Monday, September 17, 2007
NYT giving up on charging readers for content and moving to an advertising based content model, it only makes sense if ad sales stay strong, strong enough to offset the subscription revenues the NYT is giving up. If/when (and I believe it is when, not if) advertisers realize they're not getting a good return on their online advertising expenditures, then the NYT is going to regret giving up the nice steady revenue stream of subscription sales.
I believe (and have so for a while) that advertisers are advertising on the web not because it's cost effective (defined as sales in excess of the cost of advertising) but because of some feeling that one must, absolutely must, advertise on the web these days.
The only question, at least in my mind, is how long advertisers (or more accurately, their agencies, who are even more infatuated with the current fad) can ignore the fact that they're spending more in advertising than is coming in in revenues. Does anybody think Ford's sales are going up because Ford advertises on the web? Who is buying a Ford because Ford is buying banner space on Yahoo? And the same holds true for advertiser after advertiser.
Some advertising on the web makes sense. Most doesn't. At least not if one is trying to make back in revenue an amount equal to or greater than the amount one is spending on the web. But if you're simply trying to convince your peers - or yourself - that you 'get it', keep spending the money...