• http://sachinkamdar.com/ Sachin Kamdar

    You should look at all publisher sites, not just magazine/newspaper sites.  It makes financial sense to for sites like The Economist and other magazines to have a high percentage of house ads.  Those convert into subscriptions, which actually make them a lot of money.  Same thing goes for newspapers, but maybe to a lesser extent.  

    This commentary would be meaningful if you looked at all content sites and then looked at the percentage of house ads, not just those sites where converting users to a subscription is a good strategy. 

  • http://www.btbsunglasses.com BTB Sunglasses

    I don’t doubt this one bit. I’m actually a little surprised its not higher nowadays. I guess they do have to find a good balance and keep the user experience in mind. 

  • http://www.facebook.com/nic.fulton Nic Fulton

    House ads are free. They are used to fill spaces in inventory that are not filled with paid adverts. The theory of supply and demand would generally indicate there is a ‘best price’ for adverts where you make the most money our of your supply. This best price happens at about 80% sell-out. If you lower your prices you’ll maybe sell another 10% but you drop the price by more than 10%. If you increase the price by 10% you drop to closer to 70% sold-out. So the magic balance point is 80% (approx). The better the advertising sales team and their analytics the better they can do, but the rule of thumb stays approximately true. For what it left, i.e. the 20%, you run house ads. They don’t cannibalize revenue and they enable you to create more page views and hence increase the supply. Which you then sell until it’s about 80%… So Pew has just confirmed what we all knew in the industry. Economics will find a way…

  • Allison Edrington

    I’d be interested to see a wider study on how online-only publications fair in this regard. I agree with Sachin Kamadar that subscriptions are probably a big money maker for them and some level of house ads would be justified.

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