To publishers — trying desperately to make money by selling more inventory of advertisements that have a plummeting CPM — the only value of online ads seems is to make them annoying enough that the audience will pay to turn them off.
The problem seems to be that there’s very little online advertising that has annoyed me enough that I will pay to turn it off. I will grumble as I chase “click to close” across the screen. I’ve seen people resize their browser windows to remove banner ads from their field of view. Now ask me to name some of those ads I spent chasing across the page? I dunno. A liquor brand maybe? Auto insurance?
But this week I paid for the the first time to turn off ads. I’ve been trying out the TextPlus app on my iPad. It allows me to send and receive SMS messages to an iPad, iPhone and Android phone. The app displays ads inside the app and embeds a little self-promotional message at the bottom of each outgoing SMS.
The banner ads didn’t bother me, but it’s a little tacky for each of my recipients to see “-Sent FREE from textPlus.com” at the bottom of every message. So when I saw for $3 a year I could remove ads, I made one click to remove those little buggers. The transaction was seamlessly handled through iTunes’ in-app purchase feature. (Now, unfortunately, I failed to read the not-too-small print and I only turned off the tolerable in-app ads. The in-message ads are still there and can’t be bought out.)
So GOGII, the company that makes textPlus, got my $2.10 (Apple got the other 30 percent of my purchase) but they lost the ad inventory. So GOGII must think that’s a good trade-off, right?
TextPlus says it has 8 million active users a month, according to TechCrunch. Those 8 million people send 15.6 billion messages a year via their textPlus apps, which averages 1,950 SMS messages per year. I’m going to make the (probably incorrect, but close enough) assumption that a new ad is served with each message. So, in GOGGI’s estimation, my $2.10 is worth more than 1,950 ad impressions it expects me to generate during my ad-free year. For what it’s worth, that’s a $1.08 CPM.
But the only reason I paid my $3 is that I thought — wrongly, as it turns out — that it would remove something that I found annoying; that it would improve my user experience. But EVERY other ad-supported app and Web site I use has a user experience that is good enough for me to save my $3 to remove the ads.
On the other hand, I pay $6 a month for my DVR service — partly so I can skip TV ads.
Of course, I’ll pay for content that is superior. And if I need it for my job, or I can use it to make wiser purchasing decisions, or if it entertains me. But, otherwise, you’re going to have to annoy me into submission. That means interrupting my time. Put up a wall, don’t let me over it or around it until I pay or until you get me to agree to buy into the timeshare condo.
News organizations — newspapers — have been long accustomed to earning about 80 percent of their revenue from ads. As a comparison, Pandora gets about 87 percent of its revenue from ads. That just doesn’t seem healthy to me. Too many eggs in one basket. Are the ads not annoying enough for people to turn them off? Is the content so commonplace that annoying ads would drive the audience elsewhere? Is the service and experience of Pandora not satisfying enough that it would be fatally marred by more annoying ads?
As ad inventory continues to climb, it becomes a tough game to sell that infinite real estate. Now, of course, some real estate — The New York Times — is more exclusive than other real estate — The Huffington Post — but all properties are going to have a hard time keeping their ad revenue stable. For companies with superior content, a paywayll or service-based revenue model are going to become important replacements for a falling ad line.
I think this portends a real shift in our media consumption and a possible division in media culture and civic knowledge. There will be the news and information products: those that are annoying and free, and those that are paid and efficient.
People who have more time than money to spend on hard news will suffer through the ads to get to the free content, which may or may not be junk. People who have more money than time will pay for convenience or quality of information. As a journalist, I’d rather get my paycheck from a news organization that gets a high percentage of its revenue from subscriptions. Those organizations will be able to pay for quality reporting and editing. And the free, ad-driven sites will happily repeat that reporting to an audience that’s willing to stand on the shore and wait for the arrival of the ripple of news.