It’s tough being an online content publisher these days.
While the flow of advertising dollars into digital continues to increase—online advertising spending is expected to grow 20% to $31.3 billion in 2011 in the U.S. alone, according to eMarketer—it has not resulted in higher CPMs for publishers.
Rather, the increase in spending is spread thin across a crowded field of technology middlemen (i.e. ad networks, exchanges, data providers, DSPs, etc.).
And it is largely following increased audience usage of digital media as opposed to resulting in larger payouts per page view for content creators. Meanwhile, the cost of producing content remains stubbornly high. Recent developments like Google’s Panda update, which rewards original and high quality content in search results, as well as the increasing amount of traffic directed by the social Web via “word-of-mouth” will likely sustain the expensive cost of developing quality content.
When the balance sheet reflects a disparity between the price of producing content and the revenue it can realize, a shift is necessary. In order to increase monetization, online publishers must recognize the two halves of the problem and tackle them in different ways:
1. Drive higher audience engagement to increase valuable supply
2. Add new revenue streams, without subverting goal No. 1, to increase demand