Finding value beyond ads
The lead eMarketer story today is How Much Ads Cost. It breaks down offline media CPMs in a handy graph, then makes a separate set of online assessments.
The biggest takeaway? Display advertising doesn’t pay. Online display ads ran at a $2.46 CPM in 2008. That’s less than 10% better than what outdoor advertising charges for billboards and bus stations.
The article goes on to note better returns in video (CPMs anywhere from $7.40 to $35, depending on placement) and search ($75!). But it doesn’t eliminate the big message: online display advertising doesn’t pay. Not well, at least.
Of course, display ads are de rigueur in much website creation, and a buoying component of media sites. But display has become a baseline and not a profit center. This is happening offline as well as online. The New York Times recently reported on evolving revenue channels at magazines, where subscriptions are becoming pricier profit centers–the opposite of the traditional model, where subscriptions covered postage and ad revenue ran the business.
Savvy online publishers are realizing this and similarly evolving their models. Beyond video advertising, sites can offer premium content, exclusive access, tools and other items to entice more value out of individuals. Business-to-business revenue needs to morph into something more profitable as well, whether it’s through partnerships, sponsorships, cobrands, or something else.
Innovation is going to be key in the coming years. Because a simple ad banner unfortunately won’t pay the bills.