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Why Luxury Brands Should (Probably) Welcome Newspaper Paywalls

new_york_times_paywallWhilst the era of access to free news is not coming to end, it’s becoming clear that the era of limitless access to free news, through certain channels at least, is. 

Last June, News International erected a paywall around all the online versions of The Times and The Sunday Times. In March, the New York Times followed suit, and there are rumours that The Telegraph is planning to introduce one in the autumn. 

It could be argued that those publications with the least to lose are those that have been the first to try the online subscription model. The old timesonline.co.uk lagged well behind its rivals the Guardian and the Mail Online in terms of traffic – in an increasingly competitive tussle for online advertising revenue, they were always going to lose out to their more popular rivals. 

However, the New York Times is the world’s most popular online newspaper (ahead of the Mail Online at no.2) so it’s clear that even the pack leaders are looking at a hybrid advertising / subscription model to ensure their survival. 

The fact is that although online display advertising is growing, it’s not growing as fast as online inventory.  Also, much of that growth is being driven by Facebook which, due to the data it holds on its users, is becoming an increasingly popular option for advertisers.  So newspaper publishers’ online revenues are not growing as fast as they would like. 

However, those publishers that already command significant online ad revenues have more to lose. It’s for this reason that metered systems are proving more popular than a News International ‘Berlin Wall’ style paywall where any access is charged. 

For example, the New York Times meter only starts ticking once a user has read 20 articles in a month. In addition, users can also access 5 articles a day through Google, and any article they click thru to from the NYT’s social media sites.  A similar system is said to be being considered by the Telegraph, and even The Times is rumoured to be considering a switch to this more flexible system. 

Metered paywalls may not be good news for compulsive online news consumers, but they do offer some interesting possibilities for advertisers. 

The Times’s paywall may have led to a sharp decline in users but the NYT’s metered system so far hasn’t seen such a significant fall out – daily falls of between 5 and 15% were observed by Hitwise.  For those brands with ‘masstige’ offerings looking for mass awareness, one of the key advantages of newspapers sites isn’t diminished. And with that content still delivered to audiences via Google searchers and social media channels, there’s no reason for this audience to decline significantly in the coming months. 

But things can get really interesting when you consider those who venture behind the paywall. 

First, there are subscribers – both to print and mobile editions – who are often offered free unlimited access as part of their bundle of benefits. When users are logged on, more in depth profiles can be built on them based on the content they consume and interact with.  This knowledge is attractive to advertisers looking to more precisely target their activity to audiences that are relevant. 

The other benefit for advertisers is the ability to leverage the relationships between the publications and their readers. Those prepared to spend to subscribe to a publication to get unlimited access to its content clearly have a close relationship with that publication, and brands that advertise overtly to that audience will clearly be perceived more positively, Recent research shows that advertising behind paywalls leads to higher brand and message recall and a more premium perception of those that advertise. 

A more exclusive environment and a better profiled audience – perhaps for luxury brands advertising exclusively behind a paywall may be the best option? 

It’s early days for newspaper paywalls and there’s still much research and testing to be done for advertisers.  But there’s no doubt that rather than presenting a threat to premium advertisers, they present some rather interesting possibilities.

Published by Graham Painter on 27-04-2011

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