Opinion

# Felix Salmon

## Blogonomics: Revenue per page

March 27, 2010

In the wake of the debate we had earlier today, Henry Blodget took to Twitter to explain the numbers behind ad-supported blogs. The most interesting tweets, to me, were these:

Ad revenue for a general news site tend to range from \$3-\$6 per thousand pages. Ad revs for a business or premium site can run \$10-\$20… [does a bunch of math] And that’s at \$10 per 1000 pages, which is actually a good monetization rate (business sites are higher, thankfully). If you work for a gossip or general news site, the revenue per thousand pages can be far lower, requiring vastly more pages per journo.

If \$10 is “a good monetization rate”, then let’s be generous and say that Blodget is making \$15 at TBI. And then let’s look at a typical TBI page — say, this one. You’ll probably see different ads than I do, but I see a MetLife banner across the top, a FedEx box in the right-hand column, a big Amex/OPEN ad underneath the post, and a Monster.com text ad just before the comments start.

Now check out TBI’s rack rates. The MetLife banner is \$20, the FedEx box is \$25, the Amex/OPEN ad is \$30, and the text ad is \$3. Or something like that, anyway. Add them all up and it comes to \$78, but let’s call it \$60.

If Blodget is running \$60 worth of ads but getting only \$15 of revenue, then either he’s discounting massively, or he’s not even coming close to selling out his inventory, or some combination of both. And the same is true even if he’s making \$20 or even \$25 per thousand pageviews.

But here’s the problem: when Henry starts talking about the number of pageviews that a journalist needs to generate in order for the site to make money, he’s working on the assumption that every marginal 1,000 pageviews produces \$10 (or whatever) in marginal extra revenue. Whereas in reality what tends to happen is that the ad sales team either fails to sell out the site’s inventory, or only does so by discounting so deeply that it’s really only their own fault that the revenues are so low.

This is one area where I think that Henry could take a leaf out of Nick Denton’s book, and refuse to run deeply-discounted ads. Doing that helps to improve the value of the brand among advertisers, and it also creates interesting opportunities for rewarding staff. At such a website, there will always be unsold inventory; at Gawker Media, that inventory is given over to the Gawker Artists program. At TBI, the inventory could be given over to staff journalists, in proportion to their pageviews the previous month, to donate to whichever organization they think could make best use of some free advertising on the site.

But for the time being I think it’s actually quite hard to say that a journalist with underperforming pageview numbers is being uneconomical for the site, especially when the ads you’re running on his pages are nominally worth four times what you’re being paid for them. That looks much more like a problem with the ad-sales team to me. The editorial team, after all, is clearly already producing way more content than the ad-sales team can manage to sell at decent rates. Maybe they should be the ones being fired.

I’m not sure that’s the right way to look at this one. I spent last year at an online and print trade media business (the print side was established, the online side was fledgling).

The rate-card for online was based on price discrimination. Published rates were aimed solely at inbound leads and random prospects with more money than sense (Middle East exhibitions, organisations trying to spend their annual grants, and so on), and were well above standard industry rates. All account-managed clients paid well below the rate card (well, normally they bought one thing on the rate card and were given various other packages for free). The absolute industry leaders were given ads and storefronts for a nominal fee, so that we could get their competitors to sign up as well.

This wasn’t because our salespeople were inept – it was a deliberate revenue maximisation strategy. No idea what Blodget’s up to, but it could be something similar.

Posted by johnb78 | Report as abusive

felix, can i call you felix?
you got it right.
to me the consumer or reader, or whatever, it is about the message, not the messenger.

your articles are so above and beyond anything written
@ BI.
no comparison. totally different content. they are trying to cover a very wide spectrum and i don’t think they are pulling it off at all. too, scant. readership acknowledges this via their comments. moving similarly close to HuffPo. i wouldn’t even want to click on comments on that blog, whoa 3,5000. WTF. you got an intimate cafe here, keep it.

MetLife FedEx Amex/OPEN Monster.com banners. i never even noticed, have become quite immune to these, except they add color to a usually black and white mundane page.
just my 2¢s

Posted by velobabe | Report as abusive

How is a banner ad that 3 million people a month view and not click on any less valuable than an ad in a magazine or a newspaper? It’s not. So why are digital media salespeople devaluing their product?

The reason why very few can make money on content alone is because the people selling the product have some warped idea that the product is less valuable than the format that was once very profitable in a print format.

Giving advertisers additional metrics around their ads shouldn’t allow them to dictate a price so low that digital media as a business is unsustainable. The fact that their ad was even loaded on someones screen is valuable enough, to provide demographics on top of that is something print could never do with nearly as much detail. The fact that even large websites can’t profit off that fact is a failure of the business side, not the content creators.

Posted by Soup | Report as abusive

soup: I’m pretty sure that marketing people aren’t as clueless as you describe. I’ve seen studies that readers retain more from print ads/develop stronger impressions from them. If an online ad isn’t generating clicks and sales it probably isn’t doing anything. And if you make it as intrusive as a TV ad people click away or avoid the site entirely.

Posted by najdorf | Report as abusive

I’d like to see those studies. I think the devaluation of online ad sales has more to do with providing the buy side with so much tracking detail that they will pay next to nothing for what isn’t interacted with.

Meanwhile they sell television ads for hundreds of thousands of dollars to an audience they assume is watching, while they pay far less for guaranteed viewers because the video was delivered over IP rather than cable, broadcast, or satellite. Did I mention you can’t skip through a Hulu ad like you can the one on your DVR?

Digital ad sales need to wake up and stop devaluing their product.

Posted by Soup | Report as abusive

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