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Why Digital Media Can’t Rely on an Advertising-Only Business Model

The New York Times' Tanzina Vega reports on a type of automated ad buying called programmatic or real-time bidding (RTB), the latest advancement from the ad network community. The general idea is that an ad buyer bids on every page where a prospective buyer goes, in real-time. The intended result is to get an ad or series of ads to follow the customer across the web. The unintended result is that it lowers the revenue of every media property that participates.

Commodity
a good or service whose wide availability typically leads to smaller profit margins and diminishes the importance of factors (as brand name) other than price
–Merriam-Webster

The New York Times’ Tanzina Vega reports on a type of automated ad buying called programmatic or real-time bidding (RTB), the latest advancement from the ad network community. The general idea is that an ad buyer bids on every page where a prospective buyer goes, in real-time. The intended result is to get an ad or series of ads to follow the customer across the web. The unintended result is that it lowers the revenue of every media property that participates.

Or, as Steve Brill states in the Columbia Journalism Review:

…on the heels of the Internet having destroyed the readership and advertising revenue of printed newspapers, further advances in digital technology now threaten the papers’ digital ad business.

One of the current axioms of media advertising is that differentiation is the key to ad sales. While the nearly limitless supply of low-quality advertising inexorably drives prices down, premium advertising —  defined by a media property offering exclusive access to a specific, sought-after audience — is the only financially sustainable advertising model.

Even this may not be enough.

 

via Columbia Journalism Review and The New York Times

 

Filed Under: Digital Journalism

Charlie Rogers Charlie Rogers

Chief content officer, editor-in-chief, managing editor, launch manager, and product strategist on dozens of digital ventures, for companies including NBC, Conde Nast, Time Warner, Martha Stewart and Random House.
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