Commentary

Since Digital CPMs Are Meaningless, News Corp. Paywall A Sign Of Things To Come

by Joe Marchese , November 9, 2010

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

advertising, commentary, cpm, online publishing, pay wall

5 comments about "Since Digital CPMs Are Meaningless, News Corp. Paywall A Sign Of Things To Come".

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Craig Mcdaniel from Sweepstakes Today LLC, November 9, 2010 at 4:20 p.m.
Joe, I started a test market 3 years ago using "Billboard Pricing" on my website. Billboard Pricing is a tried and proven method of charging the advertiser a flat fee on a per month basis per sweep or contest I run. Guess what? The Fortune 100 companies love it. First there is no click fraud and success of the campaign depends on the quality of the promotion. Not who is running the offer. Second I give statistics on all promotions. My goal in our future development is to make the statistics real time. So don't the ad networks consider something so simple and works?
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Greg Alvarez from iMeil, November 9, 2010 at 4:50 p.m.

But why so pessimist? Cable and Pay-Per-View TV is working under the same model. Unless things have changed enormously, there will be always space for ads.

I would place a different question... aren't we, as consumers or paid subscribers, supposed to no make any payment for ad-supported events or programs?

It would be interesting to see who is right... News Corp or McKinsey Quarterly, with the latter going in the opposite way, from a pay-per-access model to a free-content-ads-supported one.

David Britton from The Voltage Group, November 9, 2010 at 6:16 p.m.

Joe, the decline in CPM and ad revenue started when publishers went to ad networks and sold their soul. Content has value and advertisers pay for it everyday in broadcast and print. This medium wasn't willing to keeps its pants up and demonstrate the value of its audience. Some publishers will survive and those which take $3 CPM's for pre-roll, should save themselves the hassle and pull the plug. Ad networks will go down as the death of this medium.

Craig Mcdaniel from Sweepstakes Today LLC, November 9, 2010 at 8:06 p.m.

David, as a publisher with a large membership, there is another side of the story. The publishers started to get the raw end of the deals. We were getting a lot of really nice CPA deals then they dried up. I use to get 3 to 5 high paying CPA deals a month. Now, I am on my 3 decent paying deal for the year.

The big difference? The advertisers went to Google Adsense and email on now Facebook and Twitter development. So the advertisers budgets have changed and their methods as well.

At least I am trying things instead of complaining.

Yossi Barazani from Publishedin.com, November 9, 2010 at 11:52 p.m.

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