User reactions to fee-based content models could affect advertising on news sites
The steady erosion of print newspaper readership and the uptick in online news consumption have many traditional publishers looking to online ad revenue to offset traditional ad revenue declines.
The Pew Research Center identified a 17% increase in the online news audience from 2009 to 2010, while the print newspaper audience dipped 5%, offering validation for a growing reliance on online ad revenue among publishers.
The much higher price tag on traditional advertising packages compared to online packages, coupled with a growing number of ad networks, exchanges and platforms that often sell inventory at prices far lower than premium sites, has led publishers like The New York Times to try to capture additional revenue with a metered paywall.
A brand as renowned as The New York Times is bound to have a healthy number of loyal readers willing to pay for a quality news source. Nonetheless, research indicates publishers transitioning to a “freemium” content model, which offers basic, free access to a product, site or service and requires a premium for more advanced features or access, have their work cut out for them.
The Times’ model, which allows site visitors up to 20 free articles per month before the paywall kicks in, seems reasonable when considering print newspapers require a paid subscription for access to the same content. Still, research indicates online users have different cost expectations for online news, no doubt a reflection of their current ability to find and rely on free news and information.
Findings from the Pew Research Center provided a preview of how readers might feel if newspapers were to erect premium paywalls. At present, only 18% of US internet users have purchased online news content, a number much in line with data from Harris Interactive that indicated only 19% of US internet users are willing to pay for online news.
Such strong opposition from readers not only poses challenges for publishers hoping to erect paywalls, it also has the potential to impact a publisher’s main online revenue source—ad sales. How consumers react and possibly change their viewing habits could affect ad inventory and impression levels.
“There’s the potential for there to be an impact, but I don’t really think it’s going to mean the end of advertising in The New York Times by any stretch,” said eMarketer senior analyst Paul Verna. “At the prices they’re starting this at, I don’t see them converting a lot of readers to paying customers, and I think they’re really going to need to keep working the ad-supported side of it.”
Katelyn Watson, senior manager, internet marketing at Shutterfly, currently advertises on online gaming sites that use paywalls. Although the audience, product and experience differs greatly from online gaming sites to online news sites like The New York Times, Watson told eMarketer the same principles can apply for advertising on metered usage sites and can create a positive advertising experience.
“Having a paywall opens up more opportunities for advertisers, for example, the ability to sponsor one-time access to the site on a cost-per-engagement basis. This makes for a much more robust and engaging brand experience than traditional banner advertising,” said Watson.
Marketers may wonder about the potential implication for ad performance behind the paywalls; for advertisers more concerned with audience targeting than brand reach, Watson believes this too offers an opportunity.
”You know people are paying for a subscription, and you may even have access to data that tells you more about them. The quality of the inventory behind the paywall and the price an advertiser is willing to pay is probably better because of that,” she said.
The decision for publishers to offer targeting capabilities based on subscriber data would require publishers to weigh advertiser needs against subscriber privacy rights.
“If a consumer is paying for premium content and feels their information is being used to bombard them with ads, that’s going to make a bad situation worse, especially among people who already resent paying,” said Verna.
If one thing is for certain, it’s that the relationship among online publishers, advertisers and news consumers is highly susceptible to the slightest of changes made by any party. A publisher’s decision to transition to a freemium content model is one sure to impact both readership and online advertising revenue, and is one the industry is sure to watch closely in the coming months.
FEBRUARY 3, 2011
Still room to grow in digital
Digital and interactive is not the No. 1 priority for companies when it comes to advertising. That position still belongs to TV, and a majority of advertising agencies feel there are several obstacles in the way of changing that.
STRATA, a software company for media buying and selling, polled agencies about their clients’ preferences in Q4 2010. Spot TV is still the top advertising medium, with 44% of respondents saying it was the area where their clients were most focused. Internet and digital came in with 21%.
Clients are still turning to traditional advertising methods, but they are open to incorporating social media and digital and interactive tactics. Sixty-one percent of advertising agency respondents said they used social media as an online marketing tactic in Q4, and 78.9% reported using Facebook as a part of client campaigns.
The survey also found that 80.6% of agencies have clients interested in advertising on the iPhone, while 51.4% were interested in the BlackBerry. More than 30% of respondents plan to use some kind of location-based service in 2011, but only 10% of clients have asked to advertise on Apple TV or with an iAd.
While 24% of respondents reported there were no major obstacles in the way of increasing clients’ digital and interactive ad spending, a majority of agencies feel there are still challenges to be overcome. Lack of channel effectiveness was the greatest obstacle, with 26% of agencies choosing it as the primary problem. Another 23% cited lack of advertiser demand.
Clients will continue to show increasing interest in emerging technologies as they prove their effectiveness and ROI. But agencies must work to overcome the remaining obstacles to greater digital spending to make interactive the top priority for clients.
“Likes,” views and followers were all the rage in 2010. Despite the social media community emphasizing engagement instead of reach, media agencies quickly learned that engagement doesn’t scale easily, making it difficult to sell. Enter Facebook, YouTube and Twitter. As consumer use of social media spiked, the leading social networks retooled their advertising products to satisfy the newfound demand from brands. Instead of fizzling out like the popular online communities of yesteryear, they are driving toward profitability after several years of trying to figure out what they wanted to be when they grew up.
On the flip side, as consumers incorporate social media more into their daily lives, alternatives to the “big three” in the form of niche and location-based social networks have increased in appeal. Advertisers willing to experiment with media campaigns on these networks will have a distinct advantage moving forward as consumers become desensitized to text, display and even rich media ads. Whether they choose to go big or small, the social web equips advertisers with significantly more consumer data points than ever before to improve the targeting and relevance of online advertising.
Below are six predictions for digital advertising in 2011.
1. Local Advertising Becomes Relevant Again With Location
Location-based advertising will continue to grow in 2011 as Facebook expands the technology with its location platform, Places. In addition to Facebook, many other players in the checkin space, including Foursquare,Yelp, Shopkick, and last but not least, Google, will condition shoppers to expect a deal or coupon for alerting friends of their whereabouts. Relevance will distinguish these services from each other as the two biggest players, Facebook and Google, have the most powerful social graph data to customize deals for consumers. Don’t count Groupon out, though. It more than makes up for its comparative lack of technology with brand equity and scale, as its massive sales force will remain dominant in 2011 by further monetizing local commerce beyond the recently launched self-service platform.
2. Silicon Valley Will Be the Next Madison Avenue
The coolest job in advertising used to be working for an agency in New York City or Chicago, but these days the dreams jobs are at Facebook and Twitter. Not unlike Mail.ru Group (formerly Digital Sky Technologies) attracting top bankers from Goldman Sachs, as Facebook and Twitter start generating more revenue, advertising and marketing talent will start heading West to cash in.
3. Influencers Will Be the Celebrities of the Social Web
Consumers are constantly scouring the social web to decide where to eat, shop and stay; so it comes as no surprise that brands are desperately analyzing Twitter, blog posts and reviews to understand not only who has the largest audience, but how much influence individuals have. YouTube’s Partner Program is being joined by new services such as Klout to create an official layer of social credibility.
Klout scores are being used by The Palms Hotel in Vegas to gauge discounts for hotel guests, including through the “Klout Klub,” which “will allow high-ranking influencers to experience Palms’ impressive set of amenities in hopes that these influencers will want to communicate their positive experience to their followers.” Creating thoughtful ways to leverage your influencers is the thing to focus on. People have always said it’s cheaper to keep and please the customers you have, than acquire new ones.
4. Small Will Be the New Big for Social Networks
Despite Mark Zuckerberg’s unwavering belief that an open and connected social web is best for society, early adopters are starting to experiment with new platforms designed to communicate and share media with smaller audiences. Path has shown us the potential of limiting our social networks to 50 people. Fast Society is a new iPhone communication service that allows the user to create small groups to text with on the fly, and the groups last for three days. Facebook also realizes some of us may prefer communicating with smaller networks. Facebook’s new Groups feature allows us to segment our friends into personal, professional and interest-based communities, and openly engage in conversations not meant for our mother or colleagues to hear. Watch for more of these smaller, closed networks to launch in 2011 as people seek deeper connections online.
5. Brands Will Become More Like Media Companies
Social media has empowered brands to break their own news instead of relying on advertising or PR to disseminate their message. As brands become increasingly comfortable with social media on the whole, more budget and attention will be focused on high quality content created specifically for the social web. We will see more Facebook Pages like Skittles that appear to employ comedy writers to keep the content fresh. It would seem that “a brand’s best bet in social media is randomness.”
6. Facebook “Likes” Will Be Important for Your Brand
While it’s still unclear exactly how much a Facebook “Like” is worth to a brand, the following video sums up why Facebook is so important.
Brands will be tripling down on Facebook advertising in 2011, and the process for acquiring Facebook “Likes” has evolved to accommodate this increase in demand. Instead of doing A/B testing between two photos to see which generates more Facebook “Likes,” the savvier brands and agencies are leveraging technology that can simultaneously deploy 10,000+ ad variations to yield the lowest CPA (cost per acquisition) of those “Likes.”
Des chiffres très intéressants (de source IAB – Internet Advertising Bureau) publiés par PaidContent sur le marché européen 2009 de la publicité en ligne:
[Légende: publicité sur les moteurs en bleu, bannières en Orange, annonces classées et annuaires en vert, autre en rouge]
Ce que l’on y voit:
- Le Royaume-Uni est toujour le plus gros marché: c’est en ligne avec le fait qu’Internet y a dépassé la télévision depuis 2007
- malgré des populations relativement équivalentes et un développement économique similaire, le marché semble très en retard en France comparé à l’Allemagne et au Royaume-Uni. La part comparativement énorme des annuaires / annonces classées est à noter: signe du bon travail commercial des forces de vente de PagesJaunes.fr….
- la publicité sur les moteurs de recherche (en bleu sur le schéma) prend une place prépondérante partout et même majoritaire au Royaume-Uni. Pour 2 raisons à mon avis: à cause de son mode de facturation à la performance dont les avantages ont déjà été exposés et également pour utiliser la Base des Intentions de Google au plus amont du processus d’achat des internautes
- les pays méditerranéens (Italie, Espagne) ont encore une forte marge de progression
Le marché européen n’a pas atteint son plein potentiel: à population équivalente aux USA, le total des marchés nationaux est loin des 16.2 milliards d’euros du marché américain.
Meilleure preuve: le marché américain, plus proche de sa maturité a régressé en 2009 à cause de la crise alors que ses homologues européens ont eux progressé (modestement)
Il faut suivre ce marché publicitaire en ligne: les revenus qu’ils génèrent sont la manne de l’éco-système Internet. Ils vont devenir celle de l’éco-système mobile émergent.
Tout cela fera de l’Internet le deuxième media publicitaire en 2015.
Source: blog Media & Tech (par didier durand)
Retailers are responding to the growing consumer appetite for online videos by adding them to their Websites both to differentiate themselves from competitors and to keep up with what consumers expect from their online shopping experience.
“Consumers rank other purchase decision-making tools, such as customer reviews, ahead of videos in importance,” said Jeffrey Grau, eMarketer senior analyst and author of the new report “Video E-Commerce: Innovative Models Drive Sales. “But that has not discouraged retailers from quickly adding videos to their sites. They find that videos boost sales conversion rates and reduce abandoned shopping cart and product return rates.”
The proportion of the top 50 US online retailers offering videos jumped 378% in 2009 over the year before, according to a Forrester Research study, “Online Retailers’ Adoption of Online Video Content Is Ahead of Consumers’ Preferences,” published in November 2009. Last year over two-thirds of the biggest online retailers hosted videos.
The adoption rate is poised to climb further, as revealed by a February 2010 Multichannel Merchant survey. Among the two-thirds of respondents who indicated they were planning a site redesign in the next 12 months, some 42.3% said they would add video to their site. That makes it the second-highest priority, well behind social media tools but ahead of other popular Website enhancements including customer reviews and personalized recommendations.
“Retailers are making the case that videos boost their sales conversion rate, a measure of the increase in the percentage of shoppers who make a purchase after viewing a product video,” said Mr. Grau. “Retailers also claim videos reduce shopping cart abandonment rates and lower product return rates.”
Clicks don’t give the full picture
Marketers are used to low click-through rates—but they also know the click isn’t the only way users engage with advertising. Other metrics are needed to measure the full range of interaction that might take place with online advertising.
Eyeblaster set out to develop a new type of measurement, dwell rate, in its “Trends of Time and Attention in Online Advertising” report. “Dwelling” on an ad is spending time with it, including mouse-overs, user-initiated video duration, user-initiated expansion duration and other user-initiated custom interaction durations.
“Recent research shows that the lack of suitable metrics as a top frustration for marketers,” said Gal Trifon, CEO and co-founder of Eyeblaster. “Technology allows us to analyze consumer time spent with display advertising and indicates that consumers intentionally spend nearly a minute with online ads on average.”
The difference between clicks and general interaction was huge in 2008. For example, the average worldwide click-through rate for rich media ads studied was 0.35%. The average dwell rate for those ads was a much more impressive 8.71%.
Broken down further, in North America expandable banners had only a 0.3% click-through rate, but a 7.1% dwell rate and an average user dwell time of more than 45 seconds. Other rich media formats saw similar improvements in engagement measured by dwell or interaction rate.
As the report notes, dwell time is an important metric. Internet users in North America spent the longest time dwelling on online ads appearing in the mail category, at nearly 85 seconds. Instant messaging ads were a close second, at nearly 74 seconds, with news, technology and games rounding out the top five.