The last decade has been a massive blow to the acceptance of digital advertising. That pair of red shoes you looked at once a month ago has been following you around the Internet without mercy. No wonder users installed ad blockers at record rates, and publishers turned to subscriptions as the primary source of income. This is a world where users want an ad-free user experience.
It’s also a good sign of a maturing ecosystem that regulations kicked in, and governments and infrastructure providers like browser manufacturers reduced opportunities for using third-party cookies and similar devices.
But all data and all user interviews show that this is not an overarching “no” to advertising. It seems publishers were overdelivering by banning all ads.
This is just a “no” to the cheap third-party ads on how to get rich, what online game to play, and how to lose belly fat. Those ads never made it into print newspapers.
But it is still an explicit “yes” to good ads — those that are mostly “direct sales” to advertisers’ products and not “automatic sales” by programmatic algorithms that run across the Internet.
Advertising is expected
Readers are not only used to seeing ads in their paid-for, printed newspapers, but they appreciate them. Particularly in regional newspapers, these ads are regional “Lesestoff” (reading material) that is sometimes as important as the premium regional content around it.
But looking online, the share of revenues made from regional direct sales for small- and medium-sized (SMB) customers versus the big multinational programmatic campaigns is usually below 10%. In print it was more than 50%.
But why, when readers demand this regional information, are advertisers willing to pay for the audience? Further, adding the cost-per-thousand (CPMs) of those campaigns as exclusive ads available post-paywall can significantly boost revenue-per-user (adding subscription and advertising revenues).
We discovered three main reasons:
- There are no direct sales SMB campaigns at scale available.
- Most SMB advertising campaigns look absolutely not premium.
- SMB direct sales focused on click-through-rates (CTR), cost-per-customer (CPC) and CPM does not work.
INMA member Kölner Stadtanzeiger Medien from Cologne, Germany, recently scaled direct ad sales to its longtail of SMB advertisers significantly by a few hundred new local display ads per month. It discovered four levers of how premium content for more subscriptions and premium ads from local advertisers must go hand in hand:
1. Do not let local advertisers build premium ads, and do not let people click out to their Web sites
Some might have great ads and home pages, but most don’t. As a publisher, you have to control the banner and the landing page. By doing so, you ensure a high-quality product for every ad and every click a user takes. Long term, that also drives CTR when users know that they receive what they expect after clicking an ad.
2. Sell exclusivity instead of “run-of-site” like programmatic campaigns
Give local advertisers one spot on the regional home page, such as in a banderol where other national and multinational campaigns don’t appear.
3. Sell exclusivity not only via positioning but also via user-targeting strategies
Publishers can’t target users via cookies anymore, but they know a lot about their subscribers. As soon as paid users log in, matching local ads to their local reading habits can be served. Users appreciate local information, and the advertiser gets an exclusive audience it couldn’t get anywhere else.
4. Do not sell via CPC and CPM
Local sales representatives and local advertisers have a hard time with this. What they do understand is attention. That is, how much attention did my offer get for a certain price?
Kölner Stadtanzeiger Medien offered one bundle at one price that included the banner and landing page. Local advertisers (also from print) only had to say yes or no.
After opting in, the banner and landing page were done for them. With a landing page in the publisher’s hands, sales representatives could report about time spent on the landing page and buttons clicked on the landing page, and not only about the number of clicks (without information about what people did afterward).
With a much more compelling story to advertisers, direct sales to SMBs grew so substantially that Kölner Stadtanzeiger switched the model from an upsell to an automatic bundle with every print ad last year. (This also earned the company a nomination in this year’s Global News Media Awards.)