How to Make Money from Advertising
Advertising is how we move customers and prospects along the purchase spectrum, from no awareness of our product or service to awareness, preference, intent to purchase, purchase and repurchase.
1. The key to media selling and buying is audience. Without it, advertising is the sound of one hand clapping.
Start your ad sales planning (and pitch) with audience. Who is your audience, how is it measured, what are their characteristics, where do they live, etc. The more you can tell advertisers and media buyers about your audience, in a documentable manner (i.e., measured by a trusted source such as Nielsen), the more likely you are to succeed in the monetization of that audience.
2. Next is the likelihood of the ad being seen and possibly acted upon. This can be measured and dimensioned by such ‘soft’ measures as ‘engagement’ (attentiveness, involvement) or hard measures such as recall.
Most advertising sales are of potential ‘impressions’ or ‘opportunities to see’ rather than proved actual exposures. The closer you can come to being able to ensure an actual and documentable ad exposure, the more valuable the media position.
One extreme in this consideration spectrum is a controlled circulation magazine that is sent free to an audience. This sort of publication must be able to prove real readership or risk being completely discounted by intelligent media buyers.
Another extreme is an ad feature is a live update in a sports event such as an auto race or football game that is highly likely to be viewed by the involved viewing enthusiast.
3. The price of the audience, usually dimensioned in cost per thousand or cost per target rating point, is the next key variable in media buying and selling. The right ad rate for a given media property is determined by a reasonably open marketplace in which media buyers and advertisers can weigh your media offerings vs. others they consider comparable.
All other things being equal, two NFL Football games or two highly rated primetime original TV programs telecast in the same time periods on different TV networks are likely to earn the same ad rates.
But ‘all other things’ are rarely equal in the real world. And many media offerings must compete for consideration with ad positions in completely different media; e.g., internet streaming video vs. network television. In this specific case, my point of view is that an intelligent media buyer and/or advertiser would equate these two offerings because they’re both television, just delivered by different distribution methods.
On the other hand, the buyer would weigh the relative audience size, likely to be higher for the network show; the relative attentiveness, likely to be higher for a TIVO-proof mid-roll in a net video of the same program. It would also be important to define the audiences clearly in terms of desirable characteristics such as age, gender, income, education, purchasing behavior, etc. Even the probable size of the screen would be a factor to consider.
The point is that when all things are not equal, tradeoffs are defined and given relative values in the media consideration process.
4. The program environment is, in my view, the last consideration since if we have an attentive audience that we want to reach and the ad position is well priced, we’ve got what we are aiming for, an effective platform for our ad. What the program environment can add to this is an association ‘rub-off’ for the advertiser and ad. This could be in the form of image, such as an ad in The Kennedy Center Honors or in the MTV Video Awards (depending on the advertiser) or relevance, as an ad in The Academy Awards for a movie or a cosmetic.
The bottom line of ad selling and buying, therefore, is composed of four elements:
1. The audience
2. The quality of the ad exposure
3. The price in terms of delivering audience/exposures for less than comparable media offerings
4. The ad environment as characterized by the programming around the ad and/or the media vehicle itself.