Advertising may not be sufficient to support Internet media.
MarketingSherpa has an important study of marketers’ discouraging experience with Google Content Targeted Advertising on general content sites. [Thanks, MarketingFix]
Generally newsy, how-to, and highly targeted articles on niche sites tend to get far better ad clicks than newsgroups, bulletin boards, general interest sites, or stagnant info pages.
Unfortunately Google didn’t take this factor into consideration when designing the program. They chose the partner sites for contextual ads mainly based on traffic (sites had to have more than 20-million pageviews a month, which very few niche sites do) and “quality” which seems to mean being G-rated.
What they found is that click rates are abysmal for many contextual ads, and that conversion rates (share of clickers who take the desired action after clicking on the ad) have been disappointing for many advertisers as well.
MarketingSherpa says low click rates aren’t too big a deal if you’re paying by the click and you’re getting decent conversions. True enough, but it also means that pay-per-click ads aren’t going to pay the bills for an online publisher.
The low conversion rates are even more troubling. This may doom general content sites to seeking price-sensitive, rich-media-laden, dubiously-effective branding ads instead of light, direct-response advertising that is the fastest-growing category on the net. According to the NY Times, search-related advertising has grown “from an estimated $400 million in 2000 to $1 billion in 2002 and even higher this year”.
If this admittedly limited research holds true, what are the implications for online publishers?
First, don’t assume this means you should charge for content. Just because it’s still challenging to sell ads on general content, that doesn’t mean you can sell it to your readers.
Second, seek services revenue. The services sector is producing more revenue and growing faster than general content.
Third, consider publishing content that supports direct marketing. Get your readers when they’re considering a purchase. For local newspapers, real estate comes to mind.