Sunday, February 10, 2008

Ads in Transition

The Wall Street Journal gives us a wonderful case study in the relative economics of revenues from banner ads and premium (paid) subscriptions.

(I tend to watch Rupert Murdoch pretty closely. His billions give him a bit o’ financial credibility.)

Mr. Murdoch is $5B lighter after adding the WSJ to his media stable. (The guy buys media the way Jay Leno buys cars!) At the Journal, his Rupert-ness promised to beef up the Journal's ad-sales effort and to lift its circulation. (Don’t read “print circulation” – that would fly in the face of terminal forecasts for all print outlets.)

On one side, free content (breaking news alerts, opinion, personal finance, lifestyle, as well as some videos, blogs, podcasts and other interactive elements). Note that those visiting the non-paid side spend less time on the site. Visitors who link to the WSJ from Google News get can see their article for free, but WSJ hopes readers will like what they see and pony up for a subscription.

On the other side, where subscriptions could be as high as $119, advertisers also pay a premium to reach the more committed visitors. The Journal itself reports $60M in subscription revenue last year.

Here’s the dilemma: the Journal would have to double or triple its monthly visitors to earn as much in ad dollars as it does in subscriptions. So the Dow Jones publishers continue to carefully adjust the balance of free and paid content, with incentives and attractions all around. Consumers are constantly valuing and reassessing their budget for information tools.

I’m feeling your pain Rupert.

SOURCE: “ to Retain Subscription Component” by Emily Steel, January 25, 2008, Wall St. Journal,

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