Knowledge Bridge

//Kevin Anderson /September 28 / 2012

Malaysiakini doubles revenue with premium ad strategies

Independent news website and MDLF client Malaysiakini has been able to double its advertising revenue in the past year by moving up the advertising value chain.

They have aggressively developed their premium advertising sales, which deliver 10 times the revenue of advertising from ad networks.

The site boasts 2 m unique readers in four different languages, English, Bahasa Malaysia, Chinese and Tamil, and Malaysiakini tells prospective advertisers that the site has more than 40 m page views each month.

But traffic alone isn’t the key to success. The site has hired measurement companies so that they know the demographics of their users, which is key for their three-to-four person sales team to attract premium advertisers. You don’t need to have as large of audience as Malaysiakini to be successful, but you do need to follow their lead in knowing the demographic details of your audience. As Chia Ting Ting, Malaysiakini’s senior advertising manager, says, that is what you sell to advertisers.

Chia also says that creative advertising development is essential in helping to counteract “banner blindness”, the tendency of online audiences to filter out commonly used advertising areas. Sites must also be prepared to develop “super-premium” advertising if they want to attract top-rate advertisers that can deliver significantly higher than the normal revenue of fixed ad spots.

The advertising mix on Malaysiakini

Malaysiakini has two types of advertising: premium buy and ad networks.

For premium buy advertising, the website charges a daily fixed rate, which guarantees the site a set amount of revenue regardless of performance. They charge roughly $6,500 for the leaderboard position on their homepage for one week.

In contrast, ad network rates are performance based, depending on CPC or CPM, cost-per-click or cost-per-thousand impressions.

Last month we examined how advertising networks can provide a revenue base for a new site, but as we noted, as your site grows, ad networks will play a smaller role in your revenue mix. Ad networks now only represent less than 10 percent of Malaysiakini’s revenue, and Chia makes sure that the site does not give premium placement to ad network advertising because premium ads deliver 10 times the revenue of ad network sales.

The focus on premium advertising is integral to developing the perception that Malaysiakini is a high quality site. Advertisers also know that if they see a lot of ad network inventory that the site isn’t able to sell that advertising space, and “that will affect the brand in the market,” she said. It is important to view advertising as part of the content on your site because, as Chia says, quality advertising will reinforce the perception that you provide quality content.

This isn’t to say that Malaysiakini spurns all ad networks, but Chia makes sure that they use ad networks whose content isn’t easily identifiable. They also use ad networks that can deliver advertising from high quality advertisers, such as the government-linked companies in Malaysia like Petronas that might not otherwise advertise on an independent news site like Malaysiakini.

Growing premium advertising

To get into a position to pursue premium advertising, traffic is a major factor. Once your site reaches a certain level, you will be able to engage ad agencies to help you sell your inventory. But in addition to raw numbers, you’ll want to use web analytics and audience measurement companies to understand the demographics of your audience. “A demographic is the main product for you to sell in the advertising industry,” she said.

Your content will determine the type of readers your site attracts, and specific types of content can help attract unique audiences that advertisers want to reach. “How unique is your readership? The readers are a community you build up for your site,” she said. She gave the example of a site for mothers. Such a specialist site, or it could be a special section on your site, may attract relatively low traffic, but it attracts a unique audience that certain advertisers will want to reach.

Using the example of the motherhood site, she said that it is not enough just to target mothers with your content, but you will also need to know their age and their household income. To get this level of detailed information, you will have to hire a measurement company, such as comScore or Effective Measure, she said.

Using Malaysiakini as an example, their content is focused on politics and issues related to Malaysia. “We know that politics interest business people and highly intelligent people,” Chia said. In promoting itself to advertisers, Malaysiakini emphasises that 65 percent of its readers are managers or professionals who have relatively high incomes, an attractive demographic for advertisers.

Beating banner blindness

Chia also stresses the importance of creativity in advertising, especially in terms of providing dynamic advertising design and also in providing unique advertising experiences that will attract super-premium advertisers.

One challenge for digital advertising is that readers soon ignore ads, leading to what some call banner blindness. Web usability expert Jakob Nielsen has used eye-tracking software to show how many web users completely ignore areas where advertising is commonly displayed.

In 2009, AdAge celebrated the 15-year anniversary of the first banner ad on the worldwide web. In May 1994, the age of internet advertising was born with the first banners on Hotwired.com, part of Wired magazine’s family of websites. In 1994, there were only 2 m internet users in the US, and the first advertisers included MCI, Volvo and Club Med. The reaction, especially by today’s standards was stunning, with a 78 percent click-through rate (CTR). Now the average CTR is about 0.1 percent, and on Facebook, it’s even less, dropping to half the web average, according to webtrends.

To drive continued revenue growth and beat banner blindness, Malaysiakini have created very premium ad spots they call online billboards that are not fixed and do not run everyday. To help prevent advertising blind spots, Chia also advises the tech team to change the ad location every six months.

To compete in the digital advertising market, you can’t stand still, and you need to be thinking creatively about what new products you can bring to market. “You always need to be creating new products for the advertising industry. At Malaysiakini, we think what kind of ad format or ad slot can we create that are very premium,” she said. They hope to be able to charge a daily rate of half what they now charge for their leaderboard spot for seven days.

Bringing new advertising products to market produces more inventory and can help create on-demand, premium products to attract the highest paying advertisers. Advertisers are now pushing sites to go beyond fixed positions and asking for custom advertising products. You’ll need to be in a position to take advantage of that opportunity if it arises. Chia believes that these custom, super-premium ad products will allow them to charge 100 or even 200 times the fee of traditional fixed position advertising.

Malaysiakini’s success shows that it is possible to rapidly grow digital advertising revenue to support your editorial ambitions. To effectively compete against not just other news organisations but other digital advertising options, you’ll want to follow Malaysiakini’s lead in developing your premium advertising offering. Build your audience, and use web analytics and audience measurement companies to understand the demographics of your audience. Then work on new advertising products to satisfy your premium advertising customers and prevent banner blindess.

Article by Kevin Anderson