Category Archives: advertising

Gruber on Ad Age on Apple and Amazon (and that’s too many “on”‘s)

John Gruber, on “Ad Age on Apple and Amazon”:

Interesting take on Apple’s advertising initiatives, but it seems like the ad industry just doesn’t get it that Apple cares more about its customers — their experience, their privacy — than the advertisers. I also detect a sense of entitlement — not just that they want this personal information, but that they think they should have it.

Speaking as someone who's been within the ad world, it's not so much that they think they're entitled to it. It's simple that they don't understand why Apple won't give them access to this data at any price.

Google HUD glasses have no revenue stream? Yeah, right

Nick Bilton of the NYT on Google to Sell Heads-Up Display Glasses by Year’s End –

Everyone I spoke with who was familiar with the project repeatedly said that Google was not thinking about potential business models with the new glasses. Instead, they said, Google sees the project as an experiment that anyone will be able to join. If consumers take to the glasses when they are released later this year, then Google will explore possible revenue streams.

If they’re not thinking of the revenue streams, they must be extremely dense. This is the advertising industry’s wet dream: a billboard on every building, an offer from every restaurant you walk past – all direct into your eyes. This is the ultimate advertising channel, and advertisers will pay massive amounts of money to get right into it.

Owning the subscriber relationship isn’t really about selling the data

I think John Gruber is wrong about the motivation for the FT’s desire to retain its subscriber relationship and not hand everything over to Apple:

“Not a word of complaint about the 70/30 revenue split. Their complaint is solely about access to customer information, which they profit by selling. And remember: it’s not Apple that controls that information with App Store subscriptions: it’s us, the users. What the FT is arguing here is that they don’t want their subscribers to have any control over their customer privacy.”

First, simply because the FT doesn’t publicly complain about the split doesn’t mean they’re privately happy about it. But more importantly, the idea that the FT “profits by selling” subscriber data is… well, not entirely wrong but not entirely right either. It’s much more nuanced than John, in his rush to pitch Apple as “pro-consumer”, is making it.

Having worked on a magazine which had a higher-than-normal subscription base, I know a thing or two about the value of subscribers. And the value you get from your subscription list largely doesn’t lie in selling that data directly to third parties.

In fact, quite the opposite: The big money is in using the demographics of the overall set of subscribers to sell highly-targeted advertising in the magazine (or, in the case of the FT, newspaper) to a highly-responsive, affluent audience. Selling the “raw” data is much less valuable, as it means you no longer “own” the channel for the ads.

To put it another way: Selling a mailing list so a someone can mail out a piece of DM is much less profitable than getting them to either buy an ad or put an insert in your magazine. Setting up a co-marketed service (like, say the one that the FT does with Berry Brothers for wine) is much more profitable still.

On MacUser, we had (in my day) a subscriber base of something like 70% of the readership. Because of the surveys we did of subscribers, we knew they were mostly involved in design and print, and spent a lot of money on new IT equipment (I think it was something like £10,000 per reader per year).

This meant we could charge companies who wanted to reach that audience premium rates for ads, so much so that a magazine which peaked at around 35,000 readers was massively profitable. It also meant the ads were more effective, because that audience were interested in buying that kind of stuff. And for the audience, it meant ads were relevant – it was stuff they were interested in buying.

(This is the bit that people often forget: If advertising is to be successful, like any piece of content it has to be useful to the audience. And the more you know about the audience, the more you can target the ads so they are useful, rather than just cheap filler.)

That’s where the money was, not in selling the subscriber list like it was cheap data. Selling someone a tipped-in insert in the magazine was massively more profitable than selling them data to do a mail out.

That’s not to say you never sell the data: You do, where people have opted in (and it’s legal to do so). But it’s not where the big money is. A single page ad will make far more money for the newspaper than selling the entire database, and will probably get better response for the advertiser too.

The more you know about your readers, the more valuable your ads. The problem with the Apple model, which the FT is correct in highlighting, is that it effectively breaks the relationship you have with subscribers, which lets you increase the cost of your ads.

For a publication like the FT, where you’re reaching a high-value, affluent audience, this is doubly-true. And when you consider that direct online channels will ultimately allow you to target ads which are personalised to individual subscribers (and thus get higher response rates and higher value), it’s easy to see why the FT wants to hold on to that subscriber relationship.

The dirty little secret behind Google’s business model – The ad delusion:

“You can’t really blame them. A portion of Google’s business depends on the delusion that their “AdSense for Content” ads the ones you see on blogs, not Google’s search results are good most of the time. The rest of the internet knows that they’re usually crap, but at least Google’s employees and leaders need to believe in them.”

And that, in a nutshell, is why Google is actually a lot weaker than many people imagine. It’s business model is founded on a fantasy: That contextual, text advertising is the most effective model. Sure, it owns DoubleClick (and now AdMob) so it’s diversified into other kinds of ad – but contextual is a massive chunk of its revenue.

It’s becoming more and more of an irritation to advertisers. Virtually every company I’ve spoken to of late has spent more time rolling their eyes in frustration over keyword ads than talking of how great it’s been for their business.

Advertising is changing. Not dying – changing. And the big question is whether Google has bet correctly on which way it’s going, or not.

This is what is killing newspapers

From the comments on The Times’ Q&A about it’s pay-model:

“£2 a week is too rich for my blood even considering the quality reporting but this depends on what the annual rate will be.”

If people genuinely believe that news isn’t worth £2 per week – less than the price of a latte at Starbucks – then newspapers are doomed, whether they are in print, online, or a mixture of the two. If the content is something that’s so throwaway to you that it’s not worth 29p per day, then you’re just not engaged with it and it’s effectivel just time-filler, wallpaper.

And if news is just wallpaper, then advertisers aren’t going to pay for it, either. At which point, goodbye news – online or off.

“Don’t it always seem to go that you don’t know what you’ve got till it’s gone…”