I wrote about the pricing disparities between print and online media a few weeks ago, curious why my local newspaper was able to charge a $45 CPM for advertising inserts, while top websites are able to charge a fraction of that sum for highly targeted leads. Commenters on my site and elsewhere suggested a variety of explanations, from speculation that online advertising simply doesn’t work very well (an explanation I find pretty unsatisfactory) to the observation that my newspaper has a pretty effective monopoly in delivering timely sales information to my neighbors (a much more believable explanation.)
Jeff Jarvis points to a story in today’s Wall Street Journal that helps me understand the disparity in pricing – and efficiency – between online and offline advertising. Baylor Health Care Systems, a large Dallas-based NGO, compared the effectiveness of three ways of finding job applicants – web-based ads placed on search engines, ads on job boards, and ads in newspapers and magazines. The results were pretty stark:
In the first six months of the program, Ms. Bouthillet says, the search-engine ads delivered 5,250 applicants, at an average cost of $4. By contrast, Baylor paid an average of $30 for each of the 3,125 applicants who came via job boards, and $750 each for the 215 applicants who replied to a newspaper or magazine ad.
Baylor’s experience isn’t the only point of comparison between search and print advertising. A UPS recruiter points to an online campaign that yielded great response for part-time drivers and sorters, at roughly a fifth of the cost of conventional advertising. This advertising, the article points out, is geographically targeted – Baylor might only be looking for Dallas-area hires, and UPS needs to hire drivers in specific areas. In other words, it’s precisely what local newspapers have traditionally been good at… and there’s every indication that it’s cheaper to deliver job candidates via Google.
It’s worth noting that one reason that online job advertising works is that so many job hunters are online – the first bit of advice many laid off employees are receiving is that they need to get online to seek new opportunities. No one’s telling my neighbors that they need to get online to get specials on tangerines at the local supermarket – once they’re online and supermarkets are targeting them via Google rather than via the Berkshire Eagle, that newspaper is in a lot of trouble.
To be clear, I’m interested in following this issue not because I want to join the pack of bloggers calling for the death of newspapers. The point I tried to make in my earlier piece was that the model that made high-quality journalism possible in a print age – local and national advertising – is probably not possible in a digital age. Yes, publications (mine included) need to find ways to monetize online attention, and that almost surely means selling ads online. But it’s unrealistic to hope that online advertising is going to yield even a fraction of what print advertising continues to yield. The numbers above from the Wall Street Journal suggest that online advertising can be 200 times as efficient as print advertising, which implies that online advertising may only yield a tiny share of the revenue we’ve grown to expect online.
In other words, we should be watching projects like Mother Jones very carefully. Nonprofit news models are one of the possible ways we’ll continue to afford to produce difficult journalism, and one of the few that’s proven itself. Syndication models, like the model of GlobalPost, are exciting, but I’m not convinced that newspapers that are in financial trouble will continue to pay syndicators for content.
The ugly truth is this – we know we need good quality journalism and we don’t know how to pay for it. My contention – it’s probably not going to get paid via online advertising, as much as I wish it would be.
A set of connected thoughts:
If you’re looking for the best candidate for a job, you may not want 2000 online applicants. When I was job hunting, not long ago, I was warned that sending a resume over email was the least effective way to find a job, by a very large margin.
The difficulty is that sending out resumes online is easy. It’s so easy that one person can send hundreds in a day (like the guy who claimed to be sending out 1200 query letters in one go.) That means more work for the employer who has to read them — and it means the person sending them out may have done little or no research on the job or the company.
The employer may have a computerized sorting system, but among a computer’s many talents, matching personalities and skill sets is hit-or-miss at best.
The most effective way to find a job is to talk to people; it’s also the most effective way to hire a sane employee.
In other words: sometimes the communicator wants to reach as large a market as possible, and sometimes the communicator wants to reach a targeted market. The internet can do both — but for the second, it needs an editor. You assuredly already know this better than I do (I’m connecting thoughts as I go.)
One of an editor’s chief assets is local or specialized knowledge. I know you know that too. The rub is that local knowledge — like corporate memory, open space or fresh vegetables — is something we don’t always know how to set a value on.
People do value it — Foxfire became nationally famous. Having a value for something (when you know it exists) and being willing to pay for it don’t always equate. Sometimes, if you give people a structure that allows them to support an intangible, they will though.
Ethan, great post. Thanks. Current online and offline media businss model hinges on the same sort of attention assumptions as the billboard. We are trying to steal some attention. As we see a future of advertising which is more targeted, more social, more sophisticated, more point-of-sale, more ‘pull’– the who notion of drive- by ads, whether in the local rag or the online global blog aggregator starts to feel like more like model-t than model-b (b-model, that is).
Here is an idea. I talked with a Wash Post editor a few weeks back, after the Issacson piece ran in Time. He laid the entire collapse of journsalism thing on Craig Newmark. True enough. So, what about inverting the model and having Craiglist be the revenue generation tool for local journalism. Give local journalists 30% of the screen space on every CL site and share 30% of the CL revenues with those journalists– distribute based on community attention metrics. Fund investigative community reporting with micro-finance, etc. etc. ??
Not perfect by any stretch, but maybe interesting.
ok, back to work!!
If ads were profitable during the newspaper era because of monopoly power, will Google (or another online service) ever be monopolistic enough to subsidize news like newspapers once did?
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