Users are able to use products for free because they give their time and attention which is then monetized through advertisements.
Companies invest in advertising for:
Companies will pay a premium for:
Indirect programmatic advertisement is bad for business and users. Yet, most companies adopt it because it is a relatively easy plug and play revenue channel.
The pivot to privacy brings in new opportunities!
Advertisements in print and TV give much more revenue than digital.
|Print and TV||Digital|
|How is it sold?||Advertisements in print and TV are sold directly by the news company. Given that, 100% of the revenue belongs to them.||Online, most quantity of advertisements is sold indirectly by ad networks. Given that, the publisher loses out 30-40% of ad revenue to the ad network.|
|How is reach measured?||In print and TV, it is assumed that the entire circulation (MAU) is reading.||Online, one can precisely calculate the DAU, which for most news websites turns out to be only 3-8% of MAU.|
|Brand Premium||There’s is a prestige to advertise with big news brands.||It isn’t feasible for brands to select that they want to advertise with a specific publisher.|
|Bid up or down||Sometimes companies will bid up to block out competitors from advertising on specific print and TV channels.||Ad engines force publishers to bid down, i.e., whoever has the lowest price will get the ad.|
|Implication on content||Premium content is valued.||All content is measured against page view. Hence, a detailed investigation is measured against a cat video.|
It is always advisable to have one major source of revenue and then diversify by having multiple minor streams of revenue that de-risk you from that major source of revenue. For example, YouTube’s revenue split is 1:3 between subscriptions and advertisements.
Why it matters:
There are different forms of revenue models:
Some of these revenue models can be in opposition to each other and make commoditized businesses complicated. This in turn mandates the need for propensity models.
Cost Per Mille: Businesses book a fixed number of impressions within a date range. Once the order is accepted, publishers must honor the impressions while maintaining reach and view-ability% within acceptable limits.
Advertisements sold via an intermediary ad networks like Google Ads, Taboola, etc.
Businesses pay top dollar for advertising on Print and TV. However, the same isn’t the case for digital.
In-house sales team directly sell Digital Advertisements solutions to brands without any intermediary. They look for giving brands more solutions to help them build their business.
There’s seasonality in digital advertisements sales.
An Owned Identity is something for someone and not everything for everyone. Given that, it is imperative that companies prefer to target advertisements. Hence, Ad-rates are higher for identified audiences compared to anonymous audiences.