Delivery & Registration

Today’s Newspaper Sites Move to Registration Model story at Editor & Publisher magazine’s Web site. Focusing on newspaper sites that are requiring registration prior to access, it states, “these site are already seeing new revenue as a result of registration.”

I think the story has that cause-and-effect backwards. Of the three examples (Belo Interactive, NYT, Chicago Tribune) the story gives of sites that have increased revenues, all the executives quoted say those increased revenues arise from e-mailing content, not from forcing registrations.

Those increased revenues are primarily due to advertisers being willing to to pay for guaranteed daily delivery of their ads, not due to consumer registration. That’s why the the newspapers mentioned that are forcing registration but not delivery content by e-mail aren’t getting those increased revenues.

Why do paid subscription newspapers in the U.S. that deliver editions directly to homes & offices generate far greater advertising revenues than either free newspapers or newspapers that are available only by purchase at the newspapers’ offices? The answer is that advertisers are more willing to pay for ads placed in something that readers have requested to receive daily, even paid to receive daily.

That might be obvious to newspaper publishers, but their New Media staffs have failed to see it during the past seven years of shoveling their newspapers’ content online. Instead, they’ve made their newspaper’s content available online to consumers only via retrieval at the newspaper’s own site.

The results have been they’ve had trouble knowing how many consumers really see their content and how frequently. With those unknowns, advertisers haven’t been particularly attracted or motivated to pay large amounts or high advertisings CPMs. And because the only way for consumers to read that content regularly has been to visit the newspaper’s site — which few consumers daily remember and take time to do — those sites have received woefully infrequent use; although their content changes daily, the sites’ average user visit only 2 to 5 times per month!

Those newspaper sites that invoice their advertisers for the number of banner ads exposed thus have exposed ads to their average user only on about 2 to 5 days, not 30 days, per month, thus generating only 1/15th or 1/6th the ad revenues they could. Those newspaper sites that invoice advertisers for monthly sponsorships of Web pages, rather than the number of banner ad exposures, likewise have found that Web pages seen only about 2 to 5 per month by the average user are proportionately less attractive to advertisers than pages seen daily.

Indeed, I’ve read recent stories in which Belo executives say that the availability of e-mailed content has been the major driver of registrations at their sites (anybody from Belo please correct me if I’m wrong about that). E-mail delivery of content is the best way to drive registrations and increased revenues, not the other way around.

As Steve Outing once said in one of his E&P columns:

“It’s so obvious that E-Mail beats [just] the Web when it comes to effectiveness in reaching online audiences. Advertising in e-mail publications beats Web banner ads many times over. E-Mail is the first thing people check when the log on to the Internet – not the Web.

Why is it, then, that so many online publishers concentrate their efforts predominately on their Web sites and barely scratch the surface when it comes to the potential of e-mail to attract and retain online audiences? Why is it that so many publishers don’t make e-mail a priority, when the evidence shows that it should be a top priority?”

Advertisers know the superiority of delivery over retrieval. That’s why spending on legitimate email advertising is projected to draw even with online advertising next year and balloon to $19.3 billion by 2006, exceeding banner advertising by $3.9 billion a year, according to Jupiter Media Metrix. Forrester and eMarketer make similar projections.

And be mathematically astute in examining some other issues in E&P’s Registration story. Several of the executives quoted say that registration has actually increased their sites’ average user visitation frequencies and that the pageview losses their sites had suffered have nearly recovered.

For instance, the story mentions a site where the average user now visits 6 times per month after registration, compared to 2.5 times per month prior to registration. Yes, your usage frequency must increase if you lose most of your infrequent users. For example, imagine a free access site that receives 580 unique users monthly, 30 of whom visited daily and 550 of whom visit only once per month. Those 580 visitors will generate an aggregate total of 1,450 visits per month, the average user visiting 2.5 times per month. If the site then begins forcing registration, driving off 406 of the once per month visitors, the remaining 174 users will generate 1,044 visits per month, the average user visiting 6 times per month. Usage frequency increased, but 70% of the audience and 28% of traffic was lost. It shouldn’t be surprising or exemplary if usage frequency increases after registration. Average user time spent on site likewise must increase. But the increased usage frequency and usage time had always been there from the remaining users. There are no real increases.

And what are the baseline growth figures for U.S. newspaper Web pageviews? Hasn’t overall traffic been growing at 20% to 40% this year for most newspaper sites, as it has in previous years? That rising tide equally lifts both free access and registration sites. So, if a site immediately loses 30% of its pageviews due to forcing registration, it can then claim to ‘recover’ nearly all that within 12 months if pageview traffic at all newspapers’ sites is naturally growing at 40% per year. So, only if pageview traffic for U.S. newspapers were static would a recovery of pageview traffic after introducing registration be remarkable.

Consumer registration is an admirable goal for newspaper Web sites. But don’t think that the increased revenues reported in this E&P story are due to the cart pushing the horse. The revenues reported are from delivery, not registration. Cause and effect need to be accurately deduced. Advertising begins and ends in research and analysis. So too should online publishing strategies.