Paywalls Don’t Bump Ad Prices

The bet on paywalls, meters and other methods of charging for access to digital content is that the revenue generated directly from consumers will outpace an expected decrease in ad revenue.

The other assumption is that a publisher’s paying audience will become more valuable to advertisers on the theory they’ve proven a deep connection with the publisher by opening their wallets. The problem, of course, is this is a tough sell to ad buyers operating in a digital media world awash in ad impressions.

“In digital, what tends to overcome that kind of conversation, often, is that there’s so much available out there,” said Andy Chapman leader of digital investment at Mindshare. “You can get audience in different places, so a story a publisher is telling is blunted by the realities of the marketplace. Setting up a paywall, creating more value, maybe that audience gets smaller, but maybe it’s a more crystallized and more valuable audience. But it’s the nature of marketplace, and I haven’t seen that directly translated.”

And, sure, there are some examples of a publisher putting up a paywall and then being able to sell its high-quality audience. The New York Times and The Wall Street Journal are always the first to be mentioned. But CPMs haven’t necessarily increased because of a paywall. In fact, other moves are more likely to increase ad prices.

“Sites are trying to incorporate video increasingly and can command higher CPMs,” Chapman said. “It’s because they’re trying to sell experiences rather than increase of CPM for paywall or audience reasons.”

According to a New York Times spokesperson, its paywall hasn’t caused the publication to change what it charges. Additionally, it hasn’t hurt its ad-selling process, but the spokesperson said the paywall has allowed for new opportunities, such as the deal with Lincoln during its launch of the subscription model. Lincoln provided free access to 100,000 of the publication’s “most actively engaged” readers. Another example is the Ralph Lauren sponsorship, which unlocked sections of its iPad app.

“I don’t think a publisher can ask for a premium of buyers without a full analysis,” said Kat Chung, associate director of digital at Initiative. “Ultimately, it comes back to the advertiser, and if differentiation is more valuable to them, it’s up to the publisher to show it.”

As paywalls become more the norm — in just the last week, The Washington Post and The Daily Beast each floated up balloons suggesting they’ll join the walled garden club — publishers will also need to strike a balance between audience growth and other advertising-based revenue mechanisms.

“No one wants to see anyone fail, and we’re seeing an increasing number of examples of publishers doing it right,” Chapman said. “It’s still the early days, but it looks like there’s some kind of recipe to work from for traditional print and newspapers to find the right balance.”

https://digiday.com/?p=27882

More in Media

As Patreon and Substack enter the mix, the livestreaming landscape is dividing creators

Platforms’ livestreaming push has highlighted an underlying divide in the community of livestreaming creators.

Digiday+ Research: Publishers were ready to depend more on first-party data. So, now what?

Publishers were ready for the move away from third-party data: the role of first-party data in generating ad revenue was set to grow significantly, and the percentage of ad impressions served by first-party data was set to increase.

Digiday+ Research Data Sheet: The state of subscription pricing

This infographic details how publishers are approaching subscription pricing and how subscriptions drive other revenue streams for publishers.