Ad rates on digital are significantly lower than on print and TV.
Businesses pay top dollar for advertising on Print and TV. However, the same isn’t the case for digital.
- Reach: In TV and Print, the DAU/MAU is assumed 100%. The same isn’t true for digital.
- Targeting: Targeting is assumed in newspaper and TV. Most digital publishers have not enforced login struggle to build First Party Data. This makes it impossible to know socio-economic and demographic information about these Anonymous Audience. Hence, businesses pay lesser ad rates if one cannot Target advertisements.
- In TV and Print, all sales is Direct-sold. However, in digital a substantial portion is Indirect-sold.
- Bid down: In Digital, ad networks operate as bidding engines, i.e., the publisher that bids the lowest gets the Digital Advertisements. In contrast, in TV and Print, the businesses bid (up) to get space in a relatively scarce property.
- Cut: These ad networks can take up to ~45% of the revenue.
- Can’t monetize premiumness of platform: All businesses want to advertise on a premium Owned Identity, for example, a premium platform like The Times of India newspaper instead of an ad hoc billboard. Hence, Print and TV command premium rate. However, when advertising via ad networks, a business cannot say that it wants its advertisement to appear on a specific website. It could go to anyone who bids the lowest.
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