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Diversified Ad Revenues & Social News Organizations (part 5)

May 7, 2010
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So far in our series on Social News Organizations (SNOs), we’ve looked at how SEO, social media, and mobile apps could all be used to drive and retain registered users, and collect user data for hyper-targeting ads. Well, today we consider how SNOs can use these different channels and the user data available through them to diversify their ad offers and bolster their ad revenues.

Just as SNOs rely on a variety of digital channels to acquire and retain users, they employ a variety of ad offers to generate revenues. There are several aspects to a SNOs diversified ad offer: actual media placement/real estate, enhanced ad targeting, varying ad models, and  multi-tier advertisers.

Ad Placements & Social News Organizations

SNOs customize ad placement/real estate according to distribution channels and content verticals. This includes specialized ad placements for each of their sites, email notifications, and each of the content vertical mobile apps (news, sports, business, etc.).

Such ad variations allow SNOs to offer advertisers specialized and premium media placements that are actually seen by readers. For instance, mobile ads are integrated into the core user experience of each mobile apps rather than being lost to the low resolutions of a WAP site.

Ad Targeting & Social News Organizations

SNOs also leverage the user data available through each distribution/acquisition channel to better target ad campaigns and packages. First, social graph data available through social media APIs helps SNOs better understand what opportunities they can offer advertisers. This data can inform SNOs as to what kind of advertisers to approach, as well as reassure advertisers as to what kind of audience their message is actually reaching.

SNOs also leverage an additional layer of data available from mobile users to hyper-target ad placements: geo-location. By monitoring the geo-location of users as they log-in into apps, SNOs can offer advertisers an opportunity to reach users with geographically relevant message.

For instance, users that are close to a point-of-sale (POS) can be targeted with an added-value-proposition — such as a time-sensitive, in-store promotion. This level of hyper-targeting, then, also offers advertisers the opportunity to deploy incentivized messages and drive actual foot-traffic to a POS.

Indeed, the mobile facet of an SNO is very much the logical extension of its social media integration. While social media provides data on users’ actual interests and demographics, mobile apps reveal the locations and POSs that users actually visit.

Together, these data sets can be used to develop hyper-targeted media placements that offer advertisers low risk advertising. This helps SNOs both secure advertisers and increase the revenue potential of each ad sale.

Ad Models & Social News Organizations

SNOs will also use these data sets to effectively embrace a variety of ad models. Through varied ad model offers, SNOs can appeal to a wider base of advertisers, offer more custom ad packages, and increase advertiser confidence.

There are three general ad models available through digital channels:

  • CPM – cost per thousand impression
  • CPC – cost per click
  • CPA – cost per action

Many mainstream publishers prefer CPM advertising because it makes it easier to manage ad revenue projections — i.e. impression packages are sold in advance. However, CPM offers advertisers little reassurance for advertisers. The ads are purchased in advance so if the audience isn’t targeted, the investment is lost, and pre-paid publishers have less incentive to accurately target ads or integrate them into their user-experience.

Alternatively, some mainstream publishers render CPC ads on unsold real estate, but such ads are inefficient on two levels. They represent an opportunity cost if users don’t click on them. Furthermore, because these ads tend to be targeted by content (not by social graph of geo-location), click prices remain low to secure advertisers confidence, and the publisher’s revenue potential is limited.

Lastly, CPA offer advertisers the most security because they pay only for an ad when it converts into a sale. Mainstream publishers, however, are reluctant to adopt the CPA model because it leaves them assuming all the risk.

Diversifying Ad Models

The hyper-targeting potential available through social graph and mobile data offers SNOs several opportunities to bolster their ad revenues by blending each of these ad models. First, they can determine whether an alternative ad model is a calculated risk. For example, if an SNO has determined that a user is a health food enthusiast but there are currently no relevant CPM advertisers, the SNO can then render a CPC or CPA ad that pertains to healthy living in general.

Second, it provides SNOs with data that allows them to develop multi-model ad placements — i.e. a blend of CPM, CPC, and CPA. Essentially, as SNOs accrue data on users and how they interact with various ad placements, SNOs are able to determine the risks associated with selling advertising based partly on impressions, partly on click, and partly on conversion. Such ad offers will help protect the interests of both SNOs and advertisers, and boost the value of SNO advertising space.

Finally, SNOs can further bolster their ad revenues by engaging multi-tiered advertisers. Essentially, the confluence of hyper-targeting and varied ad models opens up mainstream advertising to all levels of advertisers.

For example, a local, neighborhood cafe would be able to buy advertising from a national news outlet’s mobile app and target only users within a certain geographic radius. Such mobile placements could be further enhanced to drive foot-traffic with incentives, such a CPA lunchtime mobile coupon.

All such ad diversification helps SNOs  gain additional opportunities to generate revenue — from either a click or a commission from a sale and preserve the confidence of its advertisers. This increased ad space efficiency and advertiser confidence can help SNOs increase both overall ad sales and the value of each sale.

Multiple Ad Models for Multiple Channels

SNOs leverage and blend multiple content distribution channels to acquire and retain users, so they must also leverage and blend multiple ad models to build an effective revenue stream. Just as I wouldn’t buy a two dimensional print ad to be broadcast as a static image during the Super Bowl, SNOs must offer advertisers a blend of ad placements and models across each of their channels.

Since SNOs can track user behavior as they migrate from channel to channel, they are in a position to aggregate user data at a variety of levels. Through this data, SNOs can determine when (if at all) to show a specific ad for a specific product at a specific time when the user is in a specific location. This allows SNOs to bolster their ad revenue stream because targeted ad space is easier to sell and can be sold at higher premium.

Read the Series:

About CT Moore

A Staff Editor here at Revenews.com, CT Moore has over 5 years experience leveraging search and social media to help brands meet their business goals online. By day, he provides SEO and social content strategy to both SMBs and enterprise level companies. CT is also an accomplished blogger, podcaster, and conference speaker who educates groups and companies about how they can leverage digital media. You can find CT on Twitter @gypsybandito.

Twitter: gypsybandito
Filed under: Media + Online Advertising + Online Publishing