UK newspapers could get much more ad revenue out of their websites, Ernst &Young claims in a new report. The consultants say that if newspapers got as much revenue out of their users as Google, they would have earned 120 to 250 million pounds each in 2007, instead of around one-fifth of that. Google had revenues of 1,26 billion pounds in the UK in 2007.
E&Y say that the newspapers should start offering advertisers cost per click (CPC) based ad models alongside the usual cost per thousand page impressions (CPM). But can ads in newspapers ever become as relevant to the user as Google’s search-based ads? Maybe on the newspapers’ own search pages? Some news websites have fought advertisers who wanted CPC before, because they feared too few would click (they know their own click-through rates, of course).
Other recommendations: acquire online classified ad services (a well-known strategy in Norway) and improve behavioural targeting of users. It would be interesting to know how much of this is done already, and what regulations exist — probably privacy rules are tougher in for example Germany and Norway than in the UK and US. (tip: journalism.co.uk).
UPDATE: A prediction for the US online ad market says growth will continue and the shares of the different types of advertising will be very stable in the five years ahead.
One major problem with CPC though: those who click on ads are not always representative of the pupulation at large, check out this piece on a recent study of “online clickers”. Getting lots of clicks on an ad is one thing, but getting the right clicks can be a challenge:
http://virtualeconomics.typepad.com/virtualeconomics/2008/02/only-half-part.html
Higlight: “according to the latest comScore study, about 50% of ad clicks are carried out by the same 6% of the online audience, a core of heavy clickers. This accords with an older AOL study that found 99% of web users did not click on an ad in a given month.
“Even more interestingly, it reached the same demographic conclusion: that the clickers are not representative of the online population as a whole but represent households with an age profile between 25-44 with an income of $40,000.”
Newspapers already offer CPC campaigns to advertising clients. They just don’t work as well as Google ads because newspaper sites don’t have the same level of technology that can produce the same results.
Cost per thousand impression (CPM) works best for visual, branding-oriented campaigns while CPC is best for textual, response-oriented campaigns.
Google produces more revenue because it redistributes its ads on other Web sites (AdSense), which newspapers can’t do, and because it can deliver contextual ads, which newspapers are starting to do.
Thanks a lot to both of you! Kristine, does comScore look at “Google clickers” specifically? I would expect that those clicking on Google ads are “higher quality”, otherwise fewer advertisers would buy AdWords ads, right?