Why has the Internet been hit harder by the 2001 advertising slump than other media?
Probably because it’s a branding medium measured by direct-marketing metrics.
A “click-through” is a direct-marketing metric. So is a “conversion rate.”
We were terribly excited when click-throughs were 5 percent, because that compared with a 2 percent rate on direct mail, which costs $1 per letter against less than a penny for an e-letter. Now click-throughs are at approximately .2 percent, conversion rates are even lower, and direct marketers are going back to killing trees.
They’re doing this because with a direct-mail list they know to whom they’re selling. When you buy a list from a business magazine, you know the people on the list represent the industry. If you buy a list of 25-year-old Wisconsinites who drink light beer, you know exactly who will get your message.
The low cost of email kept e-marketers from doing an honest evaluation of their lists. Just because you opted in for information on something doesn’t make you a prospect for my offer.
As to branding impact, the industry has done nothing.
If I buy a page in InfoWorld magazine, I know how many people will read it, their position in the industry, and how much of the industry my ad will reach. I can’t get that data from CNET — because the site hasn’t collected it.
Variety.com drew a lot of guffaws when it announced it would no longer allow nonsubscribers past its home page. (Click on any story to see what I mean.)
But Variety knows who its print readers are. It knows their job titles, and it knows how much of the film, TV, and music industry they represent. If someone wants to reach those industries with a branding message, that person knows he or she can reach them through Variety.
The Web site isn’t leaving the great unwashed completely behind. You can subscribe to the site for $59.95 per year or buy a $2.95 “day pass.”
Since you won’t count in the ad rates (you’re unqualified; advertisers targeting the industry don’t need you), you’ll have to pay your own way. And that’s just for the Web site — Variety isn’t cutting trees for the likes of you!
Qualifying readers and figuring out how to deal with the unqualified will be one of the big stories of the next several months throughout the Internet content space. If you lack a mass audience (as most sites do), it’s the only way to measure the branding power of your advertising.
Personally, I think Variety is being a bit harsh and (perhaps) leaving money “on the table” with its actions, but it has the right idea. Every site should find incentives to encourage registration.
Microsoft’s HailStorm promises to build just such an engine, but where there’s one product, there’s bound to be more — and quickly.
Once we know who our readers are, pre- and post-campaign brand-awareness studies will carry meaning. We’ll know what this medium is capable of. We’ll be able to compete against print, broadcast, and cable on an equal footing.
Put the highly measurable direct-marketing effects of the Internet on top of that (especially as we start selling “qualified” lists of “registered” subscribers), then add in the higher cost of paper, ink, and printing, and we’ll be able to proudly compete on Madison Avenue again.
It won’t be like it was before, when advertisers were throwing money at any site that moved, but at least it will be a fair fight. It’s a fight we should all look forward to.
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