Two websites, two successful launches, two very, very interesting results – at least for the advertising business.
The latest nzx.com release followed findata.co.nz in blazing its way into web 2.0 land. Of interest in both were the introduction of news based content alongside their core content – share trading data and information. Both clearly looking for a sideline of advertising dollars to boost revenues from the website.
Both sites look great, both sites maintaining much of their existing user base with the usual loss of disgruntled “I don’t like your new site” customers. But the new look and better usability should push up the user numbers in the long run.
You would think this is a success. But the punchline for 2.0 is a nasty one. New Zealand operates CPM cost models for advertising. So you pay per 1000 pages for an advert. Inventory is largely dictated by the number of pages downloaded and the more the better. It’s the cap on your potential revenue providing you have the audience and user numbers that advertisers want.
On both websites the same result. A big drop on pages delivered. Findata dropped from 300K pages a week to less than 100K pages a week. So before they could carry up to 6 campaigns and now they’ll max out at two. For Findata big deal, so what. They have a healthy ecommerce business. For NZX a drop from an estimated 400K pages to 250K pages. Again the opportunity and number of campaigns have dropped. Not so good when a major media player has banked on the advertising revenue from the partnership as a way of profiting from hosting the website.
For both these websites, if they had a business case around selling advertising inventory and I’m betting they do, they’ve just lost a lot of the potential. It is probable they never sold out of inventory in the past, but also probable they had an intention to in the future. And these two websites are not alone. A number of websites implemented recently have seen a drop in page impressions when moving to web 2.0. The activity on the pages mean the website doesn’t have to serve as many pages to provide the same, or better user experience.
So what is a website to do. If we’re sticking to the CPM model then more ads on the page. A big stack on the right, richer media options and … wait for it… the resulting loss of usability from cramming the pages and annoying the user. It will also reduce the advertisers response rates as they will compete with more adverts on each page. That has happened before too and continues to happen thanks to the major publishers following exactly that plan of action.
So what’s the easy fix? Tenancy. Stop paying per page delivered and start paying for quality. Advertisers have to exercise the power of the dollar and start demanding quality again. CPM does not deliver quality with web 2.0 dropping and constraining inventory levels.
It looks like CPM might be a backward step for publishers.