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The rising value of the online user

Submitted by yelvington on September 30, 2007 - 11:59am

According to E&P, Bank of America analyst Joe Arns says the value of an online reader to a newspaper company is on the rise:

Based on the total ad revenue per reader, in Q2 Bank of America estimates that on average, newspaper publishers generated about $25 to $38 of ad revenue per daily online reader compared with $70 for each print daily reader. This suggests that online readers are worth about 36% to 55% of the value of print readers, up from 28% to 42% in Q2 2006.

I'd like to see the full "show your work" calculations. I continue to believe that the readership claims of newspaper websites are inflated by irrelevant, drive-by traffic that bloats the unique-user count and depresses derivatives such as revenue per user.

It's been a couple of years since I did any heavy-duty behavioral analysis on a newspaper website, but I don't think the numbers have changed all that much. What I found then was an easily identifiable, but small, group of habituated users and very large population of one-hit drive-by visitors.

If you ignore the drive-by traffic and divide revenue by habituated users, you get a pretty powerful story about the potential of local Internet advertising revenue ... and you can see that our challenge is to build that habituated readership.

As I've said before:

... the problems are much more driven by a weakening ability to deliver an audience in any medium than by any inherent weakness of an online advertising model. At the end of the day it comes down to a simple question: Are your content and services relevant to consumers in your market?

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Comments

I started doing detailed audience analysis in Ventura and came to the conclusion that our core local audience was too small to drive revenue to the heights needed.

Belden thinks online newspaper audiences are bigger than you might think -- that our measurement tools aren't giving us an accurate picture.

So, who knows?

Does anyone know what the dollar value of a business member is in an acquisition by a third party? For example, I run a locally focused city portal website. Membership to the site is free. What would the value per business member be to an outside company that would look to acquire our company and then offer them value added services for a fee? $10 per business? $50 per business? Chris