Value Versus Volume

A recent article in Digiday entitled “Why publishers struggle to monetize their paywall data” lays bare one of the great inconsistencies of the digital marketing era: despite the ready availability of great targeting data, advertisers and their agencies still put more emphasis on quantity than quality.

This article was first published on the InfoCommerce Group Blog.

Don’t get me wrong: advertisers want to target their messages, and will pay a premium for the ability to do so. But they also want push-button simplicity, which invariably means they favor those with the largest audiences and the biggest networks. A single price, a single invoice, easy management and analysis: that’s what advertisers seem to value most highly. If the audience quality isn’t quite as good, it’s still worth it to them.

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And thus it has ever been so. In the heyday of postal direct marketing, everyone talked quality and sold quantity. Back then it was the tyranny of per thousand pricing at work. If you sold your product at a per-thousand rate, you had to move a lot of volume to make meaningful money. Indeed, the clever publisher who could identify 50 perfectly targeted prospects for an advertiser probably couldn’t even sell those names at any price – it was just too much work in an industry that tested its lists in quantities of 10,000 names.

Online marketing and improved user data was supposed to change all this. And to some extent it has. We now have a bifurcated publishing world with some publishers still selling their audiences on a cost per thousand basis, forcing them into a world of almost unlimited supply, meaning low prices, meaning they have to still make their money on volume. Quality occupies a tenuous position in this business model.

The other group of publishers has changed their focus to lead generation. By using a variety of different approaches, these publishers get individuals in their audiences to raise their hands and indicate they are likely buyers of a particular product or service. An individual lead can sell for a lot of money, and this has allowed publishers to move away from commodity selling with per thousand pricing.

And this would ordinarily be a happy ending, except that advertisers are now demanding their sales leads in quantity. They’re indicating it’s not worth their time to work with publishers that can’t reliably generate a certain quantity of leads per week. Once again, quantity is starting to take precedence over quality. What makes this even more odd is that many advertisers are gorging themselves on sales leads, buying so many that they can’t handle them effectively without expensive marketing automation software that itself demands more and more leads in order to work effectively.

The seemingly unavoidable conclusion from all this is that most advertisers aren’t really that good at marketing and sales. If correct, it seems logical that publishers should assume more of this role for them. And indeed, we are seeing movement in this direction with growth of marketing services, content marketing, lead qualification and appointment setting – all things that arguably roll up into what’s being referred to as the “full stack” business model.

If things play out this way, we’re looking at another round of profound, wrenching change for the publishing industry. At least with this round of change those who survive it will seemingly emerge with strong, high-value businesses and bright prospects.

Russell Perkins, our INSIDER Guide to Data Publishing Strategy, is the Founder and Managing Director of InfoCommerce Group (ICG). InfoCommerce Group is a boutique consultancy serving the global business information industry, with expertise in commercial data products focused on corporate and product data strategy, new data product development, assessment of existing products to help accelerate growth (or stem declines), and acquisition due diligence. (Read Russell’s full Bio)