Let’s take a look at what Daily Kos gets for ad revenue. Kos sells through blogads (as do we). His rates are:
Premium: $12,500/week
2nd slot: $7,500/week
Standard: $3,500/week
One of the standard online advertising pricing models (and, I believe, the most commonly-used one) is “cost per thousand impressions,” or “CPM.” According to blogads, the estimated “impressions” for a week of ads on Daily Kos are about 5.8 million. So for the premium ad spot, Kos charges a little over $2 CPM, and he charges correspondingly less for the 2nd and Standard slots (about $1.30 and about $0.60, respectively). As far as I know, those rates are ballpark for the industry — perhaps a bit on the low side, but ballpark.
Let’s assume — contrary to fact, as his premium slot is currently vacant — that Kos manages to run a premium ad, a 2nd slot ad, and two Standard ads, every day of the year. That gives him 52*$12,500 + 52*$7,500 + 52*$7,000, or about $1.4 million, in ad revenue for the year.
Kos runs ads from a few other services on his site as well, but I trust by now the point is clear: a website that is far more heavily-trafficked than boston.com, and that is nationally-recognized as an important stop for political types, cannot generate even $2 million in annual advertising revenues. If reports that the Globe is losing a million bucks a week are even remotely close to true, advertising on boston.com isn’t going to solve the problem. (And this remains true even if Kos’s ads are too cheap — assume that he quadruples his rates. Now you’re talking $6 million a year under the most optimistic scenario. Still no help.) Even the insanely popular celebrity gossip site Perez Hilton, which records something like 50 million impressions a week (nearly 10 times what Kos gets), only charges $18,000 a week (about $1 million a year) for its most expensive blogads ad slot.
Under the current model — free content, paid ads — I just don’t see how the numbers are there. Do you?
Previous posts on this subject have basically said (or at least implied) that the Internet is where its at and old-fashioned print is sooo 20th century. If online news outlets were to charge I submit they woud lose traffic and make ad space even less attractive. I for one already prefer print and would certainly choose it over a website if I had to pay either way.
I’d be a rich man, and I’m not. I’m just pointing out that, unless I’m missing something, the correct response to the folks who are harping on boston.com’s traffic numbers is “so what?”
Obi-wan.
If I wanted to look at ads I’d look at one of the magazines I subscribe to. Who and why would anyone pay to advertise on a website? Who looks at the ads?erhaps i am not a consumer aware person. I had a close relative doing nationwide ads on TV and I never realized it until someone said, “you’re so and so” and whatever ad it was. I said the same thing to him. Who notices ads?
Look at Kos and other political blogs, and you’ll see that a large portion of the advertisers are “public debate” advertisers. They hawk books, conferences, political t-shirts, etc. Mainstream corporate America has not yet started buying ads on Blogs.
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p>Look in the paper copy of the Boston Globe, and the ads you see are for Macys and Filenes, Quaker and Audi. The only blog-like entity that I’ve seen with corporate ads is Salon.com. They carry ads for Slim-Fast and M&Ms.
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p>Advertisers have the capacity to support a given amount of media. That capacity has been reduced as classifieds moved online. But ads are still able to spend money, its just a matter of where. If a few major papers shut down, maybe that will send big advertisers into the hands of blogs.
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p>Maybe the next model will be that every city will have 4 or 5 big blogs that generate enough ad revenue to pay a few staff people. Those paid staff will in-turn coordinate an army of volunteer bloggers.
The complaint in the publishing industry is that they’re trading traditional ad dollars for internet ad dimes. It’s true here, for sure.
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p>Boston.com can certainly get more of a CPM premium than Kos — they offer roadblocks and other ad units/formats which are more attractive to advertisers with large budgets. They’re also a more ‘brand-safe’ site — advertisers with lots of money will stay away from Kos because they’re afraid they’ll get tainted in a way that a newspaper site won’t.
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p>But net-net, it’s a new reality when it comes to distributing content, and the old models and the old math just aren’t working.
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p>As the shift in ad spend continues to move away from traditional media, I think the publishers who can weather the storm will do well — there will be a limited number of spots considered ‘safe’ to advertise on by the people who control the massive ad budgets out there — but it’s going to be a tough transition, and it’ll still at best be quarters instead of dimes.
Sitemeter doesn’t count unique visitors, only total visitors — so it’s not accurate to say that Kos has radically more uniques than the globe. Maybe so, maybe not.
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p>Also, perez hilton has two skyscraper slots, which he charges much more for — ($32k vs 18k, $38.4k for flash). Two flash skyscrapers plus a banner on the top is more like 5 million a year than one. Plus he’s doing some remnant advertising, which is probably getting something around ta $0.05 eCPM, for another not-insignificant chunk of cash.
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p>But fundamentally, the question is whether the globe can put together an online audience that online advertisers want to buy. Can the globe attract more than just a regional audience?
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p>I keep seeing their “big picture” pop up on sites like reddit and digg. That’s a good sign, but it’s still fundamentally a regional paper — and there’s still not a lot of regional or localized advertising online. That’s going to be tough gap to bridge.
Sitemeter says: ” Site Meter defines a ‘visit’ as a series of page views by one person with no more than 30 minutes in between page views.”
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p>That’s essentially the same as a “unique visitor,” with the caveat that different sites set their time interval differently. I don’t know how much time has to elapse between the same person on boston.com showing up as two “unique visitors”; apparently on Daily Kos, it’s 30 minutes.
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p>Re additional ads on PH, yes, of course that’s true. But the point is that we’re talking orders of magnitude away from the Globe’s operating costs.
from statcounter, a different service but one that operates similarly (and that tracks BMG’s traffic):
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with the differentiation of first time v. returning visitors: this number would be highly suspect in that more sophisticated Internet users would be more likely to have their browser options set to delete private history data for various reasons (and not necessarily because they’re up to no good). Hence if cookies are being wiped off each time they close their browser, under that definition every new browser session they would be counted as a first time, rather than returning visitor.
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p>Think a left/right leaning website may attract more suspicious types? Tends to lessen a Kos/WorldNetDaily type of site’s statistics with that type of definition in play.
Unless greatly important breaking news hits, boston.com looks pretty much the same at 7am on Wednesday, 4pm on Wednesday, and 11pm on Wednesday. Sure, the weather and traffic change, and the sports scores go up, but so what? I get that all on one page on my browser homepage.
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p>DailyKos and BMG evolve on an hourly basis, and the content updates at a much quicker pace. Three days away from either, and I may have missed something bigger.
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p>It’s easier to get more unique visitors if your readers are visiting 7 or 8 times a day.
Definitely orders of magnitude away. But i think the key question is how much of their overhead is related to the printing and distribution of paper copies vs content creation. If they went all virtual, how far off would they be from turning a profit. Have you seen any numbers related to that?
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p>Re uniques — it’s a hotly debated topic in advertising. What you describe are sessions, rather than uniques. My recollection is that by IAB guidelines you must cookie a user to count him/her as unique. It’s primarily a metric that’s interesting to advertisers when answering the question of “does my ad get shown to the same people/person over and over, or lots of different users?”.
Might change dramatically if it went online-only. A few hundred journalists, a sales department, and a few tech. staff: 300 people? I guess that is the logic that appealed to the Christian Science Monitor. Personally, I think it would be highly premature, and even longer-term there may be an important role for printed newspapers, just like cinemas survived after TV, VCRs, and DVDs: different user experience. It’s easier to read a newspaper, you can drop it in a puddle (like I did today), and if you lose it, no big deal. Just saying.
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p>boston.com doesn’t have that problem.
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p>2. kos is awfully segmented. That means that sure, advertisers know most of the viewers are interested in liberal politics, so those with liberal political products have a great set of viewers. But it also means that those interested in food, cars, clothing, etc aren’t well defined on the kos website — so lots of advertisers have no benefit of advertising on kos instead of any other arbitrary place.
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p>boston.com can run ads that are a function of article content, loginid, zip code of user, etc.
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p>3. boston.com has a staff dedicated to landing ads, with longstanding customers. That may help too…
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p>4. boston.com users are less sophisticated Internet users than kos.com users. I have nothing to support this claim except to note that bloggers tend to spend more time online, be younger, and generally more interested in the Internet medium. This means that boston.com users may be more willing to provide real information, use a real login (instead of bugmenot), and not use adBlock add-ons as kos users are.
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p>Now, all of this isn’t going to save the day either, to be sure. But I do think that, run well, boston.com could get far more per CPM than kos because it can use information to make sure that the ads match the users well, because they have a wider cross section of users, and because their content doesn’t scare away some ‘main stream’ advertisers the way a site like kos does.
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p>All of that might double ad revenue one more time, but David’s right, that ain’t enough.
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p>So, what’s the problem? My thinking: network effect. If they doubled readership, they could deliver twice the papers at far less than twice the cost because routes would remain roughly the same. That’s twice the per-paper sales revenue but also twice the eyeballs for ads, but not twice the cost. If anyone knows how to increase hard-copy newspaper sales, by all means sell that info to the Globe.
There’s no doubling newspaper sales. And it’s not just the globe, it’s everywhere. People are moving on — to their computers and phones.
Your points are good, but remember that DKos is right now getting 4-5 times the eyeballs that boston.com is, and eyeballs are the name of the game (such as it is) in online advertising. So your analysis has to start from there.
It’s number of eyeballs * margin per eyeball pair.
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p>I don’t disagree with your number of eyeballs analysis… I only argue that the margin for boston.com ought to be higher than kos for a variety of factors… and that the increased margin, while helpful by perhaps a factor or 2, isn’t enough to overcome the reality that the margins are too small and/or the number of eyeballs to small, by about a factor of 10.
If Kos had an entire team devoted to securing more online ads for larger dollars per ad, and this team were paid based on sales, I bet it suddenly makes a lot more money. Same goes with Paris Hilton, triply so.
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p>One of the things you have to consider is that while these sites aren’t raking in huge dough compared to their hits, they have owners who are still doing pretty good otherwise. If Paris Hilton’s top ad earns over $1 M a year, Paris Hilton’s probably getting a huge chunk of that, maybe even 80-90%, making him a very rich man… all for hanging out/painting cum on celebrity faces. That allows him to focus on whatever the hell it is he wants to focus on (attention).
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p>This is all pure conjecture, of course, but it’s pretty logical. Kos earns enough for himself and a few staffers/bloggers. Not a bad gig! But is he pushing for more and more on the business side of his site? I doubt it.
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p>This is why newspapers have entire staffs for ad sales. You say that hits should be paramount, but if no one’s making that case to Coca Cola, Coca Cola’s not buying an ad on your website. A local example: I bet far more advertisers find BMG than BMG finds advertisers. No other industry in the world would set up that sort of business model — where we essentially demand advertisers find us — but we’re all just a bunch of geeky bloggers who love government, laptops, gmail and (usually) our other real life jobs or hobbies. So long as we break even, or close to it, we generally don’t care about ads. If the blogosphere hired entire ad teams who went out and sought potential ad-buyers, it would probably be a much more profitable place (and actually make internet advertising itself more profitable, because of the ripple effects). Yet, that’s not our goal, so that’s not what we do – which is fine. But newspapers are different and examples such as the LA Times have proven that those models can work, too.
but it sounds like this 20 million cut back is chump change. Their problems are much worse and 20 million is not going to solve anything. It just buys them additional time. They probably need to stop their printing operations and outsource it similar to the Herald. My guess is that they are setting us up for the big layoff later on toward the end of the year.
you buy their numbers. Many of the experts don’t. Pardon me if I’m skeptical about a company that could have ulterior motives for wanting to slice a chunk of change when they claim they’re losing significantly more. No part of any of this makes sense, with the exception that NYT is somehow screwy — either number-fudging or just grossly incompetent and negligent. I prefer to think they’re not so incompetent, but maybe that’s an assumption I shouldn’t make.
When their numbers are made available, but I’m thinking that their numbers are accurate.
the Globe could fire more than 1/2 of their employees tomorrow and still be in the red? That’s pretty much what losing $85 million a year would mean.
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p>If that’s the case, why is the NYT only asking to cut $20 million? It doesn’t pass the sniff test.
The NYT may doown-size the Globe, but won’t close it. Tge BYT will close all it’s out-side the region offices. Use stringers abd use Boston as a market for NYT stories.
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p>We said bye to the Globe long ago!
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Subscriptions to the paper copy of the Globe (or any newspaper, as far as I know) were never enough to cover operating costs. If you start charging everyone who reads the Globe online the full cost of a subscription, you’d still be losing money because the business model of the newspaper was always that the advertisements would support the bulk of the operation.
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p>The problem, near as I can tell, is that newspapers have severely undervalued their online advertising slots, at the same time as advertisers to the print edition are going under, cutting back, consolidating or heading to craigslist. The Globe would likely be losing money even if subscriptions were going up.
Certainly I can’t see this happening. But hell I’m old fashioned and love newspapers even if the press drives me nuts. I love reading my paper – almost always the Globe – on the T every morning headed into my office.
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p>So, I was interested in what French President Nicholas Sarkozy proposed as a prop for his struggling newspapers. He proposed that every 18 year old in the country be given a free newspaper subsciption (and also promised the industry a 600 million euros).
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p>So how bout it? As part of enrolling at a state university, every student should be given a subscription to a Massachusetts newspaper of their choice. Let the university system get a bulk rate from the papers and pass on the charge through tuition or fees, which shouldn’t add much to the already high university fees.
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p>Why not do the same fo high school students, with school districts getting a bulk rate.
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p>I think our local newspapers are important and worth saving. If you get young folks reading them they will have more chance to stay reading them. Its good for their political and civic awareness and if you created this young audience, maybe some advertisers will start paying some to reach this group of impressionable future spenders. Maybe it also forces the content to change so it becomes more relevant to young folks too.
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p>Might not work of course but personally I’d be willing to see the Government put some creative subsidy behind our local media. There are plenty of worse industrial subsidies out there so why not.
The online ad revenue they generate is enough to pay for their entire news staff (and more).
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p>It can be an effective model. It can’t, for example, pay for 1400 employees — but it shouldn’t have to, either. The print ads and fees should pay for everything re: print & distribution.
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p>If the LA Times pays for 660 employees from its online ads alone, I don’t see why the Globe shouldn’t be able to leverage its online ads better than it currently does.
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p>No magic fixes here, but let’s not pretend as though there aren’t online versions of major papers out there that are doing exceptionally well with online advertising. I don’t know if the Globe is or isn’t among them, because it’s entirely possible that the gigantic losses are from distribution & print production — and it’s also apparently likely that the Globe’s 1400 employees is just far too many.
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p>Still lots of unanswered questions as far as I’m concerned — and I don’t think your critique is entirely justified of online revenue potential. Just because Kos and Perez Hilton aren’t maximizing online profit potential, doesn’t mean newspapers can’t.
Here’s an analogy. I stand on Tremont st. offering to guide people to restaurants they’ll like. For $1, I listen to their preferences, and tell them about what different restaurants have on their menus. When someone says they like steak, I bring them to the door of a steak house, and they pay me a dollar.
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p>Would the restaurant sue me for making money off their business? More likely they’d pay me for bringing me business.
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p>That’s what Google does. Errr…. no, wait…. Google doesn’t run ads on Google news – they do it for free. So would a restaurant owner sue me for bringing them customers for free? Do you have to think about it?
Google does just fine from Google News, I am sure. True, there are no ads on Google News, but it builds their brand, increases total time spent on their site, increases their knowledge of consumer interests, and no doubt adds other benefits. They are not a charity: their undertakings have a commercial purpose.
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p>The correct analogy is to a real estate company that manages a guide service like the one you describe. Sure, they’ll take you to the restaurant you want, but they’ll also learn what kinds of things people like to eat and use that knowledge to build their real estate business. That is the reason they provide the service. Gradually, they’ll gain more and more power over the restaurants.
Not a lot of college students care about getting the news. Unless it’s about a band or celebrity they like, or why the T is late news has no meaning.
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p>Apparently spending money on anything, including information goes against the morals of this group. Everything, from music, movies, television and the news is suppose to be free. Or paid for by some one else and handed to them.
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p>I asked the boston community on Live Journal, how many of them read newspapers, and how many got news on line. Some admit to reading the little Tabs that keep you up to date on what is going on in your own little neighborhood. And nothing else.
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p>Or they get Google News, without the realization, or consideration that Google news is not the name of a news organization, but the name of an news feed.
I’m pretty sure that this was true in the days before Google when I went to school and in the days before the Internet, and in the days before Video Games and before Cable TV and back to time immemorial.
Almost every undergrad I teach watches Colbert or Stewart regularly. Now is that news? Sortakinda to be sure — it’s got less content than the A section of the newspaper, but more content than the 5:00 news program.
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p>Many also read the school newspaper or the Metro or both. The freeness is relevant; the length of articles may be relevant too.
The thing about Colbert or Stewart is that you have to have at least a passing familiarity with the news of the day for either of them to make any sense. I don’t think you’d find them very funny if they were your only source of news.
The Globe (like most other newspapers) is going to lose its main source of “active” revenue – money it gets directly from people who like and want to pay for its services. Those are the print subscribers. It’s also taking a big step down in “passive” revenue – money it gets from people who want to market to the ones actually using its services. On the net, advertising is cheaper (advertising was probably always priced well above its real value in print, because people couldn’t track what it was worth), and paywalls don’t work very well because they feel like barriers rather than like paying someone to give you something with their effort.
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p>So to survive, the Globe will probably need to add some other form of active revenue to make up some of the difference. We don’t yet know all the models.
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p>Salon supports itself successfully using a subscription model that still makes its content available to nonsubscribers.
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p>Talking Points Memo and Wikipedia take donations, and NPR and Pacifica have long been listener supported.
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p>LiveJournal would probably have continued to be sustainable under a model of “paying subscribers get extra features, but the basics are available to everyone” if only they hadn’t been sold off to a company with very different goals.
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p>Micropayments for specific actions might work, if they were for extras.
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p>I’m sure I haven’t thought of everything, but they key is to find ways to convince customers/users/readers to give the Globe money in exchange for something they value, without blocking the Globe’s articles from being read by anyone. Doing so would give the Globe the right incentives, to focus on what its customers/users/readers want, rather than to focus on using them to provide advertisers what they want (which can become a destructive cycle on the net).