There’s a good article at Paid Content http://paidcontent.co.uk/article/419-pessimistic-publishers-expect-even-slowe… on why publishers are expecting slow growth this year. As Rob Andrews points out
‘Online publishers – who have always had reason to be bullish because their medium offers advertisers more bang-for-buck – have lost their confidence as the ad downturn has flattened their perpetual up-curve.’
There are three fundamental reasons for this
1 CPMs (the money ad companies pay per 1000 views of a website page) have collapsed and show no signs of returning to the place they were three years ago.
2 While website traffic to UK sites is up considerably a lot of has been sparked by growth outside of the UK. Many publishing companies monetise US traffic (albeit at much lower rates than they do in the UK) but have no real sales in places like India, Russia and South America.
3 Video content doesn’t make any money unless you are an established broadcaster. CPM rates on video are ridiculously low and publishers have been well and truly burned. Some developed video content in the hope that they could attract sponsorship and apart from a few high profile deals that hasn’t happenned.
While this isn’t great news for the bigger players there are a few reason for smaller online companies to feel optimistic.
1 Brand advertising is back – Shiny’s fashion and tech sites and the sites of our rivals are attracting the kind of quality brand ads that simply weren’t around last year.
2 CPMs are creeping back up – Ok, so not to the levels of 2007, but brands are once again realising the importance of indie new media sites and are starting to pay to be associated with them
3 Other types of advertising are thriving – Not just take-overs (where the brand takes all the ad positions on a site) and other newish ad formats. Text Links, sponsored sections and paid for competitions are all starting to generate serious income for smaller publishers.
4 Adsense is holding steady – Google Adsense, the main revenue source of a lot of smaller companies, is doing OK thanks. And the fact that Google can monetise ad inventory across the globe is giving the format a mini renaissance.
It is of course much harder for mainstream media companies who are working with much larger cost bases and consequently have much greater revenue requirements.
However with the less competition for eyeballs (the introduction of paywalls, the BBC news site being cut back and more generous with its links) and new opportunities (the growth of tablet PC and smartphones) many mainstream sites should see an increase in UK traffic. So maybe not all is as bleak as it appears