Hi everyone, the following is a bit lengthy but I think an interesting article so I thought I'd share it with you. If you do naything around advertising or PPC the following might be of interest to you:
"Ad revenue-sharing - The future of advertising?"
Paying users a share of ad revenues for submitting content to websites is becoming a popular practice. Andrew Davies, Marketing Director at idio, looks at the impact this emerging business model could have on the advertising industry at large.
YouTube's introduction of an advertising-revenue-sharing scheme for contributors, a story that even 6 months ago would have been confined to the technology press, made the mainstream news a few weeks ago. YouTube is not the first company to offer contributors a share of advertising revenue, but its market-leading position does in some way legitimise this method as a valid business model.
Advertising-revenue-sharing allows contributors of content to be remunerated based on their content's popularity. Although looked down upon by traditional publishers, it provides a great way for contributors to be rewarded for their (often considerable) effort, for online publishers to attract better quality contributors, and for advertisers to better reach the increasing millions of eyeballs that view the social web every day.
However, traditional publishers do have a valid point: User generated content will, for the foreseeable future, be limited to certain (they would say "cheap") subject types. For example, whilst user generated content might create an abundance of funny videos and semi-professional industry opinion blogs, it certainly doesn't yet produce documentaries with the depth and reputation of Planet Earth or Panorama.
A similar quality issue faces advertisers: Because controversial content attracts viewers, the new "popularity equals revenue" equation for contributors exacerbates the much-discussed fear of unknowingly placing advertising alongside unsuitable user generated content.
So how can advertisers balance the necessity of effectively marketing to the mass audiences/participators in social networking, with the need to secure quality delivery and positive placement of advertising? An obvious answer is through some form of publisher moderation/editorship of content, whether it is on a user level (where user know they will be rewarded fairly for the value they actually deliver to advertisers), on a site level (where publishers endeavour to select and deliver only the best user generated content), or on a network level (where advertising networks develop a method for categorising content into marketable verticals).
However, fully exploiting the inventories of social networks is not the final frontier. The big step up in campaign effectiveness needs to come when forward-thinking advertisers start to use the mass of personal information to actually personalise their advertising. Publicly available profiles, and the behaviours of these online personalities, provide immense opportunities for adverts to become so targeted, and so linked to user action, that they reflect the same characteristics (relevant, helpful and unobtrusive) as Google AdWords and the search advertising phenomenon.
This leads to another key question arising when marketing to the audiences of social networks: What should the relationship be between the content and the advertising, both contextually and spatially? Although it obviously varies between product types, most advertisers see the benefit of advertising that is contextually relevant (i.e. a user interested in the content will be more likely to be interested in the advert) and spatially suitable (i.e. catching the eye of the user without intruding to the point of annoyance).
For example, many of the generic networks (eg MySpace and YouTube) have not been able to connect their advertising with their content, leading to a situation where the advertising generally drags down the user experience, with the company forced to rely on increased pageviews to gain more revenue. On the other hand, many of the more specialised social networks are integrating the advertising to a much greater extent, not only improving the user experience, but adding value to the advertiser. And especially where the advertising-revenue-share model is used, the value and acceptability of the advertising in the community's eyes increases significantly.
Instead of users being force-fed advertising; it needs to be subconsciously accepted and even sought out. As adverts start to actually add value to users (whether by being humorous, engaging, or just plain relevant) the increasing effectiveness of campaigns will ensure that, through the strengthening of the advertising-revenue-share model, contributors get their just rewards.
Andrew Davies is the Marketing Director at idio, a personalised digital magazine that matches quality content and immersive advertising with the interests of the individual. This is achieved through a unique system of weighted tagging which intelligently adapts to readers' interests as they rate the appeal of the content they view. idio therefore allows advertisers to dramatically improve the targeting and effectiveness of their campaigns via non-intrusive, full screen rich media formats. Advertisers are charged on a CPM basis with revenue shared between content providers based on their content's popularity