January 16, 2013

Ramp-up Online Revenue with Matrix Advertising

By Stephen Laliberte

Print is not dead. It’s not even dying—witness the brimming magazine racks in bookstores and news kiosks—but it is definitely past its prime. An increasing number of traditional print publications now offer online versions to their subscribers and, in some cases, to non-subscribers as well. Many offer additional online material to augment their print offerings. Some technology-oriented publications have discontinued print entirely and publish exclusively online. And many new entrants to publishing are bypassing print from the start. Yet, if you compare ad rates for print publications to those of online pubs, you might still think that print was king. Cost-per-thousand impressions in print can be 1,000 percent—or more—higher than the cost of online impressions. Part of the reason is habit; part is questionable assumptions; and part is the market.

Habit

In its youth, no one really knew how effective online advertising would be or how to price it. Web site design was chaotic, so there was no way to tell if page visitors actually saw the ad or how long they stayed before flitting off on the wings of a whim or a hyperlink. Emphasis for early web participants was on growth, and since it cost little to show an ad online, competitors priced online ads cheaply, which is where prices have, for the most part, stayed.

In print, on the other hand, it was assumed that readers read from cover to cover. Impressions were calculated on the notion that every page was seen by every subscriber. And because print cost money—for ink, for paper, and for delivery—advertising prices started hefty and stayed there. These assumptions haven’t changed much, while the realities of both print and online advertising have changed a lot.

Assumptions

In the battle for eyeballs, print has been the loser, while virtually every aspect of online publishing has changed for the better. Content is better targeted, and design has improved enormously. Perhaps most significant, the ability to identify and track visitors and target the content and advertising they see has come a long way as well, though these capabilities have yet to be fully recognized and implemented. In short, using today’s best practices and technology, an online ad has a far greater chance than one in print of being presented to a suitable reader, of being noticed, and of being acted upon. In other words, using appropriate technology, the cost for well- targeted online ads could, and probably should, be higher than that for print. Unfortunately, the widely accepted low cost of online ads keeps publishers shot-gunning instead of sharp-shooting, trying to make up in volume for their low cost per impression. It’s a cycle that must, and in our opinion will, be broken.

The Market

As in any new market, there is a chicken-and-egg problem. Too many publishers and advertisers still see ad impressions as a commodity to be purchased at the lowest available cost. The publisher who targets ads based on identified audience and starts charging based on quality rather than quantity may pick up some insightful advertisers who recognize that all impressions are not the same, but may risk losing commodity buyers. It’s an age-old dilemma, but one that has been resolved time and again. Electric cars and charging stations are today’s chicken and egg just as gas-driven cars and filling stations were early in the previous century. We expect that old habits regarding ad pricing will change in much the same way.

An Inevitable Change

Every new medium needs time to sort out its business model. But with money as the motivation they do sort themselves out. Part of the challenge for online media is the speed with which they are changing. In just the last decade we’ve seen the transition from the strictly outbound Internet 1.0 to the two-way conversations of Web 2.0, the advent of mobile access, the appearance of social media, and the virtually instantaneous individual broadcast capability of Twitter.

With so much potential for distraction on the Web, publishers, with their regularly visiting subscribers and registrants to topic-specific sites, can provide a unique platform for advertisers. They can get to know their site visitors as few other content providers can, and can parlay that knowledge into uniquely effective service for advertisers through online matrix advertising.

Matrix-Based Targeting

Unlike print, in which regional editions and placement within the edition are the only ways to target advertising, an online publication can serve precisely-targeted ads in real time based on a wider variety of factors. Of course, the page being viewed is one, but the identity and demographics of the individual reader can also determine placement. So can that individual’s history, based on past visits and behavior. In short, an ad campaign can be individualized to the level of a single reader. For example, in an industrial campaign, a financial manager, a technical manager, and a sales manager could each see a different ad for the same product in the same online publication. A manger who has attended the advertiser’s web seminar could be served a different ad than one who hasn’t seen the seminar. With these capabilities, a publisher steps up from merely selling ads to providing advertisers with a sophisticated marketing service and can charge accordingly.

Deploying the Data

The first step toward providing this higher level of service is to turn as many casual visitors as possible into subscribers, or in the case of controlled circulation publications into registrants, by using effective conversion architecture. The second step is to maximize the collection of subscriber/registrant data including demographics and complete history of interaction with the publication. The third and most critical is to position all available data so it can be effectively used to select and deliver ads in real time based on content, subscriber identity, and subscriber history.

This could conceivably be done using custom software linking data in multiple databases, but that is expensive, time-consuming, and extremely difficult to support. A far simpler, more reliable, and more practical approach is to place and keep all relevant data in a single database. The technology to do so is available today. As in most technological change, early adopters will set the pace and typically establish positions before this technology becomes mainstream. There will be costs to making the change, but those costs should be quickly recouped based on additional services they will enable. And, as advertisers recognize the value of the matrix approach, first-movers will control the market.

 

For information on IProduction, our systems, and our capabilities, go to www.iproduction.com.