How newspapers are earning money from ads visitors cannot click & sabotaging their CPM rates too

My local newspaper, the Victoria Times Colonist (and a second newspaper owned by parent company Postmedia News, the Montreal Gazette) decided to go with a paid subscription model a week ago – once you have read ten articles per month, you can only view the homepage for free.  And while there are some paid subscription model newspapers out there, most of them would load the first sentence or X number of words of the article and then entice you to click a link to purchase a subscription or pass to continue reading.

But the Times Colonist did something different.  It loads the entire webpage – including all the Doubleclick CPM ads as well as Google AdSense ads, before it throws up a layer over top of the page that darkens the page and has a box with their subscription options.  Now, while the Times Colonist – and their parent company Postmedia Network Inc – want to promote subscriptions, they are also ensuring they keep all the advertising revenue for those pages that we can’t actually read nor click on any of the ads.

The big problem with this is that many of those ads are being displayed on on a CPM basis through DoubleClick.  Which means that those advertisers are paying for those ads every single time they are viewed.  But once a visitor has hit the 10 page monthly limit (which didn’t reset for me at the start of this month for some reason), those ads still load but become unclickable.  So even if someone is genuinely interested in one of those advertisements, the subscription blocker means that even though the advertiser has paid the news site for their ad to be on that page view, none of the visitors can actually click it. And their behavioral targeting is a little off – that is a Manscape Spa, apparently a spa for men, in the top leaderboard… I would have clicked that just to see what on earth it was!  But alas, Times Colonist didn’t want me to click it, and no, I didn’t try and find the site after.

Along with the ads served through DoubleClick, there are also Google AdSense ads, through Google’s premium publishers.  Now, not all Google AdSense ads are CPM, some of them are EPC ads, so the advertiser doesn’t have to actually pay for those ads unless someone clicks on one.  But suddenly no one can click them, which causes a few problems.

The first is a biggie.  Even brand new AdSense publishers know the cardinal rules of AdSense – don’t click your own ads, don’t do anything gimmicky to draw attention to your ads (oh the good old days of animated arrows and icons next to each ad) and don’t cover your AdSense ads with anything, such as a drop down menu, slidey anything or in this case, a pop up window that blocks the entire page.  In fact, AdSense doesn’t allow any pop-ups at all, pop-unders are the only kind of pops allowed.  So basically the Times Colonist is doing something that would get a warning for the average Joe publisher.  But the one clever thing about this is it would escape any potential quality checks since the problems don’t appear until after you view 10 article pages.  Click the image below to view full sized AdSense ads underneath the pop-up.  As an added bonus, note the link “Subscriptions to” on the bottom – if you already have your ten page views, that page is obscured too.

The second is that while the Times Colonist and Montreal Gazette are trying to increase revenue through a subscription model, what they are also doing is completely sabotaging their CPM rates while they do it.  Suddenly because people cannot click those ads, the value of the ads that appear decreases due to a lower CTR and the two newspapers will find that their ads are worth even less than before the subscription model.

From a simple standpoint, let’s say the Times Colonist and Montreal Gazette generated 50 clicks on their ads per 1000 page views prior to the subscription paywall.  Suddenly you have people having ads load on their screen they cannot click even if they are interested, and those 50 clicks per 1000 page views suddenly drop down to 20.  The value that on-screen real estate has for advertisers suddenly declines because advertisers know far less visitors actually click them to go through to their landing page per those 1000 page views.  So ad networks begin charging advertisers a lower CPM rate and the newspapers not only have reduced page views from people who stop visiting the site since they cannot read anything but also because the reduced number of page views will pay less CPM since ad clicks have dropped per 1000.

Third, as an advertiser, I would be pretty angry if I am paying the Times Colonist and/or Montreal Gazette (or any news site implementing this layered subscription notice page) to display my ads, but some of those ads being displayed cannot even be clicked on by interested visitors. Under a CPC model, it could be viewed as extra branding because it costs the advertiser nothing. But under a CPM model – where I am paying for every single page view – I would fully expect that those displayed ads would be clickable and that the ad serving companies (in this case Google AdSense & Google’s DoubleClick) would take action on any site that is scamming the system (whether deliberately or accidentily) by charging me for ads being displayed that the end user cannot click through to go to the advertiser’s site.

Now, maybe the subscription revenue will cover the advertising losses.  The Times Colonist charges $9.95 a month for non print subscribers and $2.95 for print subscribers (really?).  The Montreal Gazette, which offers 20 articles free before the paid wall goes up, charges only $6.95 per month but is free to print subscribers.

The other interesting thing is that I went to the Press+ website, which manages the paid subscription services for both newspapers, and they claim that for “News Site X” that the site’s online advertising revenue went up after the switch to subscriptions, which I find pretty hard to believe.  But they offer no further details other than the chart and no information backing up those claims whatsoever.

But I went hunting for information to corraborate those claims.  The Nieman Journalism Lab published Moneyball and Paywalls: Lessons on paid content from smaller papers earlier this month.

That may be why, in the RJI study, a majority of publishers said a paywall would reduce pageviews by only 20 percent, or have no effect at all. And, again, more than 50 percent also said they didn’t expect a paywall to have impact circulation.

But note, this is from publishers who haven’t yet implemented the system. So that is only what they think will happen.

At The Augusta Chronicle, which was also early to implement a metered model, pageviews have been increasing, said Alan English, executive editor of The Chronicle. In January 2011, the first month after the paper’s online subscription model went into effect, pageviews increased 2 percent from the previous year. In March that jumped to 11 percent.

But I wonder how much of that is due to people having more accessable devices that are easier to read on while on the go, such as the iPad and the new Blackberry Playbook, and the many apps that go along with them to make getting that news content from your favorite online news source easy and automated.  So it isn’t neccessarily that the online subscription model increased page views, its that there were just more people reading the news site over the previous year with easier ways of reading the content than before.

Hitwise data published by Read Write Web showed that page views dropped significantly (11-30%) after the New York Times implemented the paid subscription model.  And you can’t forget the infamous Newsday paywall which cost $4 million to implement but generated only 35 subscriptions in three months and resulted in a drop of 43% in uniques.

But New York Times is a unique case – the content is superior and more in-depth than what you will find in your local newspaper, so it isn’t surprising that the New York Times has over 100,000 digital subscribers.  But their reach is much broader than their local NYC audience, something that smaller papers like the Victoria Times Colonist or Montreal Gazette are lacking.  Generally if someone from outside the Victoria area is reading the TC, it is because they either used to live in Victoria, they live in Victoria and are on holidays, or they have some personal connection to the city which makes them want to keep in touch.  But for people reading the New York Times from Victoria, for instance, it isn’t necessarily because they have a tie to New York, it is because of the superior quality of journalism that the NYT is well known for.

So out of curiosity, I wondered how many other newspapers using this type of paid wall were also running afoul of the Google’s advertising terms by displaying non-clickable ads.  Sure enough, the Columbia Daily Tribune was running afoul, complete with an Ads by Google ad on the top that was likely CPM, and a whole lot of Doubleclick ads. But because they redirect you to a subscription page, they could easily modify the page to remove the ads, or just remove the popup on that page completely. (Click the image below to see it full-sized)

The Commercial Dispatch also uses a paywall and it also runs afoul with Google, those are ads by Google served through double click on the right side.

New York Times, probably the most famous of the North American newspapers to go to a paid subscription model after 20 free articles are read does a similar pop up, but at least in this case, while some of the advertising was covered up, the ads that were still visible were able to be clicked on. But if the ad was lower into the darker grey area, the clicking might have been disabled (click the image below to see full-sized).

Wall Street Journal, which offers a great deal of free content but with premium content behind a paywall, does the best job of a paywall while retaining their ad impressions and high CPM rates by displaying the ads in full, without any popups covering up any part of the ads.  Instead, WSJ offers slightly more than the first paragraph (to make it obvious there is more to read) and then adds “To continue reading, log in or subscribe.”  As a side note, those are the MSN ads displaying below the article, not Google ads.  (Click the image below to see full sized version of their less obtrusive paywall solution).

The Tallahassee Democrat also implemented their teaser content page correctly by allowing ads to show unobtrusively. However, on multiple page views I didn’t get any ads to load. This is probably due to their being so little content on the page (outside of navigation) to actually target ads to. At most, I only saw the first two lines of content included. This does make the WSJ superior from an ad revenue point of view. This news site, which started subscriptions over a year ago, does not offer any freebie page views, it goes straight to paid.

Dallas Morning News also has a type of paywall, although their paywall is for exclusive premium content, and at first glance, it did seem to be premium, not something you could Google and find elsewhere for free. And their subscription page allows the ads to display properly and are clickable, as they also use the teaser content model instead of an obscuring pop-up.

It all seems to be one type of system that is displaying unclickable CPM ads and causing a reduction in CPM rates, and that is the obscuring pop-over layer style. While there are likely other companies utilizing it, the ones I saw were all run using the Press+ subscription paywall system. The teaser content style were all find because they still displayed the ads without rendering them unclickable. In fact, the teaser style might actually increase ad clicks because there isn’t much content on the page and visitors could be more likely to click, especially if the ads were somewhat targeted.

While I think we will see more and more paywalls coming up on newspaper sites as they try to make up revenue from loss of paper subscriptions, it is pretty certain a lot of them rely on their online advertising revenue. And sabotaging CPM rates due to the way the paywall is implemented will have an impact on the online ad revenue. I would advise all publishers to utilize a WSJ type of subscription system where teaser content is displayed on the page, which allows ads to be clicked, rather than running a layered pop-over that Google/Yahoo/MSN could have issues with. Because they also need to keep their advertisers happy, and as an advertiser, I sure wouldn’t be happy if any site was serving up my ads that I am paying per page view, yet those ads cannot be clicked.

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3 comments to How newspapers are earning money from ads visitors cannot click & sabotaging their CPM rates too

  • Stephen

    What are you talking about ? Do your math…. Digital advertising revenue is nothing…. Nothing. Sacrificing digital revenue is like sacrificing the chance to get a bullet in the head. The times only needs to get 200k subscribers to cover the cost of creating the pay wall and alll the ‘lost’ online ad revs.
    Oh…. And Newsday? Go onto their website…. The pay wall is still there. Only now thousands have signed up and …. Open your ears for this…. Real wide…. Newsday is one of only 25 large newspapers to grow print subscribers. Again…. They grew print subscribers, and print is much more lucrative. You see, when freeloading losers had to pay, they smirked, then scoffed, then ranted, then bought.

  • Daniel Piechnick

    Won’t people’s conversion optimisers weed these sites out, and stop most advertising on them? I know it’s not good, but I’m sure there will be a noticeable drop in CTR on those sites.

    Daniel Piechnick

  • Popups are really cool anti spam tool. I use an open source popup ad on one of my sites. The risk is that users who came from a search result could get confused by this window.

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