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Summary:

Media buyers don’t expect the New York Times’ online ad revenue, which was up double digits last year, to take a hit from the company’s new…

NYT on iPad for Breakfast
photo: Corbis / David Brabyn

Media buyers don’t expect the New York Times’ online ad revenue, which was up double digits last year, to take a hit from the company’s new digital subscription plans. Some even see a scenario where the NYT will be able to charge higher rates — if the newspaper hits the expected number of “heavy users” which may offer proof of “more engaged” readers.

When it comes to digital ad revenue, the NYTCo’s experience has mirrored most major publishers. In Q4, digital ads remained a particular bright side in general, as that segment rose 11.1 percent to $113.2 million. Citing a “volatile ad market,” the company experienced a 7.2 percent drop in print ad dollars.

For the full year, the NYTCo’s digital revenues grew 14.8 percent to $387.3 million, with digital ad dollars growing 15.9 percent to $341.4 million. In total, digital businesses accounted for 16.2 percent of the NYTCo’s revenues for 2010 versus 13.8 percent for 2009.

As paidContent’s Joseph Tartakoff estimated, the NYTimes.com could attract at least 500,000 new online subs, or roughly 10 percent of the NYTimes.com’s “heavy users.” NYTCo (NYSE: NYT) executives previously figured that about 15 percent of its web audience are “heavy users” and thus amenable to paying for total access. Since the NYTimes.com’s paywall is particularly porous — breaking news, search and social media links don’t count towards the meter — the dropoff in online readership resulting from the pay model probably won’t be that drastic. That should protect advertising.

Plus, the paywall is structured to reward print subscribers, by allowing them complete digital access without additional costs. It’s conceivable that by retaining its print subscribers, where the rates typically are higher than online, the NYT will be able to realize more revenues by setting up new advertising packages across print and the web.

“At first glance, it seems as if the Times is doing its best to play both sides of the walled garden fence, with enough free access via the front page, social, first ten articles, etc. to stay relevant to advertisers looking for broad quality audience,” said Tim Hanlon, CEO of IPG Mediabrands’ Velociter. “The tough part will be how they sell and how agency buyers will buy a more sophisticated targeting environment inside that wall — where quality, not quantity, is the value.”

Several other media buyers I spoke with said largely the same thing. But most were reasonably confident that NYTimes.com will be able to convince advertisers of the value of this paying audience. The big buzzword among advertisers these days when it comes to display advertising is “engagement.” (The concept is still a little nebulous, but the general agreement is that time spent, sharing and recent frequent visits plus other metrics add up to something like engagement.) People who pay to access a site will be more likely to reflect that higher level of activity on the site.

One area where the NYT could run into some trouble is in its deal with Apple (NSDQ: AAPL). Many publishers have groused about Apple’s resistance to sharing consumer information for subscriptions sold through iTunes. It’s not clear if the NYT will receive any special treatment from Apple in terms of having more access to information about subscribers through that system, once that option kicks in to the iTunes App Store on or around June 30. But even if the NYT gets more than is usually assumed, it will surely be less than what it’s used to, making ad planning a little more difficult. That said, there are ways of researching the NYT’s Apple subscriber audience, so this aspect isn’t likely cause too much harm to the NYT’s revenue efforts either.

AdAge: The NYT has already found one way to make the ad-supported model sync up with the meter. Described as “one more loophole to its online pay-meter scheme” a pop-up ad from Lincoln will is advertising “Free, Unlimited Access to NYTimes.com” for the rest of the year — a $150 dollar value. But it’s not for everybody. Only 200,000 of the NYTimes.com’s “heaviest,”non-print subscribers will get to see the offer. Lincoln anticipates half of that 200,000 will actually activate it.

  1. What would make sense is to offer a *bundled* subscription: You get several major magazines and several of the best newspapers for one price. Like cable television.

    No one expects it to be free and you get a lot for your money. By contrast, the Times digital subscription is a total ripoff when you consider what you are getting: only one newspaper.

    What if you like to read a wide variety of magazines and newspapers? Pay twenty to thirty five bucks a month for each? You might say, well you get twenty articles free, but as other paid content sources have shown (there is a current article in the Atlantic by someone from the Financial Times indicating how they chopped their free articles from thirty to ten), they will probably start with that, but ramp it down and eliminate all those free article over time.

    Plus they will eliminate the ‘loopholes’.

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  2. Greg Golebiewski Friday, March 18, 2011

    Don’t say!… So Rupert Murdoch might also be right saying that nobody (but Google) needs search traffic any longer? What a surprise?…

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