When News Corp. put The Times of London and Sunday Times behind paywalls, everyone was fully expecting a massive hit to both publication's traffic. Now we know how bad the traffic hit was, as noted in Eric Schonfeld's "The Times UK Lost 4 Million Readers To Its Paywall Experiment." But the bigger story for advertisers is that News Corp. doesn't care, or at least not that much. Why? Because despite a massive hit in traffic, according to some simple math (which Schonfeld does a great job laying out), News Corp.is making a lot more money off a much smaller number of people paying for the content than they ever had from online advertising.
So here is what marketers are realizing: Online advertising is broken, so publishers of premium content will be forced to continue to focus on revenue driven through subscription services, and would-be advertisers will have to make do with whatever scraps of content/audience happen to be left.
I don't want to completely rehash what I wrote a few weeks ago in ""Advertising Is Becoming A Consumer Choice," but the utter meaninglessness of digital CPMs today is THE major issue facing the digital ecosystem. If advertising is ever going to support premium content, it needs to find a much better way to value premium content, and publishers need to find a better mechanism to offer value to marketers. Somewhere in the gap between a consumer's being forced to pay a publisher $1.60 for a day of content, and a publisher only being able to generate pennies of ad revenue from the same person, is a solution that allows advertisers to subsidize people's access to content.
Impressions are obviously not that mechanism. I have my own biased (but educated) opinions on what the solution is, but until a better system is created, consumers can expect to see a lot more paywalls, and advertisers can expect to see a lot fewer premium digital environments to engage consumers. Sounds like a lose-lose to me.
Got a better answer, or anything to add? Drop a comment or follow me on Twitter: www.twitter.com/joemarchese