|NYT Making Good Money with Adsense|
Paper drops paid subscription service
| 8:01 am on Sep 19, 2007 (gmt 0)|
"The newspaper said the TimesSelect project had met expectations, drawing 227,000 paying subscribers—out of 787,000 over all—and generating about $10 million a year in revenue.
'But our projections for growth on that paid subscriber base were low, compared to the growth of online advertising,' said Vivian L. Schiller, senior vice president and general manager of the site, NYTimes.com.
| 8:30 am on Sep 19, 2007 (gmt 0)|
|drawing 227,000 paying subscribers —out of 787,000 over all— and generating about $10 million a year in revenue. "But our projections for growth on that paid subscriber base were low, compared to the growth of online advertising"... |
So they're giving up $10mm from 227,000 paying subscribers to switch to advertising? Let's see...
$10,000,000 / 227,000 = $44.05 per user per year.
Let's be optimistic and assume that the average user reads like 15 pages a day. Let's further assume that each page contains two Adsense blocks, i.e. 30 ad blocks per user per day, or 10,950 ad blocks per year. CTR shall be a conservative 2.5% (after all, they're not blending the ads too much, they're the NYT). Makes 274 clicks from this user alone. $44.05/274 = $0.16
Which is not bad. Not bad at all. Except, well, we know about repeat visitors. They don't like to click.
Probably the NYT guys refer to ads that they sell for themselves, following a CPM model, rather than Adsense blocks? That might make more sense:
227,000 x 30 x 365 = 2,485,650,000 ad views
At just $5 CPM, this rakes in $12,428,250 in total. And I am sure they can sell the CPM ads at $10 or higher, depending on placement and targeting... Now that's smart.
| 11:50 am on Sep 19, 2007 (gmt 0)|
| 2:50 pm on Sep 19, 2007 (gmt 0)|
Where did the subject line "NYT Making Good Money with AdSense" come from? I doubt if AdSense revenues account for more than a fraction of the advertising revenues at NYTimes.com.
| 4:40 pm on Sep 19, 2007 (gmt 0)|
zett... by moving away from the subscriber model, they will open their content to everyone. their pageviews and adviews/adclick numbers are likely to explode.
you need to perform your calculations based on the anticipated number of users they will have after they make their content available to everyone.
| 5:10 pm on Sep 19, 2007 (gmt 0)|
ASdsense? I doubt it. I expect the NYT sells directly, like all other large quality newspapers. Adsense adverts may provide some benefit to NYT readers, but I doubt if the income would be noticed by the NYT
| 5:15 pm on Sep 19, 2007 (gmt 0)|
|you need to perform your calculations based on the anticipated number of users they will have after they make their content available to everyone. |
Sure, I had thought about that, too, but it's quite difficult to do assumptions on this.
My point is that the NYT will probably be much better off when using a CPM model sold by their sales force than using Adsense.
| 5:46 pm on Sep 19, 2007 (gmt 0)|
|My point is that the NYT will probably be much better off when using a CPM model sold by their sales force than using Adsense. |
It isn't a matter of "either/or." NYTimes.com has been using both CPM display ads and AdSense contextual ads for a long time. (Many other publishers do the same thing, because CPM display ads and AdSense contextual ads are complementary: Neither one takes away from the other.)
| 5:51 pm on Sep 19, 2007 (gmt 0)|
|Sure, I had thought about that, too, but it's quite difficult to do assumptions on this. |
Zett, maybe for us but not for the data-munching pros making these calls. Rupert Murdoch is considering turning Wall Street Journal's subscription only WSJ.com website into open access.
It has 983,000 subs, generating $50 million a year in ad revenue. He believes that tearing down the wall will grow its users to 10 million to 15 million (and making less in ads than it did in subs initially, but these moves are also often about branding and access).
| 6:54 pm on Sep 19, 2007 (gmt 0)|
As mentioned above, the article mentioned in the orginal post states that the Wall Street Journal is also seriously considering abandoning its subscription model even though it is earning $65 million per year in revenue from one million subscribers. It apparently believes an online advertising model can be potentially even more lucrative and that it has considerably more of an upside.
Clearly NYT and WSJ are products in a league of their own. It does show, however, how potentially lucrative online advertising of all types can be for sites with great content.
| 7:54 pm on Sep 19, 2007 (gmt 0)|
I am sure more thinking went into this decision - besides the numbers, I mean. They probably decided that by placing the article inside the wall they're losing more potential readers. Perhaps, they also needed an impression boost to be able to better sell CPM.
Also, my feeling is that the NYTimes, being a self-respecting publication, will never place AdSense above the fold. Above the fold will be for CPM ads and sponsor logos. I am going to guess the CPM rate on those is on the order of $30-$40. Contextual AdSense ads will be stuck at the bottom ("if you scrolled all the way down and haven't clicked on anything, here's some contextual stuff for you") - that will still add some nice change to the already sound ad model.
The only thing I can say is I wish I had their clout...