Don’t Get Complacent About Online Advertising

Online advertising revenue for 2006 (including search) is projected to be an impressive $16 billion, according to eMarketer. Merrill Lynch predicts online advertising will grow over 20 percent in 2007. These forecasts show online advertising is still very much in a high-growth phase. What does that mean for marketers? That you must work harder than ever to keep up.

For online content providers, this isn’t the time to be complacent. To gain or maintain a dominant segment share, you must continue to invest to strategically position yourself. At some point, growth will slow and the market will mature. Then you can sit around and collect your cash flow. Until then, you must seize every reasonable opportunity to grow. Taking on some uncertain investments is currently less risky than sticking with the status quo.

Grow Qualified Traffic

It’s critical to continue to drive qualified readers to your site. When assessing traffic, consider the following as they relate to your ability to charge for advertising:

  • Reader profile. This including users’ demographics and psychographics. It’s essential to deliver readers that advertisers are interested in reaching. This means knowing your readers through information gathered on your site through surveys, content, and behavioral targeting.

  • Location. This involves understanding where readers go on your site. Advertisers will often pay a premium for the ability to target reader interest. The challenge from a content marketing perspective is to entice existing readers to visit new site areas.
  • Frequency. Although repeat visits are good for maintaining page view traffic numbers, from an advertiser’s perspective readers who see an ad too frequently can reduce a site’s effectiveness as an ad medium. Set frequency caps, especially if your readers return multiple times in a month.
  • Other ad vehicles. To broaden your ad offering, develop related content products that attract new users and provide other ad opportunities. As a content site, you already provide advertisers with a contextually relevant environment. Other options include e-mail newsletters, co-registration, Webcasts, blogs, podcasts, and video blogs.
  • Pay barrier. Paid content sites must assess how much content should appear in front of the pay barrier to entice new subscribers as well as expand advertising options. Many paid content providers use an open house to drive traffic and new subscribers while providing additional ad opportunities.
  • Online versus offline revenues. If you’re part of a larger entity that includes offline media, consider the tradeoff of growing online ad revenues at the expense of offline revenues since offline advertising tends to drive higher revenues.

The challenge in this dynamic market is to accurately and continuously manage traffic levels to maximize revenues.

Improve Advertising Sales Efficiency

In addition to focusing on site traffic, you must make your advertising sales offering efficient relative to your competition. Among the areas to focus on are:

  • Grow your online advertising sales force. Though this can be a challenge in the current market, especially if you’re looking for seasoned sales talent, consider the payback.

  • Enhance advertising opportunities on your Web site. Often, this requires a joint effort from marketing, ad sales, and technology to create ad units that engage consumers and work within the context of your site’s content as well as targeted opportunities for special advertisers.
  • Provide advertising sales support. This goes beyond basic media kits. Include marketing support to engage prospective advertisers, tailored analysis to highlight how your site delivers targeted audience, and well-placed PR.
  • Contextually relevant content. Content sites provide an environment that’s relevant to advertisers’ products. Depending on the media entity, this may mean creating special content or tailored ad units.

Monitor Metrics for Effectiveness

To ensure that your site is positioned for steady growth, track the following:

  • Check competitors and relative market share. Although year-over-year results may continue to grow, what’s important is how they change in light of competitors’ results. Take a broad market view to ensure you don’t miss new entrants or market changes.

  • Track readers and page views. Ensure that you deliver a broad base of users and they visit those sections advertisers rate most important (the ones they’ll pay a premium for!).
  • Analyze advertising revenues. To maximize results:
    • Break out sales by type (e.g., online video vs. banners).

    • Assess revenue per page. Understand whether this varies by content subject.
    • Monitor unsold advertising. Assess differences based on content, location on the page, and format.

  • Monitor ad-related costs. Include marketing required to drive traffic, ad-sales-related costs (including personnel costs, third-party commissions, and other sales expenses), and site expenses.

Even now, while your online advertising revenue continues to grow at a fast rate, consider how to build your business to retain dominant market share as the market matures. This requires continuing efforts to drive additional readers while improving advertising sales efficiency.

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