How Online Advertising Is Failing Content (And What to Do About It)

Selling Ads Based on Traffic Will Always Yield the Lowest-Common Denominator

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Tom Hespos
Tom Hespos
Would you like a publisher to pay you for lending your content to their website? You'd better hope your publisher has an ad-sales person who can sell sponsorships. Otherwise, you're doomed to be evaluated solely by the traffic-driving ability of your content.

I don't come to this conclusion lightly. I've published a digital marketing column across several marketing-related publications since early 1998, and I'm convinced that without sponsors willing to pay a flat rate to appear adjacent to my content on a consistent basis, my content wouldn't generate significant revenue for my publishers.

When publishers sell advertising on a CPM (cost-per-thousand impressions) basis rather than on a flat-fee basis, the value of content depends solely on the amount of traffic it can draw to websites and newsletters where ads are displayed. This dynamic has reduced too much web content to the equivalent of internet-forum trolling -- provocative pieces designed to "go viral" by sparking controversy and outrage. Publishing top 10 lists that few people agree with, politically charged short video clips and other pieces of "link bait" that aim to get people to express a contrary opinion has become a viable online publishing business model. Just ask

These terrible economics apply to pretty much every ad-supported content creator who doesn't write celebrity gossip. Understanding the mechanics of this kind of buying vs. the growing trend in audience buying will help you better understand what is driving that trend, and how best to deliver value -- and audience -- for your clients.

The trouble from a writer's perspective is that stratospheric multimillion page view content pieces are few and far between. A provocative blog post or column that snares 80,000 to 200,000 page views can be considered a success. CPMs vary rather wildly across publishers, but let's assume that the ads surrounding this content are sold at a modest $5 CPM. Let's further assume that each page runs three ads. That means a column that gets 80,000 to 200,000 page views would gross the publisher anywhere between $1,200 and $3,000. It's not a lot, and it assumes that the publisher can sell 100% of the ads on your content on a CPM basis. Usually, some ads in the mix are sold on a cost-per-click or cost-per-action basis, meaning that unless the people who read your content also love to click on ads and buy stuff immediately after clicking, your yield will be lower.

Note that we haven't yet subtracted any of the publisher's overhead from these totals yet. Serving the ads takes a certain percent, as does paying the editors, the people who upload the content, the bandwidth providers, and any other overhead associated with maintaining a stable of writers. Not much left to spread around to the writers, is there?

But what about amazing technologies like behavioral targeting (BT) that boost the CPMs that ad sales people can charge for content? How much money does that add? Not much. In its current form, BT can't be the content creator's savior.

As far as the editorial side is concerned, there are two kinds of BT: Solutions used by the publisher, which raise the CPM, and solutions used by a network or ad agency, which don't. The latter enable ad agencies and ad networks to cherry-pick desirable prospects from a sea of untargeted inventory. Publishers don't know why that inventory is desirable to the advertiser, so they're unable to extract the maximum value from it.

Your best bet for increasing CPM through BT is to align yourself with a publisher that has its own system for targeting ads behaviorally. In this scenario, a publisher knows what the addition of behavioral data is worth to the advertiser, and the CPM goes up accordingly. Unfortunately, no publisher I know has enough data on its users to be able to target 100% of a given content piece's inventory in this fashion. One reason is that data profiles don't exist for every single user on the website. And if there's no data, there's no targeting. If you're hugely lucky, you can sell 50% of your ad inventory at a higher CPM, netting your publisher an extra few hundred bucks on your more popular content submissions. BT helps, but it helps only incrementally across the breadth of an entire site. It won't significantly boost value for individual pieces of content.

BT is successful at getting advertisers to pay a higher CPM, but most of that CPM increase is going to ad networks, data providers, real-time bidding engines and various other technology companies sitting between the advertiser and the publisher.

What's the content creator's best bet for generating revenue? The simplest solution involves decoupling the value of the content from its traffic-generating ability. You do that by reaching an audience that's so valuable to an advertiser that they chuck the CPM model entirely and pay a flat rate to "own" your content exclusively.

We'll all do whatever we need to do in order to increase the value of our content, but I'd suggest that relying on BT to boost CPMs isn't the answer. Separating traffic volume from content quality would have a much greater effect.

Tom Hespos is the chairman and president of Underscore Marketing. He blogs at
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