CBR Briefing #9

Feb 23, 2018

Sections Economics

How online advertising can support good journalism
Internet ad rates can be higher than in print, enabling online news outlets to pay for quality reporting

The perception that online ads are cheaper comes from a false comparison of ad prices measured in different units.
  • The newspaper industry is widely seen as unsustainable, partly because online advertisements are thought to be inherently cheaper than those in print. But a research paper by Chicago Booth’s Matthew Gentzkow finds that the price advertisers pay for the amount of time people actually see an ad—the price of attention—can, in fact, be higher online than offline.
  • By giving advertisers more ways to reach customers, the web increases competition and lowers ad rates. But it also allows advertisers to target readers more efficiently, which tends to raise online ad prices.
  • The perception that online ads are cheaper usually comes from a false comparison of ad prices measured in different units. Print ad revenue per daily circulation is often compared with digital ad revenue per unique monthly visitor, even though people spend far more time reading the news in print than on a website (see chart).
  • When the actual time spent reading news is factored in, newspapers in 2008 earned $3.79 in ad revenue per hour of attention online, compared with $2.78 in print. By 2012, the price of attention in print had fallen to $1.57, while the price of attention online had increased to $4.24.