

Conclusions

This is a time of evolution, both for journalism and the advertising industry that supports it. Many journalists do not like to think about the advertising industry and the changes it is undergoing. But the simple truth is that journalism and marketing have always been joined at the hip. Without ad dollars, there is no money to pay for journalist’s salaries, their tools or even the paper their words are printed on.

Failure to consider this could result in a shifting news landscape that could destroy many of the companies we know and trust, as well as many of the careers that mainstream journalism has created.

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Flickr photo from user wka

Tags: new york times, nyt, online advertising, online media, print media, website,

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