OK, we hear you. We’ve decided to quit displaying banner ads to SDMB subscribers.
In light of all the uproar, let me give you some background on how this came about and where we think the SDMB is headed.
Unlike the old regime, the new owners of the Reader and the Straight Dope, Creative Loafing (hereinafter CL), consider the SD website and in particular the SDMB to be one of the company’s most important assets - but also one of its most underutilized. The site generates roughly 8 million page views per month, by far the most of any of CL’s online ventures. But that huge volume hasn’t translated into huge revenue. Depending on what costs you include, we’re either making a little money or we’re losing a little money. I take the rosy view, but we’re certainly not making a LOT. The grim fact is, we need to start taking in some serious cash soon. It’s not just a question of keeping the SDMB running. The newspaper industry, including alternative papers like the Chicago Reader, has taken a massive hit in ad revenue due to competition from things like craigslist - many papers have seen classified ad income drop by millions of dollars. Unless we want to gut the company - and we’ve already had layoffs - we need to replace that income. We’re not going to do it all through the online SD, but we have to pull in more cash than we are.
That brings me to banner ads. If you look at our ad rate card, you’ll see we charge an average of $10 per thousand “impressions.” (If you view one page with two ads on it, that’s two impressions.) We get an occasional buy on that basis but not many. A few companies out there deal in what are called “remnant ads.” If you have unused advertising inventory, they’ll fill it with banners and what have you. The amount they’ll pay for these ads is modest - typically $1 per thousand impressions - but if you have a lot of potential inventory like we do it adds up.
Of our 8 million monthly page views, 4.5 million are served up to people who pay no money for the privilege, including SDMB guests. These people have been seeing banners since September. The other 3.5 million are SDMB pages served up to subscribers. A couple weeks ago the CL guy in charge of online ventures, Pat, asked me what I thought about showing banners to subscribers. Thinking of the relatively unobtrusive banners that have appeared for years on the SD home page, I said it was worth a try. But we discussed no specifics. A couple days ago, with no warning to me, Pat told Jerry to switch on ads. As it happened, one of the first banners to appear was a Ford ad that flashes to giant size on mouseover and apparently emits loud sounds. (I don’t hear this on my system for some reason, so I’m just going by what I’m told.) It was pretty obnoxious and we’ve now had multiple threads with hundreds of posts and tens of thousands of page views from complaining subscribers. After lengthy discussion yesterday we’ve decided whatever money we make on banners isn’t worth driving off the paying customers. I’m not the boss of CL, but it’s pretty safe to say we won’t be showing banners to subscribers again.
The underlying financial situation remains urgent, however, and we’re starting to reconsider our business model. The change to P2P was a risky step for us but it worked out OK - we take in a slowly increasing amount of subscription revenue every year. At a time when you couldn’t give online ad space away, that money enabled us to keep the lights on and the hamsters fed. But subscriptions are never going to be a big moneymaker, and more important they limit our page view growth. Before P2P we saw enormous increases in traffic every year. Since then traffic growth has been more or less flat.
So we’re starting to think maybe we should start offering unlimited free posting again. I emphasize that no decision has been made. It’s too soon to say if remnant ads are going to be a dependable revenue source. For all we know the banner ad market could tank. If, however, it becomes apparent that more page views = more income, we may well decide to go to a two-track model. If you register, you can post for free but you have to put up with ads. If you subscribe, your SDMB experience remains bannerless.
As I say, we’re still thinking about it, but this sounds like a win-win approach to us. Subscription revenue and potential banner-ad income for 3.5 million PVs are close to being a wash. SDMB subscribers have made it clear that in return for their money they expect no banners. If we go to two tracks, they’ll have that choice - our revenue is the same either way.
I, Pat, Jerry and other CL folks will be meeting next week to discuss the above. If we go to two tracks, we’ll need to ramp up our server capacity in a major way, upgrade the software, and deal with the search lockup issue and other problems that have been too long postponed. This is not, repeat NOT, a promise. But I think you’ll agree this could work out to everyone’s advantage.
