{{ searchResult.published_at | date:'d MMMM yyyy' }}

Loading ...
Loading ...

Enter a search term such as “mobile analytics” or browse our content using the filters above.

No_results

That’s not only a poor Scrabble score but we also couldn’t find any results matching “”.
Check your spelling or try broadening your search.

Logo_distressed

Sorry about this, there is a problem with our search at the moment.
Please try again later.

Online content may be sexy, but even on the internet, turning a profit as a publisher isn't always easy, particularly if you rely on ad revenue to pay the bills. After all, today's advertising market has come a long way since the 1990s.

Advertisers have a seemingly unlimited array of advertising options, and the proliferation of ad networks and technologies such as retargeting mean that many publishers have seen their CPMs decline.

According to
an AdAge opinion piece by Tom Hespos, who runs a digital marketing firm, advertising is failing publishers.

He explains:

When publishers sell advertising on a CPM (cost-per-thousand impressions) basis rather than on a flat-fee basis, the value of content depends solely on the amount of traffic it can draw to websites and newsletters where ads are displayed. This dynamic has reduced too much web content to the equivalent of internet-forum trolling -- provocative pieces designed to "go viral"...

This leads Hespos to ask the $64,000 question:

What's the content creator's best bet for generating revenue? The simplest solution involves decoupling the value of the content from its traffic-generating ability. You do that by reaching an audience that's so valuable to an advertiser that they chuck the CPM model entirely and pay a flat rate to "own" your content exclusively.

This is a lovely idea, on paper. And the sponsorship model is something that some publishers do sell successfully to advertisers.

But a dose of reality is in order: digital advertisers are never going to completely decouple content from its traffic-generating ability to the point that lots of money is paid for media that nobody is looking at.

Even when display advertising is sold on a sponsorship basis, advertisers value the media based in large part on the number of eyeballs that media will reach. A website with high-quality content but a small audience isn't likely to sell its ads inventory for big bucks, unless that small audience represents a sizable chunk of the target market the advertiser is looking to reach, or the largest relative audience the advertiser can find for that target market. This is true whether ad inventory is sold on a CPM basis or a flat-fee basis.

From this perspective, the big problem with Hespos' argument is that all corporate advertisers, in the final analysis, advertise so that they can sell more of their products and services. Their end goal is not to subsidize content.

If advertising isn't providing publishers with enough revenue to survive and thrive, advertising isn't failing publishers -- publishers are failing themselves. After all, if they can't publish at a profit, and can't make content creation a worthwhile exercise for their content producers, it doesn't make sense to blame advertisers who won't pay $5,000 to advertise on a 'high-quality' article that generates 1,000 pageviews.

The publishers who aren't failing themselves -- and plenty do exist -- understand that advertising is almost always just a single component of a successful business model, not the only component. Advertising isn't all bad, but that doesn't mean that publishers should ignore components such as paid content, ecommerce, ancillary services, licensing and events.

Increasingly, they can't, because when it comes to maximizing the value of a piece of content (read: maximizing the revenue it generates), fewer and fewer advertisers are going to play the role of greater fool. Instead, publishers have to work their content. If they won't, they can't expect anyone else to do it for them.

Patricio Robles

Published 17 January, 2011 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

2391 more posts from this author

Comments (4)

Avatar-blank-50x50

Tom Hespos

While it's mostly true that advertisers aren't in the business of subsidizing content, in some cases they clearly are. This is especially true in the B2B space, where companies with a POV often can't find enough content to sponsor that is contextually relevant. For instance, if econsultancy wanted to contextually target a $10MM online ad budget, would it be able to find enough content (that wasn't already reserved by competitors) to do so? Probably not. The phenomenon isn't limited to the B2B category. Pharma and tech advertisers sometimes find themselves in the same boat. Putting oneself in the content provider's shoes for a sec (and let's assume we're a writer, not a linkbait farm that churns out top ten lists several times a day), it makes more sense to write consistently about something that's contextually relevant from an advertiser's perspective. That gives you the best shot at garnering a sponsorship and having the advertiser place less emphasis on the traffic numbers. We know that content pieces have value beyond the traffic they generate - what about the discussions they kick off in the social sphere? What about bookmarking, long-term impact and such? None of these things is accounted for in a CPM-based ad model. So what should a writer do? Well, unless you want to cater to the lowest common denominator, and you see your future as sitting behind a desk writing 5 inflammatory pieces a day in the hopes of trolling your way to the front page of the social news sites, you'd want to move toward the sponsorship model. The current model is unsustainable for most writers who contribute 4-5 thoughtful pieces a month to a publication. Those writers can either start churning out that volume daily and sacrifice quality, or they can go out and start writing thoughtful pieces that can be a lasting asset to an advertiser who wants to be associated with those pieces. Where else could the money come from? Content producers have to support themselves, you know.

over 5 years ago

Patricio Robles

Patricio Robles, Tech Reporter at Econsultancy

Tom,

There are very few advertisers who will shell out big money for ads when the properties they're sponsoring have very little traffic, unless a property's audience represents a sizable chunk of the target market the advertiser is looking to reach, or the largest relative audience the advertiser can find for that target market.

Put yourself in an advertiser's shoes. At the end of the day, your goal is generally to help your employer make more money, usually by selling more product. A publisher wants to sell you ad inventory. It doesn't generate a lot of eyeballs, its readers don't generally click on ads, and those who do rarely convert. But the content looks really, really good. How do you justify paying substantially more than the market rate for the ad inventory when what you value most (eyeballs, traffic, conversions) is minimal and what you value less (the content itself) is high.

What it seems like you're really saying is that publishers (and their employees) need to pay the bills, so advertisers should ignore important metrics that are inconvenient for the publisher so that they can have the privilege of overpaying for ad inventory. That is, of course, unrealistic. It doesn't matter whether you're charging on a CPM basis, or a flat-fee basis. You're going to have a hard time finding an advertiser who will pay $5,000 every month to sponsor four articles that generate 10,000 pageviews. It's like trying to sell a 2008 Mercedes-Benz S500 for $250,000 simply because you need $250,000. You may have a nice car, but it's not worth $250,000.

Bottom line: if you're a publisher and ads aren't paying the bills, you either need to sell better, or you need to diversify your business model. There are plenty of publishers (including Econsultancy) who generate revenue from more than just advertising. If you're a writer working for a publisher, and the publisher is unable to pay you a wage that you feel you need to make the job worthwhile, you should probably find another publisher or profession.

over 5 years ago

Avatar-blank-50x50

Roberto Hortal

I agree CPM is the worst possible option for both the content creator and the advertiser. However I can't agree with your conclusion that the solution is to sell all the inventory as a package for a flat rate. The sponsorship model is certainly easy to understand for both parties but it maximises neither the revenue of the media owner nor the value to the advertiser. In order to best prove the value of your audience to an advertiser -and maximise your revenue potential, avoiding committing all your inventory in advance- a media owner must explore CPA (affiliate Marketing) as the main Diaplay Advertising model. Advertisers like myself don't mind paying quite high CPA rates as we have no trouble justifying the investment on real sales. And media owners have the ability to develop their platforms, content and advertising capability to maximise conversions for a pool of prospective buyers, bringing back the competitive aspect of media buying that sponsorship removes and maximising the revenue generated by each content piece.

over 5 years ago

Toby Kesterton

Toby Kesterton, Head of Digital at Lab Lateral

I agree with Roberto that a CPA model solves both problems. Content creators can concentrate on quality rather than volume and expect to get a premium because of the users they attract. 

over 5 years ago

Comment
No-profile-pic
Save or Cancel
Daily_pulse_signup_wide

Enjoying this article?

Get more just like this, delivered to your inbox.

Keep up to date with the latest analysis, inspiration and learning from the Econsultancy blog with our free Daily Pulse newsletter. Each weekday, you ll receive a hand-picked digest of the latest and greatest articles, as well as snippets of new market data, best practice guides and trends research.