How Media Companies Can Boost Ad Revenues
1 maart 2013 Plaats een reactie
Digital may be the future when it comes to publishing, but the problem today is that online publishing — and advertising specifically — doesn’t make enough money. Newspapers and magazines have spent years trying to find a business model to turn digital dimes into dollars from their web traffic.
We see an opportunity to as much as double the value media companies get from display advertising by creating an effective lead-generation machine. Publishers could package their insights about the people who visit their site and then deliver hot leads to advertisers at the point when customers are ready to buy.
Take a recent example. Among visitors to one US media site, 25 percent made an online fashion purchase within three months — twice the average for a typical online consumer. Their spending added up to a 13 percent share of total online fashion expenditures, worth some $4 billion out of a $34 billion market. If that media company could capture typical affiliate rates of 5 to 10 percent on the purchases it influenced, it could make at least $200 million a year from lead generation — roughly the same as it makes from banner ads under its current business model.
See now, buy later
The paradox of online shopping is that it takes seconds for customers to make a purchase, but days — sometimes weeks — for them to decide to purchase. The more complex and pricey the product, the longer it takes to make the decision. The decision journey that leads to this point typically takes place over multiple online sessions.
It’s no secret that banner ad performance tends to be poor, with an average click-through rate of less than 0.15 percent. That’s because the ads’ real job is to make an impression rather than to drive sales, as much as advertisers and publishers would like them to do so.
When we analyzed purchasing patterns for fashion goods at one media company’s site, we found that only 4 percent of purchasers bought anything during the same web session or by following a link on the company’s site. If the media company could understand and track the remaining 96 percent of buyers who purchase during a later web session, it could pass on their details at the right moment to advertisers in exchange for a share of the revenues. Media companies could provide leads to help improve ad targeting and landing page relevance. For example, media companies know not just that a visitor was checking out shoes or skirts on their site; they know whether the style was racy or traditional, and whether the product was a knock-off or a designer. Advertisers just don’t have that information, and they’ll pay to get it.
Becoming a hot-lead generator
So what does it take to capture this opportunity? Our advice:
- Think data. Most media companies have good metrics and decent analytics, but they may be looking at them the wrong way or using the wrong data. The key is to watch what people do when they visit your site and after they leave it to understand their patterns of behavior. To do that, you need to build tracking processes, infrastructure, and customer intelligence skills. You may also need to draw on external sources to supplement your own data, but keep the effort focused — it’s not about getting lots of data; it’s about using proprietary data and targeted analytics to yield insights into customer behavior.
- Encourage audience interaction. While visitors are consuming your content, get them to interact so you can catalog their tastes and preferences. The ubiquitous thumbs up/thumbs down is one option, but there are others. Stylebooks and pinboards like Polyvore and Pinterest are a great way to engage people and find out more about them; another is to track articles that people comment on or share. Pick product categories where you can really drive sales, and ideally consummate transactions.
- Keep ‘em coming back. To build up your customer insights inventory, you need to keep your visitors coming back. Good content isn’t enough; follow up with tailored email programs promoting offers and rewards for engagement and loyalty. You’ll need to create a permanent memory of customers by using persistent cookies to ensure a consistent user identity that lets you track and understand behavior over the long term.
- Buddy up to e-commerce players. Build up a portfolio of partners spanning a range of business models and target segments. Work with your partners to understand what customers and information are valuable to them. Use the knowledge of your audience to alert your partners when a shopper is ready to buy, and give them clues about what he or she is looking for. Imagine that one of your users arrives at a travel-related site belonging to one of your e-commerce partners. The site checks to see if the user is a lead from your site and asks for useful information. Your site informs the travel site that the user has been reading about travel in Greece for the past three weeks and is probably ready to book a sailing holiday. The travel site then shows the visitor relevant packages that will encourage her to buy.
You don’t have to choose between advertising and generating leads; you can pursue both at once. Nor do you have to alienate your existing advertisers. Instead, renegotiate and show them they will get better value by paying you to deliver hot leads as well as show ads.
The economics of online publishing are tough. Securing a new revenue flow from lead generation could allow media companies to tip the balance of the business in their favor and transform their role in the e-commerce marketplace.