Saturday, March 25, 2006

Why don't books have ads?

This is the start of stream that I think will take a little while to resolve. Recently, I have been researching on the role of advertising in selling information content (most notably, television). While preparing a presentation on this I wanted to summarise options with a traditional 2x2 diagram (the staple of MBA courses).

Here are the dimensions: (pay or not) for content versus (ads or not). And some examples:
  • Free/Ads: broadcast television/radio
  • Free/No ads: public broadcast television/radio
  • Pay/Ads: pay TV, newspapers
  • Pay/No ads: DVDs (some), books
It is the last one that got to me: books. Why don't we see ads in books?

The reason I was interested in this is because it seemed to me that if you were selling information and there were advertisers willing to pay to be part of it, then you would be better off by selling some advertising space, reducing books prices and selling more books. [Stay tuned for a formal, technical proof] But, of course, we never see advertising in books.

So why not?
  • Too costly to print: doesn't seem plausible as magazines find that OK and they have colour glossy ads
  • Readers won't look at ad: but if The New Yorker or The Economist can have ads, why not some trashy or popular novel? Why not a textbook?
  • Authors won't wear it: well, maybe JK Rawlings, but Dan Brown or Michael Crichton or some unknown.
  • Publishers don't want it: if there is profit in it, why would this be the case.
  • Libraries won't wear it: OK, then provide a special version for libraries without ads. Often they are charged more anyway.
As you can see, it is a real puzzle as to why there are no ads in books. Actually, some books have ads for other books but why not Coke?

Actually, it gets worse. Think about a textbook such as mine. If you put ads in a textbook, the good news for publishers is that they last beyond the one reader even as textbooks are sold and resold on second hand markets. In contrast to the purchase price, this is a stream of revenue that is robust to resale.

I can't provide you answer here but apparently a few have asked the same question before. Jason Kottke had a "horrible thought" in 2003: what if books had ads? An interesting debate ensued but no one really provided an answer as to why publishers/authors do not find it profitable even if the world might be a worse place as a result.

One thing that was pointed out was the product placement had occured in books (as they do in movies). Here is an example. Of course, that is somewhat more costly than ads and easier to see why it is not more common.

There were also some examples that publishers may have tried this before. Here is an example from 1971. These historical bits are worthy of more investigation than I have had time to do yet.

But more recently, in February, 2006, Harper Collins allowed one book to be provided free on the author's website while also selling it the traditional way. The publisher and author agreed to share the ad revenue generated by the site traffic. The book is Go It Alone by Bruce Judson. You can read it here. It is basically a self-help book for would be entrepreneurs.

Apparently, Russian and Urkranian authors got in on the act earlier.

Anyway, I'd appreciate any comments you might have on this issue.

7 comments:

Matthew Kwan said...

Three possible reasons spring to mind:

1. Customers won't wear it. Perhaps the value customers place on having an ad-free reading experience is greater than what advertisers are willing to pay. Of course, that's not an issue for prescribed textbooks, where the customers have no say in the matter.

2. Most advertising is time-sensitive, but books have an indefinite shelf-life. Ads depreciate at different rates (eg a job ad vs an ad for a business school), so the value to an advertiser depends on the average (depreciated) value of the ad across the entire (physical) print run. As a result, not many ads will be cost effective.

3. Readers will ignore them. Especially true with novels, where readers are engrossed in a continuous narrative.

Not my real name said...

Why not? Because aaaahhhh it would be terrible!!!

In all seriousness, things like textbooks remain useful after the course of study is complete. I know I have never sold a law textbook second hand. If there were ads in these texts, one view is that I would be exposed to these ads throughout my practising life. The other view is that I wouldn't bother purchashing the book in the first place and just borrow it from the library whilst studying. The thing is that even textbook information is relatively freely available. If a text does not provide a concise, uninterrupted explanation of its material, people just won't bother purchasing.

As for novels, I agree with Matthew. My guess is that readers are willing to pay more to not have an ad than have to 'search' for the continuation of the story.

However, now that I think about it, lots of my 19th century books have ads in them for, usually, other books by the same author. These ads, if removed, severely reduce the value of the book. Quite interesting, in the end.

Andrew said...

I think Matthew is on the right track, particularly in point 2. I have written in more detail on this at my blog: http://badanalysis.com/catallaxy/?p=1655

Tony Healy said...

I provided some reasons for this on Andrew's blog.

1. Books have relatively small print runs compared with other print advertising media. Magazines and newspapers offer advertisers 100,000 to 500,000 readers in Australia, whereas only a handful of best selling books sell more than 100,000 copies. What’s more, book publishers cannot identify best sellers in advance, or even provide accurate advance estimates of sales, which are required by advertisers.

2. The impact of advertising in a book would be dispersed across a long time whereas magazines and newspapers offer immediate dispersion of the advertising message. This better suits the needs of advertisers, who are generally promoting new products or services, or providing tactical fixes to marketing problems.

3. Including pictures or photos in a book, as required by advertising, adds significantly to the printing costs. Further, advertisers these days require the highest standards of colour printing, which pushes the cost even higher for books. Advertising revenue is unlikely to cover those costs, especially given the intense competition from other print media.

maynard101 said...

can student be save in assuming that your man.ec classes will be free of commercials?

Joe Yap said...

Actually, the one dimension you missed was : Advertisers won't pay for them.

When it comes to selling adspace, there are three dimensions advertisers consider - Who the audience is (demographic profile), how many are there (quantity), and how do they 'consume' the ad (pattern of readership).

Advertising is paid publicity. When an advertiser pays for something, they must exert control over it. Even if a book was a best-seller and aimed at one demographic group, because it can take a while to read, it's hard to control how the ad is 'consumed' (e.g. today, or over the next month).

A gossip magazine on the other hand understands its readers, how many they have, and how they tend to consume its contents (e.g. in the hair salon, every fortnight, before the next issue comes out)

So unless publishers have a good way of measuring their audience, I'd suggest that ads wouldn't be appearing anytime soon.

Just as an afterthought, perhaps a good way to get around this problem is not so much direct advertising in books, but using books to 'sign up' members (potential advertising recipients) or directing them towards resources which can be more easily measured (blogs, etc)

Anonymous said...

Essentialy due to the time sensitivity, books are not a relevant medium to advertise traditional advertising campaigns.

There are however different forms of commercial communications which have been in books for many years. Suggestive selling - other works by the same author or other similar works by the publisher.

With regard to your 2x2 matrix, I would suggest that Internet advertising is an interesting medium to investigate. While most people write it off as popup ads, there are some highly engaging and interactive forms of communications which should not be ignored. Entertainment and retail financial services sector are taking this medium very seriously. The budgets and investment required for this medium have also changed dramatically over the past 2 years.