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!
Ad Networks are AI-driven marketplaces owned by BigTech. These AI models are optimized to maximize revenue for the BigTech company. These models keep pushing the boundary of what is the lowest eCPM they can pay out. So if Hindi eCPMs are at Rs. 10, they will keep pushing the floor to Rs. 9.90 across a couple of months.
Hence, it is critical for news publishers to invest in AI to reverse push the boundary of the floor price up until the sell-through drops. By playing on buy and sell, you could see a 25% increase in programmatic revenue. Revenue from advertisements is seasonal. Hence, of course, do this during high-demand months (Oct-Nov-Dec) and play it conservatively from Jan 1.
Programmatic and direct digital eCPMs are facing significant challenges, especially when it comes to the Hindi market where eCPMs are as low as Rs. 10.
Based on the discussion within the cohort, we’ve come up with some rough estimates regarding India’s digital advertising market.
Changing scenario: With third-party cookie deprecation, Google’s revenue is expected to drop, and so is that of news publishers.
The direct sales pie is degrowing.
Businesses pay top dollar for advertising on Print and TV. However, the same isn’t the case for digital. Here’s why:
We’ve lost access
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:
How: There are different forms of revenue models:
Downside: 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.
This is because most products cannot always be targeted. For example, a specific SUV might be targeted towards off-roading enthusiasts but an urban professional who had a recent hike might also buy it not because the product was built for him but because they can.
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.
If brand marketing or display advertising were only a matter of recency and frequency at the lowest possible cost, then brands would advertise on low-cost conspiratorial or explicit sites. However, this would negatively impact the brand of the business.
On the upside, brands want the credibility of the publisher to transfer to them. At a minimum, by advertising with credible publishers, brands avoid unnecessary public backlash. This is why businesses prefer advertising with credible news products over any random blog. This is also the reason why celebrities get ads but not everyone else. However, on news sites too, brands would not want their advertisements next to sad news — crime, rape, death, war, etc.
Below are some of the factors that contribute to premiumness:
Google is a company that earns money by running targeted advertisements. A key variable in their business is to be able to uniquely identify users. Hence, they invested in building and giving away for free high-utility tools — Gmail, GDocs, Android — that users will need in their daily life and wouldn’t mind logging into.