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You are here: Home » The Marketing Diary » Real-life Marketing Experience » My 'Finance' Balance Sheet: Profitability and Advanced Ad Formats [part #2]

September 27, 2004

My 'Finance' Balance Sheet: Profitability and Advanced Ad Formats [part #2]

We continue with a run-down of what we achieved at the business daily during my time there ... and most importantly how.

2. Becoming one of the most profitable EU news media internet departments

Our internet department has become one of the most (and also one of the few) profitable European Union news media internet departments.

We already became profitable in 2003, but really raised the bar in 2004 (an app. 1200% increase in total profits January-August 2004 in comparison to 2003). The department's financial plan for the entire 2004 has already been exceeded by 53% by the end of August, and there is still a long way to go until the end of the year.

The question again is, how we did it and also what kind of consequences this can create ...

a] The largest part of increased profitability is due to a huge increase in our internet ad sales, which is the consequence of improved ad sales activities, coupled with internet ad market growth.

b] We introduced new profitable internet projects in 2004, most especially e-book publishing. Namely, we diversified our income structure to generate additional revenues and at the same time gain a sufficient level of independance from advertisers, because I (mistakenly) feared the internet ad market might regress.

c] We implemented a fairly aggressive cost cutting strategy, minimizing most costs. In addition, some of our human resources costs (news reporters that work for both the print and internet editions) are covered by the editorial department.

d] Taking a broader viewpoint, it's quite easy to see that the increase in profitability was mostly due to our increased efforts to monetize our internet efforts, generating as much profit as possible. All of our actions were focused on this goal: increasing profits.

This is fine, of course, especially from the viewpoint of our owners, however, there is a negative side as well. Because most of our efforts were invested in increasing profitability, we actually made very little progress in terms of strategic development.

Yes, our profitability increased tremendeously, but what does this mean for the long-term? Now is the time the company should start re-investing back in to the project, asuring its further development and supremacy on the Slovenian internet market.

3. Introducing new internet ad formats in Slovenia

New internet advertising formats were one of the key elements that positioned us as the most cutting-edge internet ad property in Slovenia and helped us reach the #1 position on our market.

a] We started with full-page prestistial ads that launched before the visitor reached the web site and lasted for 5 seconds, and also 5 second full-page commercial breaks.


The Gambit Trade full-page prestitial ad

These ads achieved an average CTR from 2,2% to 5,6%, which is much better than the average CTR for standard ads (app. 0,5%) and slighly worse than standard floating ads (app. 7%). It is however important to understand that the goal of full-page ads is normally increasing brand recognition.

The problem with these was the effect they had on our visitors. Yes, the advertisers achieved excellent visibility, but our visitors aggressively complained against ads that block access to content.

The complaints became so loud that we eventually had to increase the cost-per-impression for full-page ads, making them 30 times more expensive than standard 468x60 px banner ads.

By doing this we greatly decreased the demand for full-page advanced ads, but also at the same time increased the demand for smaller floating ad formats, such as the 250x250 px (10 times the price per impression in comparison with standard ads) and 500x500 px (20 times the price per impression in comparison with standard ads).

Luckly, our users stoped complaining as much and eventually got used to having to put up with out-of-banner ads.

There is an important lesson to be learned here: yes, internet users are over sensitive to aggressive internet advertising, however, if the content you offer them is relatively unique, they'll complain somewhat, but will eventually get used to the new normative.

b] To help key advertisers achieve maximum impact in the shortest possible time when launching new products, we offered them a front-page surround session, giving a single advertiser every ad spot on the front page & matching the web site's background color with the advertiser's brand. They could combine this with full-page prestitial ads, and then fortify the effect with an additional 1 month of advertising on the web site.

We had about 3 surround session advertisers, all extremely happy with the results.

For instance, the first surround session (for a mobile telecommunications provider) achieved a greater than 2,5% CTR, while the average CTR in Slovenia is around 0,5%.

c] At the same time we also wanted to achieve more with advertisers that rather present themselves through content than though blatant ads. This meant offering them their own advertising supplements and consulting sessions for our visitors.

Unfortunatelly, the interest for this was only marginal. I still strongly believe this could become a very popular opportunity for advanced B2B advertisers, but I guess someone else is going to have to prove that:)

To be continued tomorrow ...

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