Gasta Tech News: Online Media Shift gears up.

By Robert Moskowitz part 1.
March 24, 2009
Consumers of offline media are shifting to online media by the millions. And while advertisers' dollars are following them, publishers have not yet figured out how to generate the same levels of revenue from online advertising as they traditionally have from offline.
According to Michael Hirschorn, for example, writing in the January/February issue of The Atlantic magazine, "Already, most readers of The [New York] Times are consuming it online. The Web site… boasted an impressive 20 million unique users for the month of October… The print product, meanwhile, is sold to a mere million readers a day and dropping….
"The conundrum, of course, is that those 1 million print readers … are worth about five figures a page to advertisers, [and] are far more profitable than the 20 million unique Web users, who… could support only 20 percent of the [newspaper's] current staff…"
A canary in a coal mine, the nation's "paper of record" is thus struggling financially, another victim of an economic atmosphere that grows increasingly unable to keep today's print publications alive.
Since they depend very heavily on such publishers to reach their prospects, it's important for advertisers to understand why access to 20 million online readers yields only 20 percent of the revenue commanded by access to one million print readers.
The commonly held view is that online avails are heavily underpriced, providing extraordinary ROI that is totally unreflected in the rate card.
"While I understand where you are going with this argument," says Matt Spiegel, CEO, Omnicom Media Group Digital, "it isn't that straightforward. First, most of the time, the online and offline versions of the ads are not truly that similar. Second, calculating ROI isn't as simple for traditional channels like print."
Ted Ellet, SVP, group media director, at DraftFCB in New York, an agency offering creative, accountable marketing programs, suggests that, "The reasons why you might be doing something online vs. offline are so different that it's not necessarily fair to compare the ad prices. There are many different possible explanations for why prices might not be equivalent."
"It's not a black and white situation," confirms Seb Maitra, SVP of media, analytics, search, in the Boston office of Hill Holliday, a national communications agency. "If you just compare CPMs for online display ads to TV or radio ads, you can make the argument [about price imbalances] from a CPM standpoint. But look at the content and real estate you get: A 30-second TV spot allows you to tell your story in a much richer way.
"Sure, offline is probably priced on the high side," Maitra acknowledges, "but I wouldn't necessarily say that's true, carte blanche. Think about outdoor ads. Depending on the location, your noticeability, particularly on a highway, is about 2 seconds, which is about the same time span as a display ad on a web page. And the CPMs are also very comparable."
Online ad salespeople talk about engagement, but there's also distraction. A full-page ad or a page-dominant ad grabs a huge amount of mind share. In contrast, a web page contains many distractions: embedded links, active graphics, scrolling text, video, and more. Your online ad fights for attention in ways your offline ad simply does not.
And there are other differences that can justify discrepancies in relative pricing…
A branding ad, for example, doesn't require measuring the number of people who see it. The mere fact that you have a quarter-page ad on the Op/Ed page of Friday's New York Times is huge. It's enough to attract many of the people who are important to you. When advertisers think beyond reach/frequency/eyeballs to focus on their desired outcomes with specific target audiences, the argument that online is so trackable begins to lose force, particularly in light of current cable TV experiments with similarly specific ad targeting. Savvy advertisers know it's more important to figure out the relative contribution of each ad in a series that nudges prospects toward a purchase. Just knowing an ad has been delivered to a computer is a sub-par argument these days.
In addition, there is relatively little competition for specific audiences in the print world. How many other offline availabilities deliver the same audience as the Wall Street Journal, the New York Times, or TV's "The Oprah Winfrey Show"? In the online world, however, there may be literally thousands of websites all delivering the very demographic you seek.