Salon Ad Viewer Dollars Eclipse Subscriber Revenues

With ad sales strong, Salon.com’s subscribers comprise an increasingly smaller chunk of its bottom-line, so Salon Media Group, Inc. is upping the price of subscriptions to the site beginning next month. The site has also seen a recent boost in ad inventory since moving its gateway unit from its long-time pre-article page position to a new pre-homepage position.

Salon serves ads to its non-premium subscribers as well as non-subscribers. And those ad viewers, said Salon Media Group Publisher Chris Neimeth, “have been subsidizing our premium subscribers.” Based on ad revenue and site usage, users who see ads now contribute more revenue by creating ad inventory than do the site’s premium subscribers who see no ads. Premium subscribers now pay between $30 and $35 annually for the sans-ads experience; that rate will go up to $45 in March.

Neimeth chalks up the eclipse of ad revenue over subscription revenue mainly to the general rise in online ad spending. “The x factor is how well sold-through [the site] is and how much market demand there is,” he said, noting that the site tends to attract auto, travel and entertainment media advertisers.

As of February 1, the site has 49,700 premium subscribers, Neimeth told ClickZ News. At a minimum of $30 each, it can be estimated that Salon rakes in at least $1.49 million annually from its premium subscribers, not including non-premium payers.

Salon’s ad revenues spiked 60 percent in the quarter ended December 31, 2006, from $1.4 million in that period a year ago to $2.2 million, according to the firm’s earnings report published this Monday. The company’s total revenues hit $2.8 million this past quarter, surpassing its record dot-com boom high of 2.6 million in December 1999.

Bolstered by a return of intellectual-celeb columnist Camille Paglia, among other editorial additions, Salon also has raised its ad-supported subscription price to $29 from $22.50.

The site first employed the commercial break-style Ultramercial ad unit in November 2002. In exchange for viewing an ad for the E-Class Mercedes-Benz, users were awarded a Salon Premium Day Pass, allowing them to read full articles otherwise available only to subscribers.

Today, a pre-homepage placement displays an ad for the DVD release of “Infamous,” the Warner Independent Pictures film about Truman Capote. Yesterday, a video-enhanced ad for Unicef ran. Salon also sells pre-roll video ads, interstitials and standard display units.

The site quietly changed the placement of its gateway ad unit a few months ago, now serving the full-page ad before a non-subscriber enters the site, as opposed to offering users a choice of subscribing or viewing an interstitial before continuing to a full story page. That change has resulted in an increase in site usage, said Neimeth.

In essence, dollars and cents drove the decisions to reposition the ad and raise the subscription rates. “We recognized that the economics of the ad viewers were greater than the economics of the subscribers,” Neimeth said.

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