July was a quiet month for the blog, but this is a repost from a submission I provided to adexchanger.com.  Look for more updates in the coming weeks. The sciencification of advertising is on a clear, steady march toward greater and greater efficiencies, whether that be optimized cost for advertisers, agencies, networks, or publishers. Behind all the investment and strategy is the idea of harnessing the scale of the Internet. Unlike gaming, social networking, and daily deals, the digital media revenue model doesn’t scale with a network effect. This makes digital media the odd man out. Digital media should take notice, focus on segmenting profitable advertisers, and develop niche advertising strategies. How did scale become so important, and why doesn’t [...]

…is a scraper! Or at least scrapers that aren’t monetized properly. Scrapers are users or automated services that systematically consume media content – especially news. Their motivations are usually commercial in nature such as a media monitoring service, advertising verification, or lead sourcing. A scraper can be identified by the fact that their volume of consumption is several standard deviations or more higher compared to the rest of the audience – even compared to fans. It’s not uncommon for scrapers to make up less than 0.1 percent of an audience and generate 10-15 percent or more of the page views (i.e., ad inventory and revenue capacity). The graph to the right illustrates the behavioral difference between the largest segment of [...]

As I pointed out in my previous post, advertisers don’t buy page views they buy audience. A publisher’s business model has to produce and monetize an audience. So what kind of audience is profitable?  A loyal one.  Here is the proof… The Revenue Model Because audience engagement is the unit of monetization and because each member engages differently, the revenue contribution and profitability of each audience member varies.  For example, assume a fly-by audience member generates on average three page views.  With a $30 RPM, each fly-by is worth $0.09 in revenue.  Now compare that to a loyal fan generating 100 page views a month or $3 of revenue per month (i.e., $36 per year). The revenue model can be plotted as [...]