What Impact Will Newspaper Paywalls Have on Premium & Luxury Advertisers?

What_Impact_will_newspaper_paywalls_have_on_premium_and_luxury_advertisersOnline newspaper subscriptions are making headlines again with the news that the online editions of the Telegraph and The Sun will be disappearing behind paywalls.The Sun is set to join its siblings, the Times and the Sunday Times, behind a complete paywall in September, a decision driven by a 'deep seated belief that it is just untenable to have 2.4m people paying 40p for The Sun at the same time as a bunch of other people are getting it for free,' according to Mike Darcey, News International's CEO. The announcement comes just a few months after News International paid £20m to secure the rights to Premier League highlights on the web and on mobile devices - content that will increase the appeal of the post paywall Sun to potential subscribers.The Telegraph is to introduce a metered paywall, the first newspaper brand to do so in the UK, echoing the successful model introduced by the New York Times 2 years ago.  Online readers will be able to access 20 articles for free per month before the paywall comes into effect. Initial charges will be £1.99 for access to the website and content via apps, and £9.99 per month for a package which adds tablet access and loyalty club membership.The Telegraph has some confidence that it's new model will be a success. It launched a metered model for its international website in November of last year and 9 out of 10 people who took a free trial went on to take a full subscription.And Telegraph execs have no doubt been casting their eyes across 'the Pond', where the New York Times has blazed a trail for successful paywalls.  Its metered offering, which allows free access to 10 articles, has been successful in attracting almost 700,000 subscribers and creating a new revenue stream worth over $60m, whilst having a minimal impact on reach and advertising revenues.It's clear that the newspaper industry is reaching a crossroads with 2 paths they can take.  It's looking likely that the majority will go the way of the US press, where most titles have decided that some form of paywall is the only way to secure their future.The alternative route is to remain free for all and try to drive advertising and other ancillary revenues in line with traffic. It's becoming clear that this approach will only work for titles that can deliver massive scale.  The Mail Online, with its 8m unique visitors in January, has grown its advertising revenues to a reported £45m on the back of its phenomenal growth - but other titles have struggled to grow at this pace and therefore reap the rewards that come with this scale.But what impact will the escalation of paywalls have on premium and luxury advertisers? As we've discussed before, a potentially positive one. Whilst mass market advertisers may be put off by the resultant decline in reach that may result from paywalls, luxury advertisers will be attracted by a number of their positive effects.The first is that online subscribers are likely to have a stronger relationship with the newspaper brand they subscribe to than casual readers, and advertisers can leverage that relationship to the benefit of their brand.Secondly, newspapers are in a position to find out more about subscribers than about casual readers -and subscribers are more likely to volunteer information about themselves if they feel it will enhance their experience. These insights will prove useful to premium and luxury advertisers looking to target their offerings more precisely.And finally, paywall publications are likely to invest in new advertising formats to try and offset any losses in ad revenues that their new model brings.  New offerings may include more interactive options, and more formats that blur the lines between editorial and advertising such as native advertising. More choice and innovation on offer can be no bad thing for premium advertisers looking to drive new prospects into their purchase funnels.Although paywalls may make the online press a more attractive prospecting vehicle for premium and luxury brands, they're only part of the solution for the beleaguered newspaper industry. Paywalls can pay, but they don't fill the entire revenue black hole created by falling print circulations and ad revenues.  However, they have bought the press some time to work out exactly how to bridge that revenue gap - or how to survive on substantially lower revenues...