Mining Your Site For Multiple Revenue Streams

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By: Steve Outing

Money. Money. Money. It’s what’s on everyone’s mind in the online
news business these days. Few online publishers have figured out
how to make it fast enough.

We’re definitely in a phase where online news executives are
assessing all options, and looking at new potential revenue
streams. For this week’s column, I’ll examine some of the more
innovative approaches that news sites are taking or thinking
about – citing the pros and cons of each.

Big, big ads

Let’s start with the big ads that are appearing on more and more
sites. The trend started with CNET, which began putting big,
animated Flash ads on some of its pages – with article text
flowing around the large ads. These are a step bigger than so-
called “skyscraper” ads that have appeared along the right side
of numerous sites for some time – tall, thin ads that give
advertisers more space, but don’t interrupt page content.

Pros: Bigger ads get noticed much more than the standard
Web banner sizes we’ve seen previously. (The ubiquitous 468 x 60
pixel banners typically generate dismally low clickthrough rates,
now well under 1% on average.) There’s much more room for
advertisers to craft compelling messages and graphics. And by
using Flash, ads can be more interactive and feature attention-
grabbing animation. Publishers can, of course, charge
considerably higher rates – justified by the larger space
taken up by the ads, and their superior performance.

Cons: The negatives are many for the large ads. Foremost,
they are far more intrusive than anything we’ve seen on Web sites
(except for pop-up ads or interstitials, which I’ll talk about
next). At least initially, you can expect some negative reader
reaction to the introduction of the big ads on your site. (But I
do believe that will lessen in time, as users get used to them.)
The animation of such ads can be highly annoying to readers; it’s
difficult to read an article when an animated graphic is running
right next to the text. (The solution here is to limit the
animation cycle so that it stops after a short period.
Alternatively, such ads should have a “Stop animation” button
– or better yet, a “Hide this ad” button.) Also, recognize
that if you allow Flash animation on such ads, not every Web user
will have Flash installed on their PCs. (So, a static alternative
ad should be shown to those users.)

Pop-ups and interstitials

Pop-up ads appear as small windows on top of content. When a user
clicks on an article, the story will appear on a main Web browser
screen, but on top of it will be a small window featuring an ad.
Interstitials are ads that are seen before
(and sometimes after) a Web user sees the requested content;
they’re akin to movie theater commercials that a user has to sit
through before the film actually starts.

Pros: As with big ads (above), they get noticed more than
standard Web banners. There’s more room for advertisers to impart
their messages, and more creativity is possible. An interstitial
might be a video clip. A pop-up ad might be a registration form
where the user requests that marketing information be sent to
him/her. An interstitial might interrupt the flow of a piece of
content, as a commercial interrupts a TV drama.

Cons: They’re annoying, foremost. (But then, so are TV
commercials, and ads that run before a movie you’ve paid to see
or a video you’ve rented. Most people are used to them by now and
tolerate them.) Pop-up ads are generally ineffective because many
Web users instinctively hit the close button before looking at
them. Indeed, the pop-up ads can be closed even before the ad
content has loaded. Interstitials are a better approach, but it
doesn’t make sense to place them before a user sees the
content that’s been requested if the intent of the ad is to get
the user to click to go elsewhere. Interstitial content will work
better if the ad content is consumed at the interstitial ad
itself. A 10-second animation that says “Drink Diet Coke” is
better than one that asks the Web user to visit the Coke Web
site.

One alternative for pop-ups is to run them for limited duration.
At the Albuquerque Journal, the Web site has been
experimenting with pop-ups that hide themselves after 20 seconds.
(Here’s an example.) Says ABQjournal.com’s Donn Friedman, “Users
haven’t complained too much.” The site started using this
technique in order to save an advertiser that was about to leave
when traditional banners didn’t work.

Subliminal or ‘wallpaper’ ads

A few sites are experimenting with “wallpaper” ads, where a
corporate logo is placed behind editorial content of a page,
lightly screened. (Here’s an example from CBSMarketwatch.com;
note the CDW logo plastered in the background of the page.)

Pros: You should be able to get a hefty fee from
advertisers who wish to promote their brand.

Cons: Frankly, it’s cheesy, and gives the impression that
your site’s editorial content is somehow connected or affiliated
with the advertiser. This will really work only for brands that
want to imprint themselves in consumers’ minds; it does not
enable a Web user to go elsewhere to look for more information
about the advertiser. I think it cheapens your editorial
content.

Paid subscriptions for ad-less content

Salon.com has introduced this approach. As you add more intrusive
advertising, such as those cited above, you give users an option
to view your site sans ads – for a fee. You’ll also
want to add some premium content to the mix, available only to
the paying subscribers. But the main appeal of a subscription is
the convenience of avoiding those annoying huge animated banners,
pop-up ads and interstitials.

Pros: Let’s face it. As an online publisher wishing to
survive, you pretty much have to “turn up the volume” on
advertising and run more intrusive ads (unless you are a niche
publisher that can charge a fee for content). Offering users a
way to avoid this is an interesting notion that some of your
users will like and be willing to pay for. It could be a
significant revenue stream.

Cons: How will your advertisers feel about this? Some of
your best and most loyal customers – those able and willing
to pay you money – are opting out of seeing ads. This
strategy could hurt your ad sales efforts. Also, well-targeted
advertising is seen by many users as content. Just as many
print newspaper readers view ads as useful and not an annoyance,
so too do some online users.

Payment for content

Lots of folks in the online news sector are taking this seriously
again. But especially for news companies, it’s difficult to find
content that people are willing to pay for; there’s too much
competing free content on the Internet. The answer here is to
create niche content and put a price tag on it. For instance, the
Las Vegas Review-Journal generates gambling coverage of
considerable depth and charges for it with a service called Gaming Wire, which
provides gaming articles that others can publish or use
internally. A financial news site might offer a premium content
service covering the IPO markets, or a newspaper in an
agricultural region might create a premium content service for
farmers, for example.

Pros: Most news organizations can expand their coverage to
niche areas where they can provide great depth. The trick is to
find your organization’s strength (e.g., gambling or autos or
farming), beef it up and possibly add reporting staff, and market
the resulting niche coverage as a paid service. Make sure that
the premium content you produce is not available from others.

Cons: To generate online content that people will pay for,
it generally needs to be highly targeted. That probably means
you’ll need to add staff and resources to create a paid service.
And many niches won’t pay off because they’re too small. So,
tread carefully when planning paid niche content services.

Here’s one other paid-content strategy that can work well,
especially for e-mail publications. Provide a basic free service,
but offer a premium service that includes additional content. The
model is demonstrated by Randy Cassingham’s This Is True e-mail
newsletter of humorous news items. He offers a free weekly
subscription containing four short news items. But for $15 a
year, you can get the “premium” True which contains double the
content.

Charging for all content

In Rochester, Minnesota, the Post-Bulletin has decided to
close off most of the content of its Web site except to paying
print subscribers, who will get access to the paper’s Web site as
a value-add. This isn’t a trend, but we’re likely to see some
other print publications’ Web sites try this, too. Paying
subscribers will get print and Web-original content, plus access
to an 11-year archive of newspaper articles. Non-paying Web users
will see only headlines and classified ads.

Pros: This is a strategy that can help boost print sales.

Cons: This model hurts online advertising sales, as there
will be fewer online users. Also, it limits the future profit
potential of the online site, because it will always operate
merely as a component service of the core print product. It’s not
a strategy for those media enterprises with ambitious Internet
aspirations.

On-demand marketing e-mail

I wrote a column about this a couple weeks ago. The
idea is to provide a Web service where consumers can ask that
marketing information be sent to them. Looking to book a vacation
to the Bahamas? Submit a request and advertisers (who pay to
participate in the program) send you information – which can
be personalized to the individual request.

Pros: This is a much better form of advertising than Web
banner ads. If a consumer requests specific information from an
advertiser, that person is a solid potential customer. This form
of advertising is effective, and advertisers will pay high rates
for the superior performance over other forms of Internet
advertising.

Cons: This model can take a while to build, because you
have to attract a sizable stable of advertisers who will answer
consumer requests. Otherwise, a Web user will request information
and may get nothing back.

Selling content for wireless devices

Just because it’s difficult to charge for your content on the Web
doesn’t mean that it can’t bring in revenue when delivered to
wireless devices like PDAs, e-readers, and phones – where a
content business model hasn’t been settled on yet. So keep an eye
on the wireless market and be prepared to offer your content on a
paid-subscription basis.

Pros: This could be a promising revenue stream in the
future – depending on how business models shape up in the
wireless-device space. Wireless service providers already have a
micro-billing infrastructure in place, so it’s simpler to charge
small amounts of money for content (say, 5 cents for a daily
horoscope) than it is to do the same on the Web.

Cons: It’s too early to make much money from wireless
content. And the industry could veer toward a model similar to
the Web, where most content is free and supported by advertising.
(But I doubt it; I expect microtransactions for content to be big
in the wireless-device arena.)

On the subject of wireless content, many news sites should be
considering SMS (short messaging service) content sales. These
services send out opt-in, brief messages to mobile phones.
Examples would be top headlines, or topic-targeted headlines
(e.g., alerts of approaching local heavy weather, or when
specific sports teams score a point/goal/touchdown). While not
flashy, SMS is already a significant revenue source for news
sites, especially in Europe.

Voluntary donations

We’re seeing lots of sites that give their content away free
request donations from users. Think of it as a voluntary
subscription fee.

Pros: This is a revenue stream that relies on your most
loyal users to support your site. It’s money that can help defray
some of your expenses.

Cons: Do you really want to be seen as “begging”? Except
for public broadcasters (like PBS and NPR), most media don’t ask
their users for money. PBS gets away with it because it doesn’t
air commercials; your Web site might accept advertising, so it
may be awkward for you to also beg for contributions.

Selling archived newspapers online

Here’s an idea from the Dallas Morning News. The paper’s
Web site is in the early stages of a new venture that is a
spinoff of its archive business, according to DallasNews.com’s
Gerry Barker. Via a Web page (a “Front Page Store”),
readers can purchase printed copies of historical News
pages. Newspapers have done this for years, but now the concept
has been moved to the Web. The News contracts with an e-
commerce vendor that takes and processes the orders, prints out
and mails the desired page(s) from PDF files, and handles
customer service. Barker says that a recent test of sports pages
around Troy Aikman leaving the Dallas Cowboys generated
several thousand dollars in two weeks – “so we are
encouraged by the potential.”

Pros: This is a good example of revenue generators that
can be farmed out to other entities. Cons: I can’t think
of any.

Still on the subject of archives, they have long been a
significant revenue source for many news sites. And they can be
more so when news sites promote them better. At the
Albuquerque Journal, its Web site provides links to
related paid archived articles within current content. An article
might feature archive links to stories on the same topic, or by
the same reporter, for example.

Correction

In my column last week, I incorrectly identified the
St. Croix Avis as a weekly newspaper. It is, in fact, a
daily publication serving the island of St. Croix in the Virgin
Islands for 157 years (and also distributed on the island of St.
Thomas). Avis editor Robert Hoffman reports that
his paper, which is independently owned, actually has a slightly
larger circulation than the Virgin Islands Daily News. I
regret the error.

Other recent columns

In case you missed recent Stop The Presses!, here are
links to the last few columns:

o In Island Monopoly Media Market, Net Provides an Alternative, Wednesday, March 28
o The Word of Mouth Web Concept, Times 2, Wednesday, March 21
o A Rational Alternative to Web Banner Ads, Wednesday, March 14
o Archive of columns


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Got a tip? Let me know about it If you have a newsworthy item
about the online news/interactive news media business, please send me a
note.



This column is written by Steve
Outing for Editor & Publisher Online. Tips, letters and feedback
can be sent to Steve at steve@planetarynews.com


Copyright 2001, Editor & Publisher.

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