Pearson, the group that owns the Financial Times, among other things, has just declared half-year results that buck the trend in ad revenues. Neither the shift away from print ads nor the looming recession has hit its numbers. Why? Because, like Google, the FT has found itself in the lucky position of being perfectly positioned to grab online ad revenues. For Google, its because its ads can be directly modeled to an advertiser’s usual core online objectives (to generate leads) and, for the FT, the reasons are – essentially – the same.
We talk at Circus Street of how there are several groups of site from an advertiser’s perspective depending on how they map on a chart where one axis is the number of users it gets and the other is how vertically targeted the content is. A typical ‘massive’ site, like MSN or Facebook, will have a barrel load of users but its content is not targeted to any particular sector, like finance for example (the vast majority of its traffic comes from applications like Hotmail). Here, the scale atrracts advertising money but at very cheap rates because the advertiser struggles to get conversion on direct-response ads, since the users aren’t on the site for any particular commercially-targeted content.
Better conversion
At the other end you have very small sites but who nonetheless attract ad bucks because their ads generate great response and reach a very sellable audience. Here sits the FT. It can charge up to £75 CPM in some of its sections and sells out every month. This is because the advertiser can be sure they’re targeting the right kind of people in the right frame of mind – this leads to better conversions. Remember that a typical FT advertiser is prepared to pay a great deal of money for a lead because of the nature of the product they are selling. One big enterprise IT client will pay for the ads thousands of times over.
Google, by the way, is one of those very few sites that does both. The search model means that ads only get directed to people specifically looking for a related product or service and its dominance of search queries offers maximum scale. Of course, a cost-per-click model never hurts (though CPA would be even better).
Freemium
So, the FT has found itself as something of a winner. This position has to of course be exploited to make it work. It has invested well in digital content and getting structures around it that help that content be produced and delivered. Second it hasn’t thrown away subscriptions entirely. After lots of iterations, it’s settled on a ‘freemium’ model – charging only for what it (and its users) deem premium content. This content has to be uniquely useful to work to users – the FT’s content is seen in that light.
Of course, it faces challenges. All the sites that are small but valued in terms of their audience want bigger scale. One path would be for FT to think a bit more – man we hate to say it – but web 2.0. The joy of sites like Facebook et all (think particularly Wikipedia) is that they generate absolutely millions of page impressions but their users do all the work in terms of generating content. Small, sector-specific sites can examine how this principle can be applied in their context to generate more inventory without much cost and without devaluing the inventory it already has. Second, it needs to think less in terms of content and more in terms of applications and services. Google is an application. People ‘do’ on the web as much as – if not more than – they ‘consume’ – so, by developing tools that allow its valued audience to do useful things, the FT can again achieve greater scale in terms of visits and users.
Demographic targeting
Meanwhile, the massive sites are continuing to try and make their content much more sector-specific, while also working very hard on other ways of making their enormous audiences more useful to advertisers. Behavioural targeting is one obvious example. Another is how they are increasingly going after traditional advertisers by being able to offer demographic targeting. Most of us have put our real date of birth, location and sex into Facebook. This is the kind of info the likes of FMCG are used to buying and offers a much easier route to opening their wallets.
Yep, the FT has bucked the trend and an added layer is that Pearson group’s other properties – Penguin books and its education arm – have also done well. Penguin is known for a progressive approach to digital. In fact, its just done a deal to make thousands of its books available on the Sony Reader. This will give it useful experience when the Amazon Kindle comes around and turns book publishing on its head. So, the FT’s success can’t be deemed just luck. There is clearly a group approach in place that encourages and supports digital innovation. But this silk purse was borne not of a cow’s ear.
Filed under: Display advertising, Publishing, web 2.0 Tagged: | Facebook, FT, Pearson, Penguin, Wikipedia
