Ad Models ‘Should Lean Towards Interactive’

Newspapers could improve their online revenues by adopting ad models based on interaction rather than reach, claims a new study.

An Ernst & Young report states that news providers should consider following Google’s lead by using cost-per-click (CPC) or cost-per-lead (CPL) systems in order to enhance revenue growth.

The paper asserts that most newspapers miss out on money-making opportunities on the Web because they use the cost-per-thousand (CPM) model, which is based on reach rather than interaction.

If the main news sites had used CPC last year they would have reaped online earnings of between £120 million to £250 million each, according to Ernst & Young estimates.

“The online revenue gap between nationals and Google is also evident if we consider that the latter could have generated £2.40 per UK unique user per month from its websites in 2007 compared to top newspaper websites’ £0.10 to £0.13,” remarks Luca Mastrodonato, media and entertainment analyst at the organisation.

“This gap is an opportunity for newspapers as it shows that monetising online services in the UK is possible.

“But to do so, newspapers need to move away from the volume based CPM model towards more interactive ad models such as CPC or CPL.”

He adds: “With many online users spending time interacting on social networks and the like, by circulating millions of untargeted adverts publishers may be missing out on opportunities to increase their ad revenue to the advantage of online specialists.”

Further information on the report, entitled “Media and Entertainment… by numbers”, is available to view here.