Going Subscription

May 13th, 2007 by Chris

I tell you what, I don’t like the outlook for Internet advertising.

Ad companies are making lots of money, Internet advertising is growing, and companies like it because it works.

But for publishers, all I see is revenue decreasing on the same or more traffic, especially from ad blockers. I now notice a significant gap between ads shown and impressions delivered and that gap is getting larger and larger, approaching 40 or 50%, thats crazy.

Things like preroll video ads are poised to take off, but if you aren’t running a site with video that won’t help you. What would be really useful is if ad networks stopped focusing on popunders and instead worked to sell and perfect the interstitial, as that unit is more insulated from ad blockers than any other type.

Granted, there are many unscrupulous people out there who use banner ads or popups as a vehicle to spread spyware, so there is a security reason to block some ads, but these ad blocking providers go too far with blocking all ads, even benign ones, much like the way that they have lied to the public about cookies.

Ecommerce is great because you cannot adblock it, much more reliable form of revenue. Also, you need far less traffic to make good money with an ecommerce site than with a content site. So I’m glad I’ve diversified my income stream and have my ecommerce sites. Additionally my foray into manufacturing should pay off very nicely as well, eventually eclipsing my revenue from all other sources. Finally, I have 2 sites in development that use affiliate marketing in an incentivized way that makes users want to make sure they give you commission, so no worries about ad blocking there.

However, that still leaves my content sites I already have, and as far as I can see the best option will be to make them subscription sites.

So this Summer I plan to add subscription features to my literature site. The base level will just to be turn the ads off, and at this time I’ll probably add anti-ad blocker code to point people to this subscription if they do block my ads. I plan to have this one be $5 per month.

Then, because so many students & teachers use my site (I get thousands of incoming links from online syllabi), I plan to add additional tiers of subscriptions for specific groups. A library subscription will be $20 per month and allow up to 10 computes simultaneous access. A teacher subscription will be $30 a month and allow 1 teacher account and 30 student accounts with value added features such as annotation works for the students, tasking them to complete online quizzes, a notice board blog, private messages, and a file upload homework submission function. Finally, a district level account that is $300 a month and allows 20 teacher accounts.

Now, this site gets around 1.5 million uniques per month (true monthly uniques, not just daily uniques * 30 which would be much more). So even if my conversion rate for subscriptions is 0.001%. That is 1500 subscriptions a month, which is a huge number considering in 10 months at the same rate I’d have 15,000 subcriptions (minus any cancellations of course). Realistically I think I could expect a far lower conversion rate, around 1 ten-thousandth or 0.0001%. Which is still 150 subscriptions a month.

So really, I expect that 6 months to a year after launch the subscription revenue should pass the ad revenue from the free half of the site. It should only grow after that, I could see it reaching as much as $50k per month. That type of revenue would additionally allow me to hire more people, full time in house even, to add content and features to the site, which should entice more subscriptions, etc.

If you run any big content sites like I do, you might think about doing something similar. It might cost me $1-$3k to have the coding done for this system, but I’m sure that’ll be earned back really quickly, and everything beyond that is profit.

4 Responses to “Going Subscription”

  1. Ken Barbalace  Says:

    As many know, for several years I was doing exactly what Chris is proposing above and I even wrote an article on this issue for Chris entitled “Ad-blocking – History, Impacts, Techniques and Countermeasures“.

    While I was able to create a script that was extremely robust against even the most persistent ad-blocking programs I also found it added a tremendous amount of code bloat to pages.

    I’m not happy to see only around 80% of my page impressions result in AdSense impressions, at the same time I wasn’t satisfied with what was required to successfully detect and block people who were blocking my ads, because it slowed down the loading of my pages for innocent users.

    When I first implemented my ad-blocking countermeasures it was because my web hosting expenses were increasing faster than my advertising revenues. I saw blocking users who blocked my ads as an effective way to control the growth of my bandwidth needs by driving away those users who offered me no opportunity to earn compensation to offset my expenses.

    I still do not like people blocking my ads, and I still view it as theft of service, because those who block my ads are benefiting from the services I provide while denying me the ability to be compensated for my efforts. If someone wants ad-free access to my site they should be willing to subscribe to my ad-free option. I feel, however, that this more as a philosophical issue not a business issue.

    From a business standpoint, I just don’t see the business justification I once did to block those who block my ads. Bandwidth and web hosting has gotten really cheap so those users who are blocking my ads are not really increasing my hosting costs the way they were a few years ago. At the same time by eliminating the HTML and JavaScript bloat from my pages by eliminating my ad blocking countermeasures, I’m able to provide a better end user experience and thus provide better service to my “paying” customers (those who allow ads).

    Maybe another reason I stopped blocking those who blocked my ads was because I was the only one who had effectively implemented such countermeasures. Thus I had become a lightening rod on this issue. If I had not been the loan web publisher “tilting at windmills” on this issue, it might not have seemed like such a lonely battle. I believed in the fight but felt I might have been harming my site. In effect I was the lone “warrior” on this issue and that had become an unwelcome distraction.

  2. Chris  Says:

    I added a ‘get rid of ads’ subscription options to a fairly large site (30,000+ members) about 2 months ago and haven’t had a single subscription. Going for about the same price point.

    I don’t really think anyone will pay unless they are recieving a specific product in return. You can build this into a recurring subscription for continuous access to the site but you need a product that people will buy anyway to get them subscribing.

    I have seen examples of subscription working on mobile phone sites where the users are sold programs or ring tones as part of the subscription. This is the kind of incentive I think is necessary as just removing ads doesn’t really work in my experience.

  3. Chromate  Says:

    Yeah, to be honest I don’t think you’ll get even a 0.0001% conversion. I wouldn’t be surprised if you got less than 10 subs a month. Nothing to do with the quality of your site, but more the type of site it is. Hope you prove me wrong though ;)

    Personally I haven’t found the advertising situation to be so bad. People are increasingly blocking ads, and ad revenue is on a downward trend, but I’m finding traffic growth (for whatever reason) easily counters it.

  4. Chris  Says:

    Don’t forget it isn’t just to turn off the ads. There will be value added features and I definitely think I will get teacher signups, I have quite a few teachers already who use my site directly within their classrooms.

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