Fri Jun, 2011 by Derek Mehraban
A survey conducted with newspapers finds more and more of them are erecting pay walls. 46% of newspapers with a circulation smaller than 25,000 now require a subscription to access at least some of its content. Only 24% of newspapers with more than 25,000 in circulation have a pay wall erected. This trend is not affecting only old media either. Activision, a leader in digital entertainment has announced plans to erect a pay wall in the multiplayer version of its soon to be released Modern Warfare 3.
This is important to the digital agency because it shows that something is not being done well. Activision’s decision may be driven by capital-intensive economics that do not lend themselves to profitable advertising revenue. However, the newspapers’ decisions are clearly a sign of needed improvement. It is possible most newspapers are making a knee jerk reaction and trying to stave off losses without a full evaluation of the advertising potentials. If so, then digital agencies need to refine their pitches or their economics to account for this reactionary impulse. If, however, the newspapers are moving to pay walls because advertising is not profitable enough, then there is some introspection needed among digital agencies.
The suspicion among some thinkers is that the economics are incompatible with political moods. Many people are terrified of highly targeted advertisements because of the underlying data collections. However, it is precisely the accurate targeting of advertisements that make it profitable, increasing clickthroughs and conversions. This seems a likely explanation and requires a new persuasive technique for the digital agency’s future survivability.
A way out of this conundrum might be the display ad. It doesn’t target as well, but new data suggests the display ad does something the static or even the flash ad does not do: it builds brand recognition and recommendation. Research firm Lotame reports a significant bump in a viewer’s intent to recommend a brand based upon exposure to a display ad. If the display ad is entertaining, then it is even more likely to secure the bump. Lotame reports a 31.8% increase in likelihood to recommend and a 11.7% bump in non-entertaining display ads. The ads with expandable rich media content also secured a higher increase than static ads.
Because display ads require more they also come with less targeting attached. Lower costs, political and economic, coupled with higher affection may make them the way to absolve the privacy concerns without sacrificing effectiveness. If internet marketing firms were to move towards more display ads and less boxy static ads, then newspapers might find the pay wall a less profitable alternative.
Media Post News: Small Newspapers Erect Pay Walls
E Marketer: Display Ads Lift Branding Metrics