Peter Kafka

Recent Posts by Peter Kafka

Can Web Sites Make More Money Selling Fewer Ads?

times-squareIt’s a classic seller’s gambit: Increase prices by cutting supply. The online publishers’ version: Make your ads more valuable by selling fewer ads.

Here’s how SmartMoney.com did it, according to Advertising Age. In October, it stopped selling one of the three display ads it sells on each page. Since it dropped the one few people saw in the first place–the “skyscraper” unit Web users wouldn’t see unless they scrolled down to the bottom of the page–the move wouldn’t cost the publisher much.

But the online arm of the personal finance magazine says the move actually made it money by somehow increasing the click-through rate–and thus the value–of its remaining ads: “The result: a 21% increase in aggregate click-through rates. Some advertisers that had quit buying the site have returned, including Scottrade and Options Xpress. And the site was sold out in the fourth quarter, though [publisher Bill Shaw] said that trend hasn’t continued in first quarter.”

SmartMoney’s experiment wasn’t enough to fend off lousy times for Web publishing in general and financial titles specifically: The site laid off about a dozen people in January. Both the site and the print title are a joint venture between News Corp.’s (NWS) Dow Jones and Hearst. (Dow Jones owns All Things Digital.)

And, of course, on the Web, the concept of scarcity is a tough one to sell. Even the most optimistic Web sales guy will privately moan about the glut of online ad inventory that gets bigger every day.

And note that SmartMoney didn’t exactly turn its site into a commercial-free zone–it is still running text ads from Google (GOOG) at the bottom of its pages, and it added a second ad to its homepage.

Eventually, if online publishers are going to really increase the value of their advertising, they’re going to have to find ways to make their ads fundamentally more compelling. But in the meantime, expect to see them keep nibbling around the problem with gambits like this. In times like these, every bite helps.

[Image credit: kennymatic]


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There’s a lot of attention and PR around Marissa, but their product lineup just kind of blows.

— Om Malik on Bloomberg TV, talking about Yahoo, the September issue of Vogue Magazine, and our overdependence on Google