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Advertising forces publishers into difficult corners

October 6, 2010

There is an oft-quoted (and multi-attributed) phrase from the last century which goes like this: “I know half my advertising works, I just don’t know which half”. Of course, this is a signficant problem for publishers offering off-the-page advertising in a world where people now expect to track results.

Whether it’s advertising recall, click-through-rates, revenue peaks or ROI analysis, advertisers now demand much more – the need to target products to attract and retain consumers today is more critical than ever. So what are the options for publishers who rely on advertising revenue as a signficant part of their turnover and profits?

The online environment points the way to new methods of thinking. In his inspiring and motivational book, Socialnomics, Erik Qualman talks about how single client advertising increased the viewer experience for Hulu.com. Mr Kilar of Hulu said “we think that a modest amount of advertising is the right thing because that’s going to drive atypical results for marketers”.  Apparently so – with a 54% recall rate – astonishing.

On TV, such an approach – for example using only one advertiser – would not work. This is because TV audiences prefer variety. The thought of one advertiser dominating their entire experience would turn people away in droves. But not, it seems, in the online space. It’s what Qualman says next which caused me to pause for thought:

“This is the same concept that television embraced back in the 1950s. However, over time they kept putting the advertiser ahead of the real client – the viewer. This marginalised the viewer experience, which in turn impaired the advertiser and eventually the broadcaster”.

Absolutely right. Over the years, a number of my favourite magazines were ruined by an excess of advertising at the expense of the quality of the publication. Subsequently, I migrated away from those magazines and bought others instead.  The same is equally true of some books I can think of. When publishers care less about the quality of the material for the reader and more about the reach for the advertiser, problems begin to occur which significantly affect readership and repeat purchase. This is something which Adrian Slywotzky calls “value migration” – and companies must be careful to avoid it.

Ultimately, any advertising-based publication must be geared to offering demanded value to its readership. It is a mistake to assume that advertising in itself is the value which is sought (although the “small ads” and “classifieds” are often highly prized by readers of some niche publications). Magazines, books and websites which carry advertising need to reflect known demographics and customer hot-buttons just like any other non-advertising based product.

But it is not good enough to focus on demographics and job titles alone. The danger is to manage the model and not the product. Magazine publishers can become obsessed with ABC audits at the expense of consumer deliverables. Editors fall into the trap of claiming to “know what their readers want”. Sales teams are driven to sell space almost at any price. Annual directories and books are focused more on their advertising revenue than on who will buy, read and use the item every day. But these are simply management metrics.

For advertising to be effective, it needs to ride on the demands and needs of a niche – and to be in tune with the trends and developments which are driving that niche. In today’s social world of commerce, niches are even more valuable and demand relevance; the old advertising models are failing.

Focused content is critical to attract and retain paying readers. These readers now become the centre of the value proposition. Publishing companies which fail to recognise this fact and hope that old models will still work will continue instead to flog a dying horse to an ever-dwindling and un-convinced market. Eventually, publications will fold. Just as it is now crucial to publish to niches, it is equally important to advertise to niches – but to charge effectively.

In a blog last December, Optaros highlighted a number of key trends in the digital space, centring on customer knowledge and data to control and monetize advertising effectively. To many, what this post highlights makes perfect commonsense yet it is surprising how many publishers continue still to flog the model without grasping the fact that content is what attracts and retains customers.

Many, indeed, still carry on with “controlled circulation” models of people who “match the target profile” of their readers. In other words, people who have not seen the value in the publication and, even when they do, fail to pay to subscribe. Why do they fail to subscribe? Because the publications are too generic to be relevant. And as every socialnomics professional will tell you, these days it’s about niche not norm.

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