July 26th, 2007

Online Publishers Need To Stop Selling Space

by

I wrote a long post trying to explain why the page view/CPM model for valuing online media is so problematic, particularly for traditional media companies like newspapers that are trying to transition their business models online. But Jordan Bitterman of Digitas summed it up in two sentences (in a Fortune piece about future of the Washington Post):

“You’re almost always going to be able to find inventory,” says Jordan Bitterman, director of media for Digitas, which buys Internet advertising for American Express, AT&T and General Motors. “So the buyer has more leverage than in the print category.”

Advertising in traditional media, whether newspapers, magazines, or TV, is all about selling a scare resource — space.

The problem is that on the web there’s a nearly infinite amount of space. So when traditional media companies try to sell space online the same way they sell space offline, they find they only have a fraction of the pricing power.

That’s why the newspaper industry is worth about $60 billion offline but only $3 billion online — they only have about 5% of the pricing power that they did when there was only a finite amount of space in for printing ads.

Newspapers sell classified “listings” in print and they sell the same listings online. But in a newspaper, there’s only a finite amount of space for those listings. Online, on Craigslists and dozens of other “listing” sites, there’s an infinite amount of space.

So what’s the lesson for newspapers and other traditional media companies trying to transform themselves into online publishers?

Stop selling space.

Google doesn’t sell any space. It sells user intentions, i.e. what’s on people’s minds. And that’s a scare resource — there’s a finite number of people thinking about buying a digital camera today.

So what else is a scarce resource online? Locality.

There are only a finite number of people in ever city and town. Only a finite number of customers for every local business. Online a finite number of people in a particular locality seeking news and information online.

Wherever there’s scarcity, there’s opportunity.

Comments (36 Responses so far)

  1. Online Publishers Need To Stop Selling Space » Publishing 2.0: So what’s the lesson for newspapers and other traditional media companies trying to transform themselves into online publishers? Stop selling space. Google doesn’t sell any space. It sells user intentions

  2. Scott Karp has a lesson for online publishers – and it’s a good one: So what’s the lesson for newspapers and other traditional media companies trying to transform themselves into online publishers? Stop selling space. Google doesn’t sell any space. It sells user intentions, i.e. what’s

  3. New model for online newspaper ads

  4. noah found a link Online Publishers Need To Stop Selling Space “So what’s the lesson for newspapers and other traditional media companies trying to transform themselves into online publishers? Stop selling …

  5. Online Publishers Need To Stop Selling Space » Publishing 2.0

  6. Links that got my attention Edge: BEWARE THE ONLINE COLLECTIVE By Jaron Lanier Burningbird » Maps n’ Data Online Publishers Need To Stop Selling Space » Publishing 2.0 Even the WashPost is having trouble » mathewingram.com/work Fit Nation: The Obesity Fight – Special Reports from CNN.com Incredible shrinking couple loses 580 pounds – CNN.com User profiles take 2 | Shell Multimedia – The Scratchpad

  7. , says Jordan Bitterman, director of media for Digitas, which buys Internet advertising for American Express, AT&T and General Motors. <So the buyer has more leverage than in the print category>.» Scott Karp in seinem Weblog «Publishing 2.0» dazu: «Advertising in traditional media, whether newspapers, magazines, or TV, is all about selling a scarce [= knappe] resource – space. The problem is that on the web there’s a nearly infinite amount of space. So when traditional media companies try

  8. ????????????????22.3%????????4.8%???????????? ?Can the Washington Post survive? ?Fortune? ?Online Publishers Need To Stop Selling Space(Publishing 2.0)

  9. Siguendo con nuevas formas de rentabilizar el contenido y encontrar modelos válidos en un futuro (y presente) en que los medios de masas van viendo como se acerca la apisonadora llamada internet, en forma de un nuevo medio: Online Publishers Need To Stop Selling Space Advertising in traditional media, whether newspapers, magazines, or TV, is all about selling a scare resource — space.[..] The problem is that on the web there’s a nearly infinite amount of space. So when traditional media companies try to sell

  10. Online Publishers Need To Stop Selling Space

  11. I know of no ad-serving system prepared to work within either of these models. Someone better get moving. Nielsen won’t be the last group to stop counting page views. Next come advertisers. RELATED: Online publishers need to stop selling space Page views and CPMs are suppressing online advertising growth and innovation AOL buys Tacoda An interview with Tacoda’s Larry Allen

  12. suggesting that the well-used Screen reader JAWS is including language about support for AJAX in it’s next version. When web accessibility is not your problem (MP3, 28MB) – Joe Clark [session notes] Scott Karp: Online Publishers Need To Stop Selling Space. Google doesn’t sell any space. It sells user intentions, i.e. what’s on people’s minds. And that’s a scare resource — there’s a finite number of people thinking about buying a digital camera today.

  13. [IMG ads_in_space.jpg]On his Publishing 2.o blog, Scott Karp reckons that “Online Publishers Need to Stop Selling Space”. According to Karp, the old media mindset is clouding publishers’ ability to sell advertising. It’s a simple question with infinite answers: Why sell “space” on a “page” when both are illusions, and the

  14. bookmarked Web 2.0 for entrepreneurs Online Publishers Need To Stop Selling Space » Publishing 2.0 IM Most Valuable Web 2.0 Tool for Enterprise Web 2.0 Worldwide: ‘Master Social Network Interaction,’ Gartner Advises CIOs (SocialComputingMagazine.com) Facebook, MySpace and How to Avoid the Perils of ‘Social Network Fatigue’

  15. Online Publishers Need To Stop Selling Space » Publishing 2.0

  16. Great post. Newspapers are going to have trouble evolving. First they need to accept the concept. Then they need to retrain their entire sales force. As a past online mgr for a Gannett pub, I can say from experience that will be much easier said than done.

  17. [...] is predicated on scarcity (i.e., the scarcity of pages for advertising), how do you deal with the sudden abundance that the Internet has created? Supply and demand gets thrown out the window and other dynamics take [...]

  18. [...] Online publishers need to stop selling space | Publishing 2.0 Quote: “Google doesn’t sell any space. It sells user intentions, i.e. what’s on people’s minds. And that’s a scare resource…Wherever there’s scarcity, there’s opportunity.” (tags: advertising media) [...]

  19. [...] Online Publishers Need To Stop Selling Space » Publishing 2.0 [...]

  20. You might want to take a look at Simon Willison’s presentation on “Doing Local Right” from @media 07. http://www.slideshare.net/simon/doing-local-right

    It’s a great look at how to harness locality in moving from print to web..

  21. the web is one big advertorial, sponsored content. instead of those distracting ad units, publishers will need to sell contextual ad links embedded into the content. INTEGRATED ADWORDS. the edit folks will scream bloody murder, so lets exempt the 10% of the hardest news. that leaves plenty of content in which the ad links can be an added value to the reader. you’re reading a movie / restaurant / fashion piece and the links take you to the tickets / menu / catalog. Tell the edit folks to ignore the links and just keep practicing their “objective” journalism. Win-win-win

  22. AdSense, TLA, etc don’t compare to what FM Publishing and others are driving in terms of revenue. Online publishers (especially newspapers) are going to have to get comfortable outsourcing until they get it.

  23. [...] Karp notes that newspapers are having trouble coming to grip with the realities of web advertising. Advertisers view a website as having infinite space for ads, thus de-valuing the price of the [...]

  24. [...] Further reading: Scott Karp’s been all over this territory recently. Start here, and work your way into it. [...]

  25. [...] Karp also wrote a great piece on how publishers need to stop selling space, or as he ended the posting: “Wherever there’s scarcity, there’s opportunity.” And [...]

  26. [...] Publishing 2.0: Online Publishers Need To Stop Selling Space “Advertising in traditional media, whether newspapers, magazines, or TV, is all about selling a scare resource — space. The problem is that on the web there’s a nearly infinite amount of space.” (tags: advertising online publishing) [...]

  27. [...] Online Publishers Need To Stop Selling Space » Publishing 2.0 “The problem is that on the web there’s a nearly infinite amount of space. So when traditional media companies try to sell space online the same way they sell space offline, they find they only have a fraction of the pricing power.” (tags: internet newspapers business revenue advertising economics) [...]

  28. [...] and online classified systems.  Publisher Scott Karp recently wrote a piece titled ‘Online Publishers Need To Stop Selling Space‘ that was very thought [...]

  29. [...] Online Publishers Need To Stop Selling Space The problem is that on the web there’s a nearly infinite amount of space. So when traditional media companies try to sell space online the same way they sell space offline, they find they only have a fraction of the pricing power. (tags: advertising) [...]

  30. Look, I have no qualms with the idea that performance-based advertising will dominate online advertising.

    But “space” advertising isn’t going to die.

    While Bitterman’s audience is all over the web, there are only a few places where it’s aggregated and compacted. One of those places in on the local newspaper.com. CPM rates will continue to rise significantly over the next several years.

  31. Howard,

    Holding up Google as an example is not intended to focus on their performance based pricing, but rather on the scarcity of what they are selling in terms of keywords as a reflection of user intentions.

    Newspaper.coms need to make a clear case why it’s better for advertisers to reach someone on their sites vs. the dozens of other places on the web where that person goes.

    “We’ve got them here, too” isn’t going to yield a lot of pricing power without differentiation.

  32. It’s not “we’ve got them here, too” that will sell. It’s “you can’t reach this particular group of people as efficiently anywhere else as you can here” that will sell (but phrased tighter — in a nice little jingle, maybe).

  33. [...] Online Publishers Need To Stop Selling Space [...]

  34. I must admit that we have been selling space, but we do this across every page of the web site. We found that most of the advertisers in our sector had difficulty with the concept of paying for several thousand impressions.

    Also you may want to check the spelling of every in the sentence “.. finite number of people in ever city and town”

  35. Well, in a way you are right, but the internet world is not infinite because of the interfaces we use, i.e. google. If you are a consumer searching for a service or product, you are faced with your first page results, and as a business owner you want to be on the first page results, or risk not being in the “space”. Yes, you can sit pretty on page 2, 3, or 10… and get very little traffic from either paid or organic search. Also, the aspect that you are bidding on specific keyword phrases that land you in various ad spaces, punctuates that point even more, because you are competing for ad serving on the first page results for a list of terms.

  36. [...] the recent newspaper company quarterly results. This is no surprise because most newspaper websites sell SPACE for commodity advertising — display ads and classifieds — and thus are hard pressed to [...]

Add Your Comment

Subscribe

Receive new posts by email