A quick glance at the audience levels being achieved by Britain’s leading Websites shows that the Internet may be a medium which advertisers will not be able to ignore for much longer.
Market leader Yahoo! UK & Ireland is now understood to be generating 1 million page impressions a day – an impressive volume of commercial impacts by anyone’s measure.
But Yahoo! is the exception rather than the rule among the top UK Websites.
The majority of the UK’s busiest Websites are being developed by traditional media owners – products such as Electronic Telegraph and The Times/Sunday Times sites, which are both currently generating in excess of 11 million page impressions a month.
Where new brands such as Yahoo! and Microsoft Network have succeeded in building market-leading sites, traffic levels on such sites are often bolstered by the inclusion of news and other editorial content provided by established media operations.
Recent months have seen a raft of tabloid and consumer magazines join the broadsheet trailblazers on the Web, while ITV has joined the fray in launching a site to compete against the well-established programme support and commercial activity of Channel 4 and the BBC.
Sites such as Megastar, Express Newspaper’s online version of The Star, and This is London, Associated Newspaper’s online Web brand based on the Evening Standard, have quickly achieved traffic in excess of 2 million page impressions a month.
Meanwhile, existing sites operated by established media owners continue to report healthy audience growth, despite growing editorial competition among sites for their share of online attention.
But in this headlong rush by media owners to establish online audiences, one question remains unanswered: when will Web publishing start to make commercial sense?
Latest estimates from Softbank Interactive Marketing suggests that the online advertising market in the UK is worth under 10m, hardly enough to justify the current flurry of online publishing activity by national media brands.
Based on growth following the same path in the UK as in the US, Softbank is predicting that the 10m figure will grow to about 80m for 1999, and 300m by 2001. These are the sort of ad revenues which may establish the Net as a meaningful, if still minor, medium for UK advertisers.
But in the meantime, cold commercial reality is beginning to inform, if not curtail, the explosion of online publishing.
According to Simon Johnson, head of marketing at Beeb, a joint venture between the BBC and computer company ICL: “The advertising market is still slow to take off. We think we are commanding a reasonable share of that revenue, and seeing the likes of British Airways and Dell coming online, as well as the major insurance companies and banks. We hope more advertisers will follow. But, across the market, the growth in advertising is slower than people had anticipated.”
Nick Garbutt, director of business development at the Belfast Telegraph, agrees that the growth of national advertising on the Net has been slower than many had predicted. Its site, launched in November 1995, attracts 1.2 million page impressions a month, and is a good example of how a regional newspaper can use the Internet to extend the reach of its editorial product, and defend and build its more local, classified advertising market.
“London ad agencies still appear divided between those who see value in this medium, and those who don’t,” says Garbutt. “We have set out to be very much a commercial site, and our aim is to make money and build a revenue stream primarily based on classified advertising.”
He believes evidence from the US newspaper market, where the bulk of press advertising is funnelled through locally, rather than nationally, distributed titles, suggests regional newspapers may be best placed to exploit the medium.
“The US experience is that regional newspapers are the major players in the market – and we control the classified market in Northern Ireland. And if we look again to the US, people are using it as a local reference point. So if we play to our local strengths, we have a big advantage our national newspapers. We see online revenue coming more through classified advertising rather than London-based deals with national advertisers and agencies – but of course our London sales staff are seeking to get us cut into that revenue base too,” adds Garbutt.
Among Britain’s broadsheet newspapers, it is perhaps The Guardian and Independent which have appeared slowest off the mark in building a Web presence. But the Independent in recent months has begun to market online content through deals with Yahoo! among others, while The Guardian is planning a major expansion in its previously ad hoc approach to Web activity later this summer.
Ian Katz heads up The Guardian’s online activity, says the group has deliberately adopted a “contrary strategy” to most other national newspapers, by so far steering clear of publishing the bulk of the Guardian and Observer newspapers online.
“When The Guardian New Media Lab was launched in 1995, the philosophy was ‘earn to learn’. We deliberately didn’t follow the pattern of simply putting as much of our content up on the Web as we could.”
Instead, the newspaper has developed more limited sites, based around editorial sections, such as its weekly Online section and its printed recruitment section, where it knows it can establish a market lead.
It has also experimented in winning sponsorship revenue for ad hoc projects such as its Euro 96 site and Shift-Control, its Whitbread-sponsored e-zine which ran for a year until last October. It has also partnered other content providers, including Team Talk, the premium rate soccer news phone service, and Wisden’s in developing sports sites www.football.guardian.co.uk and test cricket site www.westindies98.co.uk.
“In everything we do, we are trying to build content to play up the strengths of the Internet, and to play down from its weakness. There aren’t any sacred business or publishing models for this media, but we don’t believe in simply posting up what’s in the newspaper.”
The Guardian is planning to roll out several other major sites this summer, which will act as stand-alone sites linked through The Guardian and Observer’s home pages. But while it’s filling in some of the obvious gaps in The Guardian’s existing online publishing activities, Katz insists the newspaper will continue to avoid the scattergun approach of some rivals.
“There’s no point investing in publishing in a particular content area if the online interest isn’t there, or if we don’t think we have the in-house capacity to be a lead destination for that particular subject area,” he says.
This selective approach has also been adopted by Britain’s leading magazine group IPC. Pat Kelly, business manager of new media publishing at IPC, says magazine-based Websites need to be capable of establishing both an editorial niche, and a critical volume of online traffic, to make the commercial worthwhile.
IPC has established strong online followings for Websites based around NME, Loaded and New Scientist. It has also launched a Website based around its range of yachting titles, again on the strong correlation between Internet use and readership of these specialist titles.
“We are constantly looking at markets on the Web, considering which of our brands also have a good demographic fit with the online audience, and what potential they have to make revenue,” says Kelly. “We have lots of titles which may fit the Web, but we don’t believe they will make money out of it. We could easily get involved in publishing 70 or so sites based around our magazines, and most wouldn’t work at the moment.”
Although both IPC and EMAP have experimented in electronic publishing of women’s titles, the male skew of the Internet audience has created a dearth of Website launches based around women’s titles which otherwise dominate many newsstands.
“Male-biased titles like NME and Loaded are well placed to achieve the audience numbers that make online publishing worthwhile,” says Kelly. “What’s important is that they can also achieve a strong editorial niche as well as just a minimum volume of page impressions useful to sell to advertisers.”
The value of the audiences generated by Websites can be directly related to the cost-per-thousand ratecards of other media. But the real potential for boosting ad revenues of site operated by traditional media owners relies on charging a premium to advertisers, based on identifying key demographic information of individual Website users.
A key problem faced by all Web publishers is whether to compromise the volume of traffic visiting its site, by requiring users to fill in online registration forms outlining personal details.
UK sites such as Electronic Telegraph, Times/Sunday Times and FT.com all require some personal details in return for access to the site – and in the process are turning away traffic, according to Michael Page, director of interactive services for Acxiom International.
“This is a key dilemma for any media owner,” he says. “Experience shows that registration pages can slash audience take-up by 50 per cent or more.”
But where personal data can be collected, it can prove indispensable in reducing advertising wastage on the Web to levels which are the envy of other media – as well as offering valuable direct market opportunities.
Joshua Rosen is UK-based vice-president of Real Media. His company’s ad management system is widely used on major US newspaper and magazine sites including the New York Times, Washington Post, and Chicago Sun Times.
The targeting potential of Web-based advertising through newspaper sites has only just begun to be exploited, he says.
“On the New York Times [site], registration data can be used by car manufacturers to target ads at particular income ranges,” says Rosen. “So Mercedes may opt to buy banner ads for Website users who have declared household annual income above the 75,000 range, while Ford could choose to target users below that income level. Yet these ads can be split across people on the same street reading the same online content.”
And media owners are just beginning to grapple with ways to develop paid-for content and merchandising activities to compliment so-far modest ad revenues, says Katz.
“We’ve managed to achieve four per cent rate boosts on a ‘crown jewels’ content service offered on one of our cricket test series sites,” he says. “That was a 5 fee to receive premium content on an otherwise free service. At the moment, that’s small beer, but if we can start to achieve that sort of take-up rate on paid-for content on other planned sites, we can see it becoming a major revenue earner.”
Johnson at the Beeb agrees: “The major media players are bound to emerge as the major brands on the Web and act as the gatekeepers for a lot of Web traffic. But how do we do that? Commercial models aren’t set, and we are waiting for ‘the next big thing’ – the role that sites can play in Web-linked transactions. If you can close that transaction on the Web, then it starts to get interesting.”