Who Pays the Paper?

[As ever, you can read this on the BBC News website]

If you live outside the United Kingdom then the BBC website at bbc.com has a surprise for you, in the form of some prominent advertisements.

While the license-fee supported sites provided to the UK population remain free of ads, the BBC has started treating the web in the same way as it does the TV channels it broadcasts around the world by trying to generate revenue from them.

So far it seems to be going well. Speaking at a recent media conference in London John Smith, chief executive of the corporation’s commercial arm BBC Worldwide, said that they had underestimated the amount of money they could make online, and that their target of getting 10% of total revenue from internet activity was too low.

Although the BBC are thinking about offering a subscription model too, asking people outside the UK to pay for access to an ad-free version of the site, the team at Worldwide seem to believe advertising is the best and simplest approach.

They are not alone.

The Corbis photo library has just announced plans to let bloggers use their photos for free as long as they allow them to carry ads, while YouTube continues to roll out its ‘invideo’ service, providing ads overlaid on selected videos.

Yahoo! has even found a way to put context-dependent adverts into PDF documents so that people who like to download and read longer documents can’t escape the commercials.

In the media world newspapers like The New York Times, The Financial Times and probably the Wall Street Journal are bringing down their paywalls and turning to adverts to pay the rent, while Microsoft is experimenting with an ad-supported version of its Works software.

The growth of the internet, and the availability of content, services and even software, would seem to depend on the continuing stream of advertising revenue that flows across the network, much of it passing through Google’s rainbow-coloured hands on its way, letting them continue to grow richer ‘one nickel at a time’, as journalist John Battelle puts it.

This growing reliance on advertising over other forms of income carries with it the same dangers as any other dependency on a single source of revenue in business.
While it is unlikely that Google, Microsoft or Yahoo! will vanish, changes to their business models could threaten the deals which currently keep many sites alive.

But the real problem is that the flow of funds into the advertising networks could diminish, especially if there is an economic downturn.  ZenithOptimedia claims that  advertisers will spend an astonishing $448bn worldwide in 2007, but even if this level is maintained it may not be enough.

Blogger and journalism teacher Jeff Jarvis believes that changes in the advertising model and a move from paid ads to other forms of communication are likely to mean that  “there won’t be enough to support us in media in the manner to which we’ve become accustomed”.

He goes on to reflect that  “it’s hard to imagine what other business models will come along to fund us”, especially when charging for content seems to be unacceptable to readers, viewers and users.

There is another, deeper question to ask here, one concerning the audience.

Partly, I suspect, because I grew up in the days before there was any online advertising at all I don’t click on ads very often, except occasionally when I’m doing a very specific product search and a relevant ad appears.

Of course clicking isn’t the only way for a website to make money out of the adverts that appear, of course. Television adverts have been rather successful without any immediate way of generating a viewer response because they raise awareness of brands, products and services, and this also works online.

The impression generated isn’t always positive. I’m certainly aware of the Experian credit agency because it has wallpapered my Facebook profile to the extent that I now resent their mere existence. However other brands may do better out of the banner ads that fill this and other social-networking sites.

But the vast majority of websites rely on pay-per-click advertising deals and are less concerned with brand awareness than direct sales leads.  My own blog has generated a whopping $70 of income from Google ads in the last two years, so I’m aware of the importance of this to small businesses.

In a fascinating post on her blog sociologist danah boyd (her spelling) reflects on some recent research from a study carried out by AOL into US web behaviour that indicated that the few people who do click on ads are far from typical. The survey found that around 0.2 percent of web users are ‘heavy clickers’ and they are older, mostly female and predominantly from the Midwest. They like to click on competitions and sweepstakes.

danah, in her best academic style, suspects that ‘heavy ad clickers in social network sites and other social media are more likely to trend lower in both economic and social capital than the average user’, which translates into ‘poor, isolated working class people click more ads’.

A lot more research is needed here, but we must face up to the irony that our favourite websites may well be being paid for by the poor, rather like the way many of the middle class’s favourite cultural institutions are supported by the predominantly working class purchasers of tickets for the National Lottery.

Bill’s Links

BBC Worldwide ad revenue

YouTube ads:  and discussion 

Corbis offers ads:  and here

Ads in PDFs

John Battelle on Google

Jarvis on advertising

danah boyd on ads