26 January 2010

Riddle me this, Batman

The reason companies have historically been willing to pay big bucks for print ads is that the publishers can provide demographic and circulation data: i.e., we have 20,000 subscribers. 27% of them have completed college. 18% have household incomes over $150,000. Etc.

Online ads? If I'm logged in to a site, which is increasingly the case, and I click on an ad, the site owner could potentially tell the advertiser everything they know about me.

And somehow that's worth less?

People, we have to figure out the financial model for online advertising, or all we'll be left with is non-professional content (and as a non-professional content creator, that scares the hoo-has out of me).


5 comments:

Frank Fortin said...

I think a big reason the old media could charge so much is that what they had, access to consumers, was scarce.

Scarcity = pricing power. So the old media could charge whatever they could get away with.

No scarcity = no pricing power.

Elizabeth Weaver Engel, CAE said...

@Frank - interesting you would mention the whole idea of changing perceptions around scarcity - the March issue of Membership Developments will include an interview with John Winsor, ASAE Membership & Marketing Conference keynoter, in which he talks about exactly this idea (among others).

Joe said...

I fear that the old "benefits" of advertising were overvalued. Advertisers saw big numbers of subscribers and assumed that 25,000 subscribers = 25,000 people who look at their ads and learn about their products. Conveniently, there was no conversion data for media to give back to advertisers, and advertisers continued on paying.

Now, with online ads, tracking mechanisms have made it readily apparent that virtually no one reads advertisements. Out of 25,000 subscribers, an advertiser might be lucky if their ad gets a dozen clicks. And "impressions" are even more worthless online b/c it's even easier to scroll past an ad than having to physically turn a page to get past it. So now the cat's out of the bag, advertisers are no longer fooled, and publications' advertising revenues have plummeted.

If online publications (and associations with online publications) want to recapture some of that scarcity model that Frank mentions, then perhaps they need to focus more on using the data they have to connect advertisers with very, very specific sets of consumers that match their target markets. Think Google's sponsored, pay-per-click ads. Instead of trying to get the advertiser to pay for a million impressions, they only show the ad to people who search for a relevant term (and are thereby in the target market).

Elizabeth Weaver Engel, CAE said...

@Joe - that's exactly my point. Pay per click should be MORE valuable, not less, since the advertiser KNOWS I've seen the ad, and can actually learn as much about me as the association is comfortable sharing.

Scott Oser said...

Elizabeth,

I think one of the big negatives of online advertising is the uncertainty of it. No one knows how many people actually read an issue of a magazine or a newspaper but we do know how many people get the publication and have the opportunity to open it because we know who it is mailed to. Most publishers have done a readership study to gather demographics so we know who is most likely to see the ad. The same cannot be said about a website. Different people, and potentially different types of people, may, or may not, come to a site in a given period of time. Websites are a pull media so there is no guarantee that anyone in your target market will see your ad let alone click on it. As I said earlier there is no guarantee that the readers of a magazine are actually opening the magazine and seeing your ad either but for now there is a lot more research being done for print publications that remove some of the uncertainty that I still think exists online.

Scott