Day 2 | web2.0 EXPO | Why the Online Ad Model is Currently Broken, and How to Fix it
In this session, Drew Curtis shares his experience as CEO, founder and sole owner of Fark.com, a very popular news aggregating site, to discuss the difficulty of making money from online ad revenue.
PROBLEM:
Online ads are attempting to do what newspapers did, however the consumption of media has changed in recent years, making it difficult for popular sites to earn from advertisements.
KEY REASONS:
- Print ads have a certain circulation and ad impression (Circulation x Size = Impression), online ads are a bit different.
- When companies went online, they were no longer monopolies and had a ton of competition.
WHY?
- Online ads have accurate traffic stats. We know where the audience is going and who is there. Now you can’t tell advertisers, “oh it works”, as newspapers did.
- Media is consumed a la carte.
- Print ads do make more money (digital media is always an afterthought) although it is decreasing
- Problem is that there is an infinite inventory supply online and finite demand
- Increase competition, difficult to track your product. Especially when people repost your product.
- Doing the same thing over and over again.
HOW TO FIX IT:
- Build a better sales narrative. The ad sales department needs to explain to advertisers why their ad space value is better.
- Building out new sources of revenue. (maybe subscription model? Offered a different level in the community, “Im now awesome”)
- Branding yourself in other places (Maxim nightclub? Merchandising? Meet the reporters? Conferences?)
- Cut Costs
FINAL THOUGHTS:
Drew Curtis did a terrific job explaining why online advertising cannot follow the same model as print, but he falls a bit short with innovative solutions. It seemed like there were only three ultimatums; sell-out, change your pitch, or cut costs – I hope those seeking advertisers can create more options. What are your thoughts?