Will Newspaper Paywalls Kill Web Advertising?
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The presentation discusses the impact of paywalls on newspaper web advertising, indicating that while paywalls can lead to a decline in web traffic, they typically recover within a year. It suggests that the vast majority of adults are not willing to pay for local news online, making advertising-focused content more viable. Ultimately, the presentation advocates for charging for access to local news to optimize revenue in a changing media landscape.
Will Newspaper Paywalls Kill Web Advertising?
- 1. Will Paywalls Kill Newspaper Web Advertising? March 1, 2013 Special Presentation for Press Forward Conference
- 2. About this presentation The following presentation was made by Gordon Borrell during Press Forward, the Wisconsin Newspaper Association/Associated Press Convention & Trade Show, at the Madison Marriott West in Middletown on March 1, 2013. 息 2012 Borrell Associates Inc.
- 4. Its Definitely a Trend 息 2013 Borrell Associates Inc. Sources: Borrell Associates Inc.; Pew Research
- 5. A Few Facts to Consider 息 2013 Borrell Associates Inc. Visitors, visits/visitor & reach stagnant for newspapers But not for TV & hyperlocal pureplay sites 95% of local news websites dont have paywalls These companies dont:
- 6. A Few Facts to Consider 72% of daily newspapers do not have a paywall 息 2013 Borrell Associates Inc. When paywalls go up, web traffic declines 20-40% . . . but typically returns in 12-14 months Story limits range from 5-25 per month; avg. is 11 Pricing: $2.87/mo. subscribers; $9.96/mo. non-subs. Jackpot! Newspaper stocks up! McClatchy +40%, NYT +45%, Gannett +33%
- 7. 息 2013 Borrell Associates Inc. Source: CommonWealth Magazine
- 8. Newspaper Online Ad Sales
- 9. Newspapers Share of Local Online Adv. Local Online Advertising, 2012: 息 2013 Borrell Associates Inc. $18.5 Billion Source: Borrell Associates Inc., Adspending.com
- 10. But Newsp. Share of Online Steadily Declining 息 2013 Borrell Associates Inc. 24% Share 57% Share Source: Borrell Associates Inc.
- 11. Advertisers Dont Seek News Readers When it comes to the lean-forward medium of online, the mass-media news model doesnt work very well. Numbers tell the story. Companies with only advertising content (not local news) dominate the local online marketplace. Thats because local advertisers seek buyers in the online arena, not readers.
- 12. Top 25 息 2013 Borrell Associates Inc. Primarily Ad Content Primarily News & Info Content
- 13. Illustration: Banners Arent Seen Traditional media websites rely heavily on banner advertising. But the display model only works with lean-back media like newspapers, TV or radio, where people are more receptive to ads. An eye-tracking chart tells the story. Leaning forward, website news readers see everything BUT the ads.
- 14. Eye tracking: Everything but Ads 息 2013 Borrell Associates Inc.
- 15. The Best Online Content? Advertising! Online mimics yellow pages directories the other lean-forward medium. And the directories content is . . . you guessed it, nothing but advertising. Illustrated in the following charts, while TV and radio attract a lot of consumer attention, the minuscule amount of time spent with a yellow pages book attracts nearly 300 times more revenue per consumer minute.
- 16. Average Daily Time Spent 息 2013 Borrell Associates Inc. Yellow Pages 0.04 (hours per day) Newspapers 0.18 Radio 2.23 Television 4.00 息 2013 Borrell Associates Inc. Sources: A.C. Nielsen, RAB, New York Times, Columbia Journalism Review
- 17. A Minute of Your Time is Worth 息 2013 Borrell Associates Inc. Yellow Pages $11.3 Newspapers $7.9 Radio $0.3 Ad revenue per minute spent with each mediumall adults Television $0.4 $0 $2 $4 $6 $8 $10 $12 In Millions 息 2013 Borrell Associates Inc. Sources: Borrell A.C. Nielsen, RAB, New York Times, Columbia Journalism Review
- 18. Local News: How Big a Draw?
- 19. Local news has a steady following 息 2013 Borrell Associates Inc. Enthusiasts Source: Pew Research Centers Internet & American Life Project Local News Survey, January 2011. N = 2,251
- 20. Getting real about expectations 息 2013 Borrell Associates Inc. Three-fourths wont pay for local news online 23% would pay $5 to $10 per month Note: These are just those local news enthusiasts. Source: Pew Research Centers Internet & American Life Project Local News Survey, January 2011. N = 2,251
- 21. Getting real about expectations If 72% are news enthusiasts. . . 息 2013 Borrell Associates Inc. and 23% of them would pay online fees . . . 16.5% of adults are the target.
- 22. Another Question So. Is that non-local-news enthusiast a good target? Probably not: Only 8% say theyd pay for news.
- 23. Conclusions The audience for local news is big and enthusiastic www.borrellassociates.com But theyre most comfortable with traditional channels Web-based marketing seeks a buyer, not a reader Advertising-based news is more important on Web Therefore. Erecting paywalls on news articles is a pretty good idea.
- 24. Why? 1. The vast majority of adults (87%) arent interested in local news online. Therefore: Theres no competitive pressure to make it free. 2. Advertisers dont want to be around local news readers online. Therefore: Expecting riches from banner ads is a pipedream. 3. Revenue per print subscriber is typically10 times that of a unique visitor. Therefore: Eroding print readership by putting news online is a bad idea.
- 25. Wrapping Up: A History Lesson Newspaper publishers three generations ago would have thought this discussion ridiculous. Heres what a publisher might have said: Why are we spending so much time debating this? Of course we should charge! Im more interested in the bigger opportunity of this newfangled medium called the Internet. Lets invest heavily in it. Lets own the local Internet space.
- 26. Publishers Used to Get It These TV call letters They started: 息 2013 Borrell Associates Inc. all relate to a local newspapers name: Radio stations: 1920s WTMJ-TV Television Stations: 1950s KCRG-TV WSBT-TV Cable Systems: 1960s WBEN-TV KRON-TV WGN-TV
- 27. But the Computer Age Confused Them Videotext: 1980s 息 2013 Borrell Associates Inc. Audiotex/Fax-back services: 1990s Computer bulletin boards AOL/Prodigy: 1990s Internet/free Websites, no ads: late 1990s Rush to Monetize Websites: 2000-2004 Rush to charge for access: 2012 Unlike radio, TV and cable, publishers failed to see the interactive world as separate ventures.
- 28. The Lesson Most Havent Learned When a disruptor arrives, the disrupted Newspapers Interactive Media 息 2013 Borrell Associates Inc. often concentrates on the overlapping area, missing the bigger Area of Opportunity opportunities to create new business. Where many newspaper publishers fail to see the same opportunity their predecessors saw: An altogether NEW entity. Where newspaper paywalls fit in.
- 29. Ask This Question Is the Internet a sustaining technology to www.borrellassociates.com your newspaper, or a disruptive technology? (Its both, of course. But erecting paywalls fits squarely in the sustaining camp.) Do you want a significant share of the online advertising spent in your market? (Of course you do. But a significant share in one medium has NEVER, not ever, been attained without a singular staff focused exclusively on selling that medium.)
- 30. Recommendations www.borrellassociates.com Charge for access to local news content! Pursue green area business with a separate staff That staff cant report to print managers. Period. Beware of applying mass media model to online
- 31. Thank You! Resources: @goborrell @borrellassoc Local Ad -Spending Data: www.adspending.com