When Publishers Pay to Buy Audience, Are They Getting Enough Return?

Many Lack the Expertise to Calculate If the Investment Is Paying Off

By Published on .

Most Popular

The publishing industry historically created great content, built their brands and attracted audiences organically. But publishers today are increasingly spending money to acquire more audience through links on other sites. They are paying to drive visits to valuable sections of their websites, to help with ComScore rankings and to pick up the slack on under-delivering ad campaigns or programs.

In part, the shift has been forced by the difficulties in securing organic traffic as a result of Google algorithm updates like Penguin 2.0, which diminished the value of keyword searching. The millions of dollars that publishers had been spending on search-engine optimization is now being used, in part, to market their content on new content-recommendation platforms such as Outbrain, Taboola, Conten.ad, Zemanta, Disqus and nRelate. Most publishers are paying for placements in widgets that offer links to related content, to drive people to their articles -- not just to products or services, the way some marketers use the tools -- as this is proving to be a solid way to build audiences.

But there's a catch. Many publishers are not trained or set up to measure the effectiveness, or return on investment, of this increased spending. In the past, agencies were responsible for delivering these metrics to their clients. Today, most of these publishers are going directly to the content-marketing platforms to purchase traffic. They create a campaign, upload the content, set a cost per click and launch -- the publishing equivalent of "Ready, fire, aim!"

Unfortunately, in their excitement to roll out a new traffic-acquisition campaign, publishers are failing to properly tabulate the costs involved. Before, when they were getting traffic from organic sources, their sole costs were the delivery and creation of content. They now need to account for the costs associated with acquiring the reader.

Assume you are a site owner, and it costs you about $.02 to create and deliver a page. You get all of your traffic organically, from search engines, referrals or directly. You sell ads at $30 per thousand impressions (good for you!), which equates to about $.03 per page view. At the end of the day, you make $.03 , it costs you $.02, you keep one penny and your margin is 33%. Well done.

But, now someone on your team decides to get more traffic by buying it from content-marketing platforms, where the going market rate is $.06 per click. This team member has a budget (using that 33% profit margin) and these platforms do their job of getting people to your site. They are successful and eventually a third of your traffic is from paid sources.

Now let's do the math. Three page views -- one via paid sources and two via organic sources -- deliver you $.09 revenue. However, those three page views cost you $.06 in creation and delivery costs and $.06 for that one paid click. $.09 – $.06 – $.06 = -$.03. Whoops.

Paid traffic is not the bad guy in this scenario. On the contrary, every publisher or marketer should have an active paid-acquisition strategy. Companies like Outbrain, Taboola and others are providing a valuable service. But publishers must be fully aware of the economic impacts of buying traffic and set their cost per click accordingly. If they can make the model work, they should be spending even more.

The takeaway: Publishers should go ahead and buy traffic, build their audience and business, make money and keep on producing great content to keep the machinery rolling. Just be sure, publishers, you're minding your CPCs.

ABOUT THE AUTHOR
Pete Sheinbaum is founder and CEO of LinkSmart.