Digital Publishers Don’t Have Old Media’s Margins, But The Best Operators Are Making It Work

Daniel Lyons of Newsweek wrote an interesting piece about the business side of Huffington Post, a new media company with $30 million in revenue.

HuffPo has a big audience–24.3 million unique visitors last month, nearly as many as The New York Times–but like most Web sites, it can’t monetize it very well. Right now, HuffPo generates just over $1 per reader per year. That’s nothing compared with the mainstream-media outlets that HuffPo hopes to displace. Cable-TV networks and print newspapers collect hundreds of dollars per year from each subscriber, and then generate hundreds of millions in ad revenue on top of that.
The hard truth is that advertisers want to put messages on Web sites, but they just don’t want to pay very much for that privilege. And perhaps for good reason. When was the last time you clicked on an Internet ad? Or even noticed one? “Maybe it’s time that someone says the unsayable–that online advertising just doesn’t work. A Web site turns out to be a not very good advertising vehicle,” says Michael Wolff, the Vanity Fair columnist who also runs Newser.

It seems that Wolff may not be an avid reader of Ad Contrarian, a man who dutifully waves the Online Advertising Sucks flag each week.
That online advertising sucks is a debate and a business problem that will not go away. We’ve certainly touched on this topic hundreds of times here at AdPulp, but what progress are we making toward solid answers to shaky questions? And what exactly are we, as advertising professionals, learning from this? Do we find it maddening or humbling?
Frankly, very few mediums have proven resistant to the advertising bug. Will digital ultimately prove resistant? I don’t think so. I think what’s already happening is we’re slowly learning to operate on slimmer margins. Companies like HuffPo are learning faster than most, which is why they have a fighting chance to be profitable over the long term.



About David Burn

I wrote my first ad for a political candidate when I was 17 years old. She won her race and I felt the seductive power of advertising for the first time. Today—after working for seven agencies in five states—I am head of brand strategy and creative at Bonehook in Portland, Oregon.