Content is Dead; I Don't Think So

Bloomberg BlogBloomberg BlogHomeSubscribe Content is Dead; I Don't Think So09/14/2011

Recently, there's been some news about online advertising that claims Internet companies aren't making money from ads displayed around original content. Really? Not in our experience.

This is an argument that I thought was worth discussing further.

The argument: Online ads are sold in a supply-and-demand marketplace, and the ever increasing supply of ad impressions drives down pricing (CPM) in an inevitable way that makes all ad-supported content businesses a challenged business model.

My view: I disagree with that generalization.

While over-supply is certainly a real dynamic (and a challenging one for mass-market, general-interest publishers, portals and utilities like email), it is an over-generalization to assert that online advertising is one big marketplace.  If you take the various segments that exist in terms of both audiences and advertisers (teens, retirees, CTOs, consumer packaged goods, enterprise software, etc.) and look at how they use and respond to typical ad formats (direct response, branding, informational), you'll see how different ad markets are formed.

Add to that two critical factors influencing supply/demand: 1) audience targeting and 2) content targeting, and you'll get an even better picture of ad industry segmentation. While both factors get at implicit audience intent to consume a product/service (as opposed to explicit intent, like walking into a store or searching), they can fall along general or specific spectra. More specific is almost always better for determining intent. General achieves wider reach and is usually cheaper. There's clearly a trade-off.

Don't be confused by the comparisons to search advertising. It's obvious that explicit intent is 10x more valuable than implicit intent. Generally speaking, the economics of advertising-driven content businesses can also be quite good as long as the cost of producing quality content is aligned with a high quality audience. For the future, the more interesting question is whether Facebook, Twitter, or quality publishers such as those in the OPA can create ad targeting options that approach the value of search's explicit intent.

Bloomberg Media appeals to a focused and valuable audience of business leaders, and we've learned that there is plenty of demand for that audience and a scarcity of supply of the kind of content that audience needs (if anything, fewer players are investing in high-quality content than before). That means we've been able to grow our audience, sell a higher percentage of our ad inventory *and* increase prices over the past 2+ years. That's an online advertising model that works.

 Kevin Krim is global head of Bloomberg web properties

Posted by Bloomberg at 12:14 PMin Advertising|Permalink|Comments (2)

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Content is not dead. And advertising needs to remain less intrusive than it has become on some sites and even on iPad apps. The user experience is among the most critical values a site can bring, making this is delicate balance which not all seem to strike.

Inder Singh
Cisco

Posted by:Inder Singh |09/20/2011 at 09:35 PM

To the point! I completely agree with Kevin and disagree with that generalization. The number of websites seems to grow faster than the internet users :) but the demand of the right kind of contents by various specific types of users is unending. Online advertising is an art for both the advertiser as well as the publisher. And the art is to have the right balance of the type of contents and type of audience for the publisher and to target the sites with the above mentioned balance for the advertiser. The need for information and information processing is growing exponentially because the impact of a small change is becoming higher and wider exponentially and in such scenario who can say that the content and information based business will decline or the advertisers won’t get results using those online portals for their growth?

Posted by:Fx |09/14/2011 at 06:02 PM

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