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The FTs New Online Ad Experiment

We look at the Financial Times' new online ad model

21May

The Financial Times was not known as the most progressive newspaper until a decade ago, mainly because it has a 127 year history and when you have that much time behind you, it can sometimes take time for changes to occur.

However, last week they managed to change the way that advertisers pay for ads on their site and it seems to have been fairly successful. This follows on from their successful online subscription service (or paywall) that has been widely emulated by other titles across the world.

The advertising change is one of the most significant and with their previous success with the paywall transferring to many other publications, it may be that this same approach is adopted by many others.

Traditional online advertising is charged based on impressions and clicks. They get a certain amount of money for the number of people who have seen an ad and then more money every time somebody clicks on the ad. The problem with this system is that the impressions could have little impact as there is no way of knowing how many people have paid any attention to the ad and click throughs are easy to falsify, leaving them open to abuse.

The FT have taken the idea of brand recognition and brought it into the online advertising space as they have found through their research that ‘Readers who see an ad for five seconds or more are up to 50% more likely to display familiarity and association with a brand’. It means that the more time people are shown a particular advert, the more likely they are to have recognition of that brand or product in the future, increasing the likelihood that the customer will make a purchase.

By charging advertisers a per hour rate, it means that ads are shown to readers for longer and in a far more targeted way. It allows for not only increased brand recognition for the advertiser, but also means a guaranteed income for the publisher. It is much simpler and more effective way of advertising that allows for a highly targeted campaign and 10% more time on page than traditional CPM advertising.

By using Chartbeat to help make the process more productive through data, the FT have put a system in place where advertisers are only charged after an ad has been seen in a prominent position for over 5 seconds. It means that rather than hoping that people have seen an advert through an impression or even if it is in a prominent position, paid attention to it, that they are almost guaranteed to have noticed it and are therefore more receptive to their message.

A new approach to paid advertising has perhaps been prompted by their announcement in March that they have slightly adjusted their paywall policy to firstly attempt to get more subscribers and secondly to increase their online ad revenue. They have given people the opportunity to pay £1/€1/$1 for the first month before paying the full list price in order to become full subscribers once that month ends. The thinking behind this is that the readers who sign up for the initial offering will develop a reading habit and feel compelled to sign up for the full product and that people will not be able to develop this habit with limited access.

A non-subscriber can also read 8 articles each month, which gives the FT the opportunity to advertise to them without the necessity to subscribe, further opening its potential to advertise to passing interest visitors or those looking for only specific subject matter.

The question is whether the new advertising model will be something adopted by others as it requires a considerable feedback loop and analytics based system to establish the validity of each ad and whether these five second have truly engaged the customer. Regardless of spread, it will be interesting to see how it works in future and whether this is a genuine game changer. 

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