Sustainable Ad-Supported Content

The Internet roller-coaster ride over the past few years has been fueled, in part, by the media, which tends to hype the most impressive success stories and nitpick the most tragic failures. But most dot-com failures reported in the media to date have been business-to-consumer (B2C)-oriented e-businesses and ad-supported Web sites, with many impressive success stories having been overlooked.

A major reason the focus has been so skewed toward these sectors is that B2C stories interest larger audiences and are often easier for people to relate to. Business-to-business (B2B) stories (many of which have been impressive, to say the least) generally attract industry-specific audiences and receive less media attention to fuel the fire.

Time after time, across a number of industries, many small players strive to compete for a limited new market only to see a few dominant players and niche-focused specialists break through the clutter and survive. Convergence is an easily recognizable trend among the survivors when new industries break out of their infancy stage. Acquisitions, alliances, and sharing of resources become more and more attractive. This scenario has been prevalent among content-based Web sites. With so many players in the market, the advertising space has lost value simply because the supply far exceeds the industry’s needs.

A highly noticeable trend among successful ad-supported Web properties is that the survivors often fall within one of the following three categories:

1.

Large, dominant player that entered the market early and still has money in the bank to continue funding R&D and acquisitions, and to ride out market swings

2. Publication backed by an existing, profitable company such as a newspaper, magazine, or television network

3. Hungry, niche-specific publication company running on a smaller scale that delivers an audience specific enough (e.g., cultural portals, B2B industry properties, and search-based Web sites) that it can attract advertisers even in today’s market

Of course a major problem is that media (online, in particular) is a tough sell today. With online ad pricing appearing to finally stabilize, a media vendor’s unique selling propositions (USPs) must be impressive. Content production costs have also become a major issue; ad revenue cannot always cover production expenses. Paid content appears to be a realistic alternative for many sites in the near future.

Nevertheless, there are exceptions, however rare. The agency where I work has worked with an ad-supported client, GospelCity.com, which remains sustainable as a niche-specific content site. This company is run by individuals who are knowledgeable and passionate about what they do, and it has quietly developed into the ninth-largest African-American community on the Internet.

Although media sales have been tough for everyone, GospelCity has developed value-added opportunities for advertisers, which include record companies and cultural marketing divisions of major corporations. Some of its most successful advertisers have created custom solutions, including album-launch countdowns, and featured audio clips on their radio stations. It has developed ties within major industry supporters and contributors, and for site content generally interviews artists, reviews albums, and covers industry events.

Whereas content has been a deadly expense for many, GospelCity continues to produce a portion of its content in-house and allows credible outsiders to insert articles. The beauty of having outside contributors is that it provides knowledgeable commentary and expands the site’s reach and audience interest. In-house professionals cover most artist interviews, and artists are eager to get involved since it helps boost their popularity in a music market that has a limited fan base. Without these contributions, content production costs could get out of hand.

Essentially, niche-focused sites like GospelCity continue to offer advertisers value and provide excellent models for sustainable online publishing. Essentially, publishers relying on ad revenue as their lifeline need to continue pushing their USPs — whether it is the ability to target highly desirable audiences, provide mass-audience reach, sell performance-based advertising, or offer time-sensitive ads. Having great, knowledgeable media salespeople always helps, too.

Online publishing appeared to be easy money a few years ago, but it has turned into a strategic, difficult market with fewer strong players that can offer unique opportunities to their advertisers.