Wednesday, July 11, 2007
A World Without Advertising
I was talking with someone today, talking about ad blockers. These are programs that block the advertising that appears on pages.
The argument was that ads annoy users, therefore they will block them. I was coming back with my usual point about the fact that people are willing to block adverts using free ad blockers. However, they are very unwilling to pay a regular price for blocking the adverts.
Walmo was also talking about how people understand how adverts fit into areas where they feel they are getting content for free, but that they don't expect to get advertising in 'their' space such as Myspace or facebook.
Thought I'd do the maths behind it, to see how much advertising pays for each user.
If we assume that there are three tiers of sites: Quality (e.g. Guardian \ Economist \ Hemscott etc), Entertainment (Sun \ Handbag \ BoingBoing) and Social (Google \ Facebook \ Yahoo! Mail).
We'd be willing to pay more for the quality sites because we feel they're giving us something of value. I think people would be unwilling to pay for things like Google or Facebook because they're seen as piggybacking on other people's content. If they had no choice at all, they definitely would as they're all pretty much a necessity for using the internet in the way we currently do.
If we assume that Quality sites are able (at the moment) to acheive a yield of around £8 per thousand pages - that's 0.8p for every page you view. If you compare this to a newspaper, with around 100 stories on average, that's 80p so quite valid in terms of pricing.
We'd expect entertainment sites to be cheaper. Let's say a yield of around £4 per thousand pages - that's 0.4p for every page. You'd expect an entertainment paper to be shorter than a newspaper, so that's the equivalent of around 20p for a paper.
Social sites fill our sights with adverts. I'd guess the ad yield for these sites (apart from Google) to be around £0.75 per thousand pages - if they're lucky!
Looking at Comscore, the average user sees around 3,500 pages a month. Assuming you look at 65% social, 25% entertainment and 10% quality pages.
This works out to a nice and round £8 a month additional money to pay for the content people look at. The problem is that this then needs to be distributed fairly and equitably between the sites. People need security to know that evil criminals aren't stealing their accounts. Any business doing this sort of deal would open themselves to all sorts of complications. They'd probably charge an additional 25%, taking the charge to a nice round £10.
Now I don't think that's a huge sum to ask people to pay for - if advertising is such a problem ask people if they're willing to pay £10 a month to not see it. If they are then maybe you've got a business idea.
I think sites would be much more interested in solutions that would stop them having to bow to the pressures they get from people like me. Unfortunately it would also involve me losing my job. I wouldn't like that!!
Ultimately as an industry we need to ensure that we don't annoy enough people to the point that £10 a month seems worth paying to get rid of our 'works of art'. I think we should be able to cope.
PS In comparison, the IAB estimate current online ad expenditure to be in the region of £2billion. This, when divided by current internet users of 31 million, gives £64 a year and therefore £5.37. This is slightly different. However, the IAB use PwC to guess their numbers, so I'm going to trust mine because I've put more rigour in than just employing some bean counters to ring round a couple of big media owners and ask them how much they made this year.
(Picture mercilessly stolen from trangress)