How Do We Make Money?
College media is a funny beast. It seems to lag about a year to three years behind the mainstream media. This applies web-first thinking, blogging, web site design, and monetization. So, this weekend, when the CoPress forum became an active discussion of CPM vs CPC vs CPD ad models, I couldn’t help but grin twice.
First, because this is a conversation that the rest of the media had a few years ago (and has never resolved), and second, because this struck on a particular passion of mine – monetizing online media. (Go figure, the Business Director is interested in monetization)
The following post is an expansion of my forum comments, and still worth a read if you’ve already been through the forum.
The Current System
There are really three ways for advertisers: by impression, by click, and by time period (usually day). Of course, there are hybrids of all three models, which the top ad networks utilize (Facebook, Google). The issue, is that all of these models have some inherent flaw. CPM doesn’t reward for the effectiveness of an ad, CPC necessarily reward high traffic, and CPD, while it guarantees a nice minimum about you can make, has both of the same issues.
Take into account that college media has a monopoly over the vast majority of the 18-24 year-old US population. That’s demographic is the most desired by advertisers. And if my rough, non-scientific, survey is to be believed, less that one third of online college readership is actually students, it’s parents and alumni, who represent a middle-class, educated, demographic – precisely what any good advertiser wants.
Translation: you’re serving ads to a very valuable, niche, audience, that you have a monopoly over.
One of the things that the forum conversation pointed out was the inaccuracy and the poor quality of the analytics available right now. Different software suites give different numbers, and non of them are really ‘correct.’
That’s a huge issue, because if you’re relying on those numbers to charge CPM, you stand to loose money.
Of course, as Bryan Murley points out, the holy grail of analytics right now is the ability to measure user engagement. Which would tell us how much a user was – using – the site. But, with such poor basic analytics, the challenge to create this data is compounded.
The moral of this story, is to have several different analytics suites measuring your audience. Know you can’t really trust any of them either.
The huge downside to these awesome demographics is that they’re usually not geographically similar. That means that you’re local adverts may not be your best market for online ads.
Take a look at your analytics, and I’m sure you’ll find that your pageviews mostly aren’t local. Try to serve ads that target all your audiences. Yes, an ad for a local pizza joint is good, but irrelevant if you don’t live near campus. Ads for Macy’s on the other hand, apply to everyone. Not to mention, national ads pay very well.
In the same vein, don’t forget that you’ll have a lot of alumni visiting the site. Go to your alumni office. Tell them you have a lot of alumni viewership. They may not know.
Alumni offices spend ridiculous amounts of money trying to contact alumni to get more money out of them. You can get a chunk of that money too! Make your case, and sell them a decent spot for a long-term contract. Then charge them a hefty amount – after-all, you’re a great way of reaching their market.
Concerned about relevancy for students? Go to the career center, and have them team up with alumni office. There’s gotta be alumni who want to hire interns and grads.
Crazy? I was Crazy Once!
Okay, normal, plain ideas out of the way. Let me present some crazier, more involved ones.
One suggestion of Revenue Two Point Zero, was to limit your ad inventory, therefore decreasing supply. This will allow you to drive up costs. Simple economics, right?
Even better, fewer ads means users aren’t nearly as annoyed by an assault of brightly colored, non-relevant content. A better UX means you’ll get more repeat users.
Our example from the forum, the Tulane Hullabaloo, has 3 display ads on the site, one of which ia Google AdWords. Google Ads, while convenient, don’t have great revenue, and you’ll make much more money from selling ads yourselves.
Of course, that means having a motivated and trained online ad sales team. Who, since they’re paid on commission, don’t stand to gain much by selling online ads. Increase the cost of online ads, and you actually stand to sell more.
The Better Plan
OK, with me so far? Now let’s get out-of-the-box:
Institute a rule that 60% of your ads must be either a coupon, or a notification of a sale/deal (that’s actually legit), with the intention of increasing this to 95%+ in the coming years. I base this off two facts: people describe online ads as annoying, and in my own observation, print ads, which are usually described as informative, are primarily coupons or notifications of sales.
Of course, coupons are really the way to go. They will not only make your users happier, but they’ll drive traffic to your site and to your advertiser’s site and store. It’s a win all around.
Now, how do you serve them? Offer some sort of hybrid: charge for a run time, but make a deal with your advertiser that if you get a spike in traffic, they’ll be charged for the additional views. It’s your market, control it. This clause will allow you to ensure that when high traffic comes, you’re not out of inventory.
But… don’t be evil, if your advertiser wants to opt-out of the deal, then let them. With no hassle. Just be sure to sell enough ads to have an inventory ready if you do spike.
No One Really Knows
The single biggest issue with online media is monetization. I’ve noticed college media becoming more interested in the topic over the last year or so. That’s a good thing, because the mainstream haven’t cracked this nut yet, and it’s very possible that the niche, high-value demographic, monopolistic market of college media will be the one to solve it.