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Apr 29, 2008

New Chart: Online Publishers Feel Effects of Economic Downturn

SUMMARY: Welcome to the second issue of MarketingSherpa's Chart of the Week. Each week, our goal is to bring you something useful and interesting in 2 minutes by presenting a bite-sized piece of Sherpa research and the lessons we learned from it. Feel free to post the link or grab the image ... Sherpa's Chart of the Week is yours to use in your blog, presentations or simply for reference.

This week's chart analyzes how paid content sites expect to handle the economic downturn.
64% of Online Publishers Expect Downturn to Hurt Bottom Line
View Chart Online
Click here to see larger, printable version of this chart

This pie chart reflects a study we conducted earlier this month into the paid content and subscription sales industries. Respondents included business and consumer publishers who charge for content, service providers that sell on a subscription basis and consultants/agencies that serve these markets.

One aspect of the study was how the economic downturn is affecting these groups, especially with paid content under pressure from free alternatives. As the chart indicates, negative effects are already being felt by a large minority (41%), and nearly a quarter (23%) see similar effects on the horizon.

Respondents were asked also about specific effects they were feeling. Quotes from respondents in two of these groups identify two places to start looking for ways to face these challenges.

Consumer Publisher: “We’re seeing significant pullbacks in ad spending.”

Business Publisher: “We’ve used events and information product packages to offset subscription declines. Now we’re seeing reduced attendance for events.”

These quotes underscore a basic truth in today’s consumer publishing world – subscriptions alone don’t pay the bills. Publishers are steadily moving away from paid content toward ad-supported models. With display ad growth slowing, the challenge continues to be differentiating themselves for advertisers.

Key Takeaway #1: Sites with great content but flat ad sales need to get creative with what they sell. Most sites have a standard range of display types with negotiation simply revolving around demographics, volume and price. Display advertising is increasingly commoditized and competitive thanks to the flood of social networking ad space.

Successful sites offer many of the following advertising opportunities:
o Online video
o Sponsorship of a section of user-generated content (UGC) collected around a topic
o Sponsorship sold in general or for a popular features that had previously been off limits
o Sponsorship of interactive features, such as Flash-based applications

Key takeaway #2: Repurpose and optimize alternative revenue streams and expand your range of products:
o Turn content from live events into prepackaged training materials -- paid webinars, courses or downloadable material for people who could not attend events
o Emphasize networking over education; plan more networking events
o Explore virtual trade shows/conferences as people look to attend without the cost and hassles of travel

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