Traffic spikes can be difficult or impossible to monetize for newspaper websites.
For news websites, big stories often mean big traffic. That traffic can come when a local story goes national, when a story gains profile through social media recommendations, or when an item gets prominent placement on a news aggregator.
But even though web advertising is often sold by “impressions”, the number of views an ad gets, big traffic doesn’t typically mean big money for news sites seeing a traffic spike. That’s because media companies typically only sell the number of impressions they expect to have, unable to foresee breaking news events that may significantly increase their inventory. So when that inventory runs out, many news organizations turn to less-profitable remnant advertising (typically yielding less than $1 per 1,000 impressions), while bandwidth costs and other expenses associated with keeping a busy site online continue to increase.
“Everything happens so fast,that there’s no real way to sell more advertising. By the time you’ve figured out what’s happening, the peak is over,” Al Gibes of the Las Vegas Review-Journal said during a Newspaper Association of America session on the topic.
The New York Times received 9 million pageviews in two hours from a link on the Yahoo home page, but that had little financial reward for the newspaper, which turned to remnant advertising.
Remnant advertising isn’t unique to the Web, but the problems it presents for online media are. Television stations often sell off unused airtime and newspapers sell off unused page inches. It’s a win-win situation for ad buyers and media companies. Ad buyers get bargain deals and media companies unload inventory that would have otherwise gone to public service announcements or “house ads” for no compensation at all.
Internet remnant advertising greatly differs because of the amount of remnant inventory. Television and radio stations are always dealing with a finite amount of advertising space — there are only so many minutes in a day. Newspapers typically only sell remnant advertising to fill in gaps between other ads, and remnant print ads are usually small as a result.
Online there is a significantly higher amount of advertising inventory, meaning there is also more remnant inventory. Additionally, advertisements can be centrally stored on a server and distributed to an entire network of websites as soon as a site dips into its remnant inventory, eliminating the need for ad buyers to make last-minute decisions, which could be necessary when purchasing from legacy media.
The network aspect can additionally lower the amount of money media companies make from remnant advertising. When advertisements are purchased directly from a media company, those ads are specifically targeted to that site’s users. As a result, those local advertisements often draw a higher price. With ad networks, purchasers typically buy into a channel — news sites or travel sites, for example. Some networks can also target by everything from credit score to age to the number of children a user has, based on someone’s behavior on the Internet (more on behavioral targeting, employed by the Yahoo Newspaper Consortium, here), sometimes increasing the price of network ad purchases.
Even with targeting and other technologies, remnant advertising is still far less profitable to media companies. Traffic spikes also often bring “fly-by” users to a site from outside a news operation’s market that aren’t potential consumers for local advertisers, driving up traffic numbers without truly increasing value for all ad buyers. That phenomenon is more acceptable for national news organizations than it is for local media.
Media companies are looking for solutions to increase the value of traffic spikes. News organizations have a unique problem that many don’t have to deal with, though: breaking news. It’s impossible for media managers to anticipate natural disasters or when a local story by gain a national media mention. Ad networks are also working to enhance inventory prediction algorithms to compensate for annual events, such as the annual product announcements from Apple that swamp tech blogs.
Others, such as Neil Monnens, co-founder of media buyer GoodHandsMedia, have suggested that media companies need to drop prices across the board, instead of relying on higher ad rates guaranteed by finite ad inventories in legacy media (print and television). That would theoretically allow publishers to sell more of their inventory, relying less on remnant advertising in a pinch.
Does the reduced value (at least in the current environment) of such traffic spikes decrease the value of inclusion in search engines and other services that bring in new users? Do those outside users interfere with a news organization’s ability to communicate with its core audience? Is it ethical for media companies to enter into deals with those who are sending the links, such as the one proposed here, to attempt to monetize this traffic? And what solutions can the advertising industry deliver to attempt to remedy the issue?
In my opinion the primary reason online ad rates are low is that they are not effective. Users don't click on the ads, no brainer right?
As I describe briefly on my blog, we have found that marketing strategies that focus on increasing frequency will yield MUCH higher results. I believe that traffic driven by one time spikes in activity provide very little value to most advertisers.
http://www.joeboydston.com/blog/frequency/