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.