Advertising on Paywall Sites

|Yaron Galai

The debate over paywall vs. ad-supported publishing tends to sound like a binary discussion: should publishers pursue an ad supported business model OR should they charge their readers for access to the content?

In fact, there are several ways in which paywalls and ad-based publishing mix, but it’s the dynamic between these two that changes once paywalls are introduced.

Asking users to pay for content shouldn’t prohibit publishers from placing ads/paid links on that content. What it should prohibit is using ad space for interruption of their readers the way traditional advertising is used so often. To set a clear guideline as to what’s okay and what’s not on this front, it’s important for a publisher to first understand what product it is actually selling: a piece of content or an audience.

If the content is offered for free without restrictions on access, then the product the publisher is selling is the reader. It is selling the reader to an advertiser. As such, once the publisher has attracted the reader in, it is fully entitled to interrupt the reader with any and all ads, including remnant ads, teeth whitening promos, affiliate links, etc. The lemon in this case is the reader, and the publisher is entitled to squeeze that lemon as much as it likes (not advising to do so… but it is the publisher’s right).

As soon as the reader is restricted in access to the content, he/she is not the product being sold anymore. At that point the content is the product, and the reader becomes the customer.

With that reversal of “contract” comes a drastic change in what the publisher is entitled to do. Ads are still allowed, but the right to interrupt goes away. Put another way, the ads have to become part of the product sold to the reader… they have to become part of the content. If interruption was okay in the free access scenario, now both the content and the ads have to be endemic to the reading experience and provide real value to the customer.

Here are two great examples (though not necessarily of paywalls), of how ads can be endemic and useful:

1. Time Out Magazine -Many of the ads in Time Out are for venues promoting their event calendar. As a reader, that is the perfect endemic, value-adding experience. In many cases, these ads provide even more value than the magazine’s content itself because they are better organized, include pictures of the artists, cover a bigger date range, etc.

2. Google – While the search results themselves are on the left rail, the ads on the right rail provide a lot of value to the Google user, in many cases even more value than the regular search results. The ads are completely endemic to the search experience, and for queries of commercial nature the fact that an advertiser had to pay to get on that search result means in many cases that they make a real effort to only target keywords for which they provide real value.

Providing this kind of value for readers on paywall publishers, while never attempted before at scale, is certainly possible. But to achieve that, publishers need to drop some of the traditional advertising concepts they’ve grown used to in the days where the reader was the product. Doing this successfully boils down to answering a single question: What is my reader’s intent?

In the two examples above, the ads demonstrate how well this question has been answered. In the Time Out case, the reader’s intent is to find interesting places (museums/shows/restaurants/etc.) to visit. An ad showing the concert schedule at the O2 is endemic to the reader experience and provides tangible value. Similarly, Google infers the user’s intent from each search query and provides a useful — even if paid — search result.

As a publisher (unless targeting a niche enthusiast audience), the only intent that can be safely assumed for readers is the intent to read interesting content. Therefore upon erecting a paywall, a publisher cannot continue interrupting its (now) customers with ads and has to start thinking of advertising as a value-add service that helps the reader’s intent to consume interesting content.

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Yaron Galai

Yaron Galai

Yaron is Co-Founder and Chief Executive Officer at Outbrain. Prior to founding Outbrain, Yaron was Co-Founder, SVP of Quigo, Inc.,... Read more

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  • Bastrop County Jail| February 27, 2012 at 6:06AM

    Paywalls are all the rage for media companies, but they have the unfortunate effect of penalizing an outlet’s most loyal readers.

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