Who Are Your Customers: Site Visitors or Advertisers?

For the last few weeks, we’ve been talking about ways to evaluate whether your site has a viable revenue stream from ad sales. We’ve talked about the importance of a critical mass of inventory. Last week we looked at the realities of what a rep firm can and cannot do for your site.

This week, we’d like to turn our attention to a less tangible but equally important area. In fact, it may be the single most important variable in whether your company succeeds or fails with its ad strategy: Does your company understand what it means to be in the media business?

Boy, that sounds like an obvious question, but the answer is less obvious than you might think.

We’ve worked with a lot of companies that want to be in the media business but don’t understand the fundamentals of the business. How do we know these companies when we see them?

Well, they say things like “Our customers want us to add this cool new feature to the site.” When we dig in a bit deeper, we find out that they mean their site visitors want them to add a cool new feature to the site. We then explain that in most situations online, site visitors are not paying them anything. In a media business, your customers are your advertisers, that is, the people who are actually paying you something.

Now that’s not to say that your site visitors are not critical to your business. Nothing could be more important than your audience because it is, in fact, your product.

Media businesses are in the business of aggregating audiences that advertisers want to reach. This is a far cry from the way that many technologists/founders who we’ve worked with think of their Internet business. Many see their product as the tools and functionality of the site. Nothing could be further from the truth in a media business.

Why are we harping on such a seemingly obvious point? Because when a site truly gets it, that its advertisers, not its users, are its customers, some pretty significant things begin to happen.

First of all, sites start thinking about content and functionality from the perspective of its role in attracting a desirable audience. Certain types of content sites have inherent audiences (for example, if you are a parenting site, it’s a pretty good bet that most of your audience will be parents), but many ad-supported sites are very general. Think about search engines or other Internet utility sites. There is no natural audience. To make a viable advertising play, a site needs to deliberately build in features and content that help visitors self-select into various categories.

Understanding the need to build a desirable audience for your customer also drives intelligent traffic-building plans. Smart sites know that not all traffic is created equal when viewed through the lens of advertiser attractiveness. How your traffic arrives and where it comes from are key variables in your long-term attractiveness.

Finally, a site begins to think about validating the audience in a new way once it internalizes that its audience is its product. If your audience is your product, you need to begin to think about proving the value of the audience in exactly the same way you would need to prove the value of any other product.

Understanding that the advertiser is your customer is a simple mind shift with profound implications for every aspect of your site’s development and strategy. Without this understanding, your viability as an ad site is certainly questionable.

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