Ad revenue drying up, what next for free websites?

[dreed]

For some geeks, the name Dr Dobbs is synonymous with computing - it has been around for as long as I can remember. Now the online only version of Dr Dobbs is closing down because it is no longer profitable.

From the DrDobbs article:
In one word, revenue. Four years ago, when I came to Dr. Dobb's, we had healthy profits and revenue, almost all of it from advertising. Despite our excellent growth on the editorial side, our revenue declined such that today it's barely 30% of what it was when I started. While some of this drop is undoubtedly due to turnover in our sales staff, even if the staff had been stable and executed perfectly, revenue would be much the same and future prospects would surely point to upcoming losses. This is because in the last 18 months, there has been a marked shift in how vendors value website advertising. They've come to realize that website ads tend to be less effective than they once were. Given that I've never bought a single item by clicking on an ad on a website, this conclusion seems correct in the small.

Interesting that it has taken vendors so long to work this out.

Given that advertising supports so many "free" websites out there, "what next?"

[PhotoEcosse]

Not surprising.

Back in the late 1990s I was getting about £1500 per quarter from click-throughs from my websites to Amazon using their affiliate programme. Today that is down to about £30. The reduction has been fairly even over the 15 years or so - something I had put down to almost everyone now knowing about Amazon and going straight there rather than clicking-through from my sites.

[shawnino]

Given that advertising supports so many "free" websites out there, "what next?"


I'm not sure there's an answer. There is precious little I would ever consider paying a subscription for, because even if it's A-plus content, with a little bit of searching I can find free, B-plus level content online ... and in most cases that is good enough.

I think ad-blocking software has dramatically lowered the value of ads. Free plug-ins at that. I could not imagine going back to browsing the Internet as I used to have to look at it.

[Justinr]

I'm not sure that web advertising really was that wonderful anyway, it was more a bandwagon that the geeky were urging us all to jump aboard. I have yet to see any real figures for how companies, other than those dedicated to online shopping, derived any great benefit from it. As for the dreaded FB then that to was always a waste of time and I have always maintained that it is not an effective way of reaching or expanding your customer base, not on this side of the pond anyway. Seems like others are coming round to the same view -

http://blogs.wsj.com/cmo/2014/11/17/brands-are-wasting-money-on-facebook-and-twitter-forrester-says/

[luminouspreece]

This is intreresting. I was just reading a paper on this topic yesterday. Strange to come across it again today. I was under teh impression that many vendors had streamline operations and the only people making real money were those involved with ecommerce websites. I've just signed up to 1&1 for the same and hope I can make a go of it selling hard to find vintage camera parts. I really wanted to avoid advertising anyway since I know how much it frustrates me when browsing.

[Otto Phocus]

I am surprised that it took the advertisers this long to figure it out.

It is a  shame for there are some really good sites out there that will probably go under.

The alternative is to start charging the customer just like in any other business.  Unfortunately, there is this expectation of getting "free" stuff off the Internets Tubes that will have to be overcome.

[Rob C]

I am surprised that it took the advertisers this long to figure it out.

It is a  shame for there are some really good sites out there that will probably go under.

The alternative is to start charging the customer just like in any other business.  Unfortunately, there is this expectation of getting "free" stuff off the Internets Tubes that will have to be overcome.

Yes, you are right there, and that's the problem with stock today too: ridiculous expectations that bear no relationship to the real cost of production. In my own, final experience of it as investment, the short version runs thus: £ 2000 for a week/ten days shoot that included one girl, maybe 60-70 Kodachrome cassettes, flights, food etc. etc. I actually did the shoot as a final test of viability around '86 or '87 and it took me almost exactly two years to get back the capital, never mind go into profit. It only wiped its nose because of two sales, one that gave me my 50% as £ 1500 and another as £ 750 or so, both from one transparency. The rest hardly did a thing. You can't plan it out, though agencies used to try to claim that you could if you followed their guides, which were based on 'now' needs, not what you could deliver a month later.

Basically, I think it was two things messed it up: political correctness which had already damaged my calendar production quite badly, and also the fact that downturns in the economy are felt very early on by advertising, way before the public realises how it, too, is going to get hit. For a while I imagined it was something I had done, then slowly, others began to tell similar tales and I understood it was across the board. Which is scant comfort.

And that was still film. With digital and the flood of shamateur input, driven both by the difficulty agencies themselves also faced/face trying to charge their clients a reasonable sum, only non-pro material could be afforded for the most part, and that set the price structure for everyone. If I couldn't make it pay, living on location as it were, how could somebody in London, Paris, NY or elsewhere fly out to the sands and do it any cheaper? You just had to leave the marketplace.

Please, no false analogies about buggies and whips.

As for paying to be with a good photographic site - yes, if it kept out the assholes: one chance, and then you are history.

Rob C

[amolitor]

We forget that advertising has two purposes, at least.

The first it to directly sell things. The second is to manage brand identity. Nobody every saw a BMW ad on TV and said 'man, I gotta pick up a beemer next time I go shopping'. That's not what BMW's television ads are about. They're  about creating the impression that the BMW is a superior driving machine, and that it's worth extra money because of that and a bunch of other things loosely rolled up under the aegis of "luxury."

The web has actually proven pretty good at the former. Your anecdotes about how you never buy anything by clicking an ad are irrelevant. Advertisers can and do track exactly how many sales they're closing as the result of an ad, and ads are priced accordingly. What's gone is the days when people were simply throwing money at it because it was new and awesome and surely all good things would come. Now they can measure success, and price accordingly.

There is a secondary problem in that ads are typically priced by clickthroughs, not by sales. So you measure your sales per clickthrough rate, and pay accordingly. This places the outfits that sell ad space in a pitched battle with people who operate robot click farms. Increasingly, clicks are robots, so the sales per click is in fact decreasing, but not because people don't buy. The rate is decreasing because robots are doing more clicking, and robots never buy.

Advertising was always a terrible model. The global advertising spend is only so big, which places a hard limit. Everyone is scrabbling around in the same pond, chasing the same dollars, and that's not a healthy environment. Silicon Valley isn't changing the world, inventing new anythings. They're simply releasing more, stupider, fish into the same pond to compete for the same dollars, and then making bank selling Sushi Futures.

But all this leaves the branding side of the equation, which was always the more important one, wide open.

[Justinr]

We forget that advertising has two purposes, at least.

The first it to directly sell things. The second is to manage brand identity. Nobody every saw a BMW ad on TV and said 'man, I gotta pick up a beemer next time I go shopping'. That's not what BMW's television ads are about. They're  about creating the impression that the BMW is a superior driving machine, and that it's worth extra money because of that and a bunch of other things loosely rolled up under the aegis of "luxury."

The web has actually proven pretty good at the former. Your anecdotes about how you never buy anything by clicking an ad are irrelevant. Advertisers can and do track exactly how many sales they're closing as the result of an ad, and ads are priced accordingly. What's gone is the days when people were simply throwing money at it because it was new and awesome and surely all good things would come. Now they can measure success, and price accordingly.

There is a secondary problem in that ads are typically priced by clickthroughs, not by sales. So you measure your sales per clickthrough rate, and pay accordingly. This places the outfits that sell ad space in a pitched battle with people who operate robot click farms. Increasingly, clicks are robots, so the sales per click is in fact decreasing, but not because people don't buy. The rate is decreasing because robots are doing more clicking, and robots never buy.

Advertising was always a terrible model. The global advertising spend is only so big, which places a hard limit. Everyone is scrabbling around in the same pond, chasing the same dollars, and that's not a healthy environment. Silicon Valley isn't changing the world, inventing new anythings. They're simply releasing more, stupider, fish into the same pond to compete for the same dollars, and then making bank selling Sushi Futures.

But all this leaves the branding side of the equation, which was always the more important one, wide open.

An interesting summary and I love the line about stupider fish, but I am not entirely convinced by the brand management argument. You still need viewers to dwell upon the ads even if they don't click on them, and if they are simply ignoring them anyway then I can't see any benefit in trying to build or maintain brand awareness through online ads.

[amolitor]

Doing branding on the web is, I think, still in its infancy, and it's definitely NOT done by placing clickable ads all over the place.

A lot of it is being done by managing relationships with influencers, by placing viral videos, and I suspect by product placement in more subtle and less talked about ways. It's a heck of a lot harder to measure the effectiveness of it, though, so they're feeling their way.

[Justinr]

Doing branding on the web is, I think, still in its infancy, and it's definitely NOT done by placing clickable ads all over the place.

A lot of it is being done by managing relationships with influencers, by placing viral videos, and I suspect by product placement in more subtle and less talked about ways. It's a heck of a lot harder to measure the effectiveness of it, though, so they're feeling their way.

Who or what are these influencers, who do they influence and how strong is that influence?

[amolitor]

Depends on the market segments, of course.

I've been watching the Zeiss show lately, and they seem to think their influencers include Ming Thein and Lloyd Chambers, and as far as I can tell their market they influence is money-is-no-object DSLR owners. Michael Reichmann is an influencer in the money-is-no-object landscape shooter market. Both are pretty narrow slices of the high end, but they're quite real, and there's money being made.

No idea how strong the influence is, there's money and effort being spent by the manufacturers here, so apparently they think it's strong enough to be worthwhile.

[Tarnash]

`Influencers' can literally make (or break) a business.  If you can access a copy read the section on Hush Puppies Shoes in Malcolm Gladwell's `Tipping Point'.  He describes the effect very well.  I guess too that we are all `influencers' in a small (or in some cases not so small) way.  I'm influenced by what I read on this and other similar sites, particularly when I believe that what I'm reading is based on personal experience and/or relatively objective analysis.  I'm influenced positively by people I respect (either individually or collectively) and, to a lesser degree, negatively by those who are known to `prostitute' themselves.  It's a form of trust I guess but it can be fragile - I can't see myself buying another VW for a while!

[Rob C]

`Influencers' can literally make (or break) a business.  If you can access a copy read the section on Hush Puppies Shoes in Malcolm Gladwell's `Tipping Point'.  He describes the effect very well.  I guess too that we are all `influencers' in a small (or in some cases not so small) way.  I'm influenced by what I read on this and other similar sites, particularly when I believe that what I'm reading is based on personal experience and/or relatively objective analysis.  I'm influenced positively by people I respect (either individually or collectively) and, to a lesser degree, negatively by those who are known to `prostitute' themselves.  It's a form of trust I guess but it can be fragile - I can't see myself buying another VW for a while!

The greatest equipment 'influencer' I ever came across was the late equipment writer for the British Journal of Photography: Geoffrey Crawley. He truly knew his stuff, and I followed his test results for Nikon's products and was never disappointed. It was his reviews of the 2/35 Nikkor and 2.8/35 Nikkor that indicated that the 2.8 would be the better option for me. I bought the 2.8 and used it a great deal over the decades, right until it went mad on a cruise and decided to create its own unexpected major vignettes and 'exciting' focus shifts. I stick one of the last images from it below.

I bought the 2/35 version just a couple of years ago, and it isn't as good: a lot of curvature that has to be corrected in post, resulting in the loss of edge info that I hate to sacrifice. Both optics are manual, of course.

Rob C

[David Anderson]

What's broken is the entire internet business model and it started with the greatest of the modern robber barons, Steve Jobs stealing the music industry to sell iPods and eventually phones.
Apple needed the content to sell the hardwear so took the value from the content by making it free and easy.
Next was films and TV.

Where the model will eventually fail is the free or nothing culture that is the current internet will have nothing left to eat but itself.

[Rob C]

What's broken is the entire internet business model and it started with the greatest of the modern robber barons, Steve Jobs stealing the music industry to sell iPods and eventually phones.
Apple needed the content to sell the hardwear so took the value from the content by making it free and easy.
Next was films and TV.

Where the model will eventually fail is the free or nothing culture that is the current internet will have nothing left to eat but itself.

So true.

But what will be left by then?

Rob C

[Justinr]

What's broken is the entire internet business model and it started with the greatest of the modern robber barons, Steve Jobs stealing the music industry to sell iPods and eventually phones.
Apple needed the content to sell the hardwear so took the value from the content by making it free and easy.
Next was films and TV.

Where the model will eventually fail is the free or nothing culture that is the current internet will have nothing left to eat but itself.

Agreed. The whole WWW is an edifice built on what exactly? Of course one of it's main props is the sheer number of people with an interest in keeping the show going but take that away and the web as we know it will soon crumble.

We are constantly bombarded by new and better things, ways of doing stuff, or doing stuff that we never thought we would want to do! And if we don't like it, don't care to accommodate ourselves to the latest fad then it's us, the individuals who are in the wrong. We will be told that we don't know, don't understand, not clever enough etc etc, beaten into submission by those with who think they are some sort of herald entrusted by the great God technology to spread the word amongst lesser mortals. 

[Jimbo57]

Another factor may be that ad-blocking software has become more efficient so most of us now never see the ads that are directed towards us.

Living in Scotland (UK) I never watch any television channel live if it carries advertising. 90% of the time I watch BBC. On the rare occasion that I want to watch a programme on a commercial channel, I record it and then fast-forward through the adverts. Same with websites - if I was unable to block the adverts, I would switch to a different site (or none at all).

[Rob C]

Another factor may be that ad-blocking software has become more efficient so most of us now never see the ads that are directed towards us.

Living in Scotland (UK) I never watch any television channel live if it carries advertising. 90% of the time I watch BBC. On the rare occasion that I want to watch a programme on a commercial channel, I record it and then fast-forward through the adverts. Same with websites - if I was unable to block the adverts, I would switch to a different site (or none at all).

I watch Sky News or France 24 in the mornings with breakfast. I swear at the screeen a lot. I enjoy the Irish guy, Holmes, but can't stand that other chap who takes over from him. Such a wimp. Vegetarian, I think. Starts everything with 'shall we' which I can see coming and that's when the language gets choice. That Asian girl who does the weather some mornings would be fine if she learned to choose her clothes better. However, she speaks rather well. Used to be a blonde girl a year or so ago sat along with Holmes - quite cute, but she left for some other station... Odd that I can't remember any of their names. Guess it marks their status in my life. But, as they don't know me either, I guess we are quits.

France 24 covers a lot more international news, but repeats not only during that particular day, but even from a week or two ago; must be working on a shoestring - Sky is so parochial it hurts, or, alternatively, it latches onto a U.S. story like a dog with lockjaw and runs with it for days...

Ads: there should be a gadget to weed ads out of live tv broadcasts! Was a time in the 60s/70s when the ads were great; suntan lotions, cigars, booze; today, they are an insult to one's intelligence and oh, so dull!

Rob C

[Telecaster]

The greatest equipment 'influencer' I ever came across was the late equipment writer for the British Journal of Photography: Geoffrey Crawley. He truly knew his stuff, and I followed his test results for Nikon's products and was never disappointed.

My dad was an avid BJP reader, and built his late-life Nikon F3HP system around G. Crawley's recommendations. (Accurate rangefinder focusing became harder for Dad in his 80s, so he reluctantly "went SLR.")

I have to say my SLR camera & lens choices in the '90s were very much influenced by Mike Johnston's writing, both in print and online. He's the guy who clued me in to Contax SLR gear, specifically the lenses.

In both these cases I'd say there was a form of advertising involved, but it was of the "this is what I use…if you're interested you should check it out" variety. This I have no problem with. But I find more blatant forms of advertising to be not only not persuasive but counter-persuasive. What are the metrics advertisers use to gauge the number of potential customers driven away by annoying, imbecilic marketing techniques? (TV ads for instance. So intrusive and utterly inane I DVR nearly all commercial broadcasts I watch and FF past the damn things. During the occasional live baseball or hockey game the ads get muted while I get up & stretch my legs.) I doubt there are any…

-Dave-