Analyst: Publishers Need Ad Wall to Supplement Pay Wall

Forget the pay wall. What Web publishers really need to reinvigorate their business is an ad wall.

The concept of an ad wall, according to researcher Scout Analytics, is to make a portion of a site’s content accessible only if that user watches or views an ad placement. The idea was floated by analyst Matt Shanahan in a post [1] on Monday (Feb. 14).

Over the past few years, as the recession hit publishers hard and newspapers and magazines struggled to reclaim lost print ad inventory on the Web, the idea of charging users for content has gained steam. The New York Times is set to move forward with a subscription model shortly, though the company expects only a small portion of its audience to pay for access, leaving the company with a still-challenged online business model [2].

Scout Analytics, which helps publishers gauge and maximize their various revenue streams, is proposing a middle ground for publishers between a completely free site and a pay wall. Based on Shanahan’s estimate, the average Web content site is composed on "fly by" users—those who visit a site once or twice and would likely never pay for content—and a small group of loyal, everyday visitors who would be amenable to a paid subscription.

In between those groups are occasional and regular visitors, who make up about 15 percent to 25 percent of a site’s audience. Those users aren’t likely to subscribe but value the site’s content enough to sit through some sort of ad experience, said Shanahan. “The regulars and occasionals, as we call them, represent an opportunity for publishers to create differentiated advertising products for advertisers, such as an ad wall,” he wrote. “Users have to give time to get time.”

That sort of time-for-time exchange is foreign to most content sites. However, it happens all the time with video and gaming, said Shanahan. He cited the case of Hulu, where users endure pre-roll ads to watch their favorite shows, and WildTangent, which provides social gamers with free virtual goods in exchange for viewing ads.

So what's the impact of ad walls on pay walls? Won’t this make paying subscribers think twice? Shanahan said the opposite is true. “Ad units like ad walls are unlikely to erode any existing pay wall revenue because the fans that would pay for access would also likely pay to avoid the ad wall for convenience sake," he said. "It actually has the chance to generate pay wall revenue.”