The planning, selling and delivery of digital advertising campaigns is a daunting task, especially when you're working with limited resources. And who isn't, these days? With so many packaging options to choose from—from Share of Voice (SOV) to sponsorships to CPM-based—what's the best path for maximizing a modern news site's revenue?
Share of Voice
If you have ten available ad slots and you sell one to a local advertiser via SOV, that ad will show in that position no matter how many impressions are delivered. In cases where the market is growing, this brings down revenue potential, leaving money on the table. And if traffic patterns shift, advertisers may receive fewer impressions because they are locked into a specific spot. Not ideal for either party.
Traditionally, ads were sold based on size and placement using the share of voice method. This may have worked well in print due to fixed availability, but it's less than optimal as you transition to a digital environment. Why? Because you are selling an advertising position regardless of how many pageviews your site gets on a monthly basis. More pageviews can mean more revenue, but you aren't realizing that potential with SOV.
Sponsorships consist of a single ad position sold at a premium to a single advertiser. When you sell an exclusive sponsorship to an advertiser, they fill 100 percent of the impressions for the agreed upon ad position for the duration of the package. This is typically done for a very short period of time surrounding an event, such as a fundraiser or community event, and can be very effective. A drawback to the sponsorship model is that it limits the number of advertisers and the length of time the ads can run.
Finally, there's the CPM (cost per thousand impressions) model. When you sell based on CPMs, advertisers pay a set dollar rate per 1,000 ad impressions delivered. If an advertiser pays $1,500 for a campaign at $10 CPM, they will receive 150,000 impressions during that campaign, regardless of site traffic variations or other advertisers' campaigns.
As digital advertising evolves, it is becoming more important to sell the majority of ad inventory at a CPM rate. (You may still want to allow for premium advertising packages or sponsorships.) Why? Because CPM-based pricing is easy to understand—both you and your client know exactly what will be delivered—and it protects you from underpricing your inventory.
Making the transition from SOV to CPM can result in noticeable digital advertising revenue growth. For example, if you sell one million impressions as SOV to 20 clients at $200/month, those impressions—approximately 50k per client—equal a $4.00 CPM. For local advertising on a high quality domain, this rate is far below market average.
If, on the other hand, you were to sell a 50,000 impression campaign at a market rate CPM of $15.00 to the same 20 clients, you would be making $750 off each client.
Shifting from SOV to CPM pricing
With a bit of planning, switching to a CPM model isn't difficult. Start with a sitewide impression report from your ad server and a separate sitewide campaign report from sales. These two reports will give you insight into the volume of ads you have to serve vs. the available ad impressions on your site.
Once you have a good handle on your current campaigns, you can evaluate historical data to see what effective (eCPM) rates your clients have been receiving based on their cost and delivered ads. When you have all the data points in place, you can begin to shift your ad delivery to your goal CPM, increasing or decreasing the number of impressions delivered according to the client cost and desired CPM. Once your existing clients are delivering at your goal CPM, then you can begin to sell new clients at the CPM rate.
By adopting a CPM-based digital sales strategy, you'll increase your ad inventory and revenue per sale, and make a big impact on your bottom line. If you haven't already, it's probably time to kick SOV to the curb.
Stevie Longwith is the TownNews iQ Ad Ops program manager.