Ken’s Take: It’s no secret that click through response rates to online ads) is miniscule. A current hot topic is whether “engaged” or “attentive” site visitors are more ad responsive. Conventional wisdom says ‘yes’. If true, sites with engaged visitors should be able to command higher ad rates.
Couple that with longstanding wisdom that people take stuff more seriously when they pay for it. and you have a new formula for online profits: generate revenue by charging a subscription fee for site access, and sell advertisers on the notion that they should pay more for an engaged base of exposures.
Might work … if the content is powerful and the base of subscribers is big enough.
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Excerpted from Business Week, “ESPN Bets Sports Fanatics Will Pay for Online”, June 4, 2009
ESPN The Magazine, the decade-old print offshoot of Walt Disney (DIS)’s wildly successful cable sports network, is about to begin charging $6.95 a month for access to its Web site.
At a time when many media companies are merely jawboning about demanding fees from online users, this magazine is doubling down on it.
More broadly, such a move by a well-known name will plumb whether a paying customer equals a more enthralled customer—the term in the trade is “engaged”—and a more valuable target for advertisers as well.
ESPN The Magazine is well placed to test these waters. Rabid sports fans have bottomless appetites for sports info and the universe of data, jargon, and inside jokes surrounding it.
“There is an audience that just loves games” and flits on and off sports sites only to grab scores, says ESPN.com Editor-in-Chief Rob King. But others “love the in-between stuff—the predictive stuff that helps them be smarter fans.” They’re the people the company is banking on. It also helps that many like to wager on sports, though ESPN doesn’t say so: When information can be translated into currency, people pay for it. Insider’s most popular features include data, tools, and deep-dig analyses geared to fantasy-league players and other stat geeks, and “Rumor Central,” which gathers and comments on sports tidbits from other media, such as newspapers and local call-in radio shows.
“Why is it, in this business, we are apologetic when asking [consumers] to pay for what we give them online?”
There is a a case that a subscribing customer is more “engaged” and thus more valuable to marketers than one who hops from one free site to another.
But, industry observers warn that it’s not a sure thing that an obsessive fan’s focus on ESPN Insider also means “there is more engagement with advertising.” That’s a debate that ESPN will presumably take up later, should it persuade more readers to pay up online.
Full article:
http://www.businessweek.com/magazine/content/09_24/b4135072008154.htm?chan=magazine+channel_business+views
The Homa Files 