The discussion about the best advertising currency is long-lasting. It may never be ending. Still the discussion needs to be continued. The web publishing space had all the options on the table: cpm, cpi, cpc, cpl, cps and so on. And each and everyone of those failed in a way that makes all sides of the publishing and web value chain happy. The only currency that did not seriously come up as a currency ratio in media is cost per user (cpu) although every company follows this metric to evaluate their website costs.
Advertisers love to purchase ‚cheap‘ quality space of extraordinary target groups. Platform owners need premium-price compensation models in order to provide high-quality content to their users. The users don’t care. Although they are the stumbling block, the center of attention, in this issue between platform providers and advertising clients. Now that web 2.0 and social media comes into the ‚cpx-game‘, everyone gets a chance to rethink digital currency models. What is missing in this discussion is the cost per user model.
A Retrospect on Controlled Circulation
If we go way back to the beginning of this century, there was an interesting discussion about controlled circulation going on in the publishing industry. This discussion indicated that the best value of a medium is the registered or qualified user. Someone who gives away a lot of personal data in order to receive a medium for free. And there were numerous print magazines in the market that do and did controlled circulation. And today? There are hundreds of community-based business models on the web – all of these are to a huge degree controlled circulation orientated. Only a few of these businesses know about it, or see the premium value of controlled circulation media in this advertising space.
Now, what exactly is controlled circulation?
In a lot of meetings with clients, the question came up a thousand times when we explained our old community model. Controlled circulation is a distribution model, usually free of charge, for newspapers and magazines that wanted to have a deeper control of their target group. Thus, controlled circulation magazines offered the ideal targeting of the best quality audience for their advertisers. The benefit was quite obvious if we read the articles here and there. Advertisers spend more money for an ad in the controlled circulation arena than for the classical news-stand magazine. In booking controlled circulation media advertisers know in details what target group get for their money. This premium model could have been applicable to business models on the web. But only a few saw this option and took advantage of the ‚closed‘ access door idea.
Why is controlled circulation a winner?
The big benefit of controlled circulation is that non-profit organizations audit the reader database of magazines or web platforms in terms of database quality and quality reach: for print BPA and for web platforms ABC Electronic. Both independent ‚controllers‘ double-check in the means of the advertisers what kind of target group quality content providers ‚pretend‘ to offer to the advertisers. Advertisers love the audits as there is some reliable data that marketers could show to their bosses or the management team after the sales people had captured the marketing-office for their sales pitches. It needs to be said that the audits were based on projections – only 10-20% of the total database really was tested, but still the quality check was much appreciated by the advertisers.
Controlled circulation and the modern web communities
The question is: Why did the controlled circulation discussion ‚die‘? Why was it not carried on as an idea for a premium-priced advertising currency in the web world? Why did the focus on the high-profile individual user registration get lost when there was such a huge benefit for the advertising industry? Did it get killed alongside the top-valued personalization idea which got stepped down by the advertising cpm valuation? Maybe…
Nevertheless, in days where social media, social networking and community-building is exploding, is it not the right time to focus on the value of the registered user in terms of digital currency and critically scrutinize the ‚odd‘ cpm valuation? Does not the individual need to be in the center of attention of the modern web 2.0 world? The modern web individual that communicates with companies. The one that reads, comments, blogs, publishes, networks, rates or reviews?
Just imagine there was a kind of database that all magazines and platform owner have to use who want to earn advertisign dollars. That database is held by a non-profit organization or the government. A system where all users unite, active and inactive web users. Every user could define their most interesting platforms and status of activity which would lead to a cost per user index for each online magazine or web platform, based on consumption intensity of the average user, social networking value of the active user and staying-time frequency of each individual. In the end, the combined data of the website generates a platform coefficient which leads to a cost per user. This is the cost that advertisers want to book, right?
In the modern social media world registration processes become daily business for users. If it was one database as described above, the users would be held responsible. They would be more careful on how to define access and care about their data. From day to day, users get more open minded about showing their data on other media including registering their preferences, interests and hobbies. And platform owners benefit from that. In the future, it will become a state of the art for publishing houses and digital platform owners to have their own web community visible on the side-bar for new visitors. This is a huge success for web platform owners. What could be a better reference if you can show your audience, visual and accessible for everyone with avatar picture that the users upload themselves? Bloggers already use this option to attract more interest. The single user will become the reference for each platform.
So, what if the best targeting measurement of a platform becomes the cost per user (cpu)? If we think about how connected (via Google, Facebook or Yahoo) these platforms are becoming and see all the website and social media metrics we could monitor, the question rises: Is there an option to standardize registration on web platforms and communities plus integrating all the generated data of these platforms into one non-profit system or organization which calculates a cost per user index based on targeting criteria like b2b or b2c and different demographic data? Is Cost per User the next digital currency? The discussion is yours…
A new study, called ‚The Power of Personalization‘, by the Chief Marketing Officer (CMO) Council brings the discussion on personalization back to digital reality. It focuses on the products, benefit and relevance of customized content and communication which should make marketers rethinking their marketing activities. The study surveyed over 700 senior executives ranging from CEO, CMO, SVP, and VPs of Marketing from across different market sectors.
A retrospect on personalization
Some years ago, when we launched a personalized-version of silicon.de, there was a common sense that personalization will become one of the essential features in digital publishing. As business decision makers were said to be busy and having only restricted time to consume business collateral and information in an effective way, personalized platform offerings seemed to be the perfect publishing business to meet their needs.
But when investors of online businesses (most often VCs) wanted to see the quick ROI on their money, tables turned for publishing platform owners. In order to satisfy their investors requirements, the digital currency had to become reach in terms of page impressions – not quality in terms of concrete targeting activities. The whole digital world lost its focus on a wonderful option for digital media: personalization as a marketing driver for efficiency.
Thus, digital media turned into a mass and reach generating industry – simply because there was no other option to finance online business models. CPX, as the one and only digital currency, became a killer for personalization for platform owners.
Personalization is coming back
The new study offers some worldwide insight that marketers have regained the aspect of personalization. Marketeers explore and define personalized communications strategies. The report highlights new technologies and solutions such as customized content creation, proprietary on-demand personalization technologies, one-to-one delivery and interaction channels. Interesting is also the emergence of transpromo documents that integrate transaction and marketing communications.
The reason why personalization will become more important in the future is quite clear: Time is running short and the need for time-efficient work-tactics is increasing. Social media has shown the importance of individualized lifecycle marketing techniques as word-of-mouth results show the value customized communications. Just think about the idea of personal web managers and the personalization topic becomes a completely different value.
56% of marketers believe personalized communications out-perform traditional mass-market delivery. Apart from that, survey participants could identify key trends. Amoungst others were implementation, and integration of personalized communications through media such as email, personalized URLs (PURLs), digital advertising, direct mail, word-of-mouth, dimensional mailers, etc.
To cut things short: Personalization in terms of marketing budgets and campaigns is still in the ‚infantile stages of being integrated into most companies’. Although the targeting of customized content is promising, marketers are still afraid of pushing their budgets in an area without reliable or 3rd-party verified customer data sources. Going the ‚try-and-error‘ route seems to be not very popular in the companies sense – especially in rough financial times.
Short summary on some important findings (by en-ovationblog)
– Over 56% of marketers content that personalized communications out-perform traditional mass-market delivery; digital, database-driven channels offer the most upside potential for engaging in customized communications.
– Chief marketing executives are seen as the primary owners of personalized marketing initiatives. However, sales and customer relationship management groups most frequently maintain control of the data that provides the foundation for these campaigns.
– Personalized communication gets less than 10% of a majority of CMOs – future outlook: 55% say they will spend more than 10%.
– While many marketers are still working at tracking the overall effectiveness and ROI of personalized communications, almost 40% say they are generating either “extremely effective and measurable ROI” or “better response rates than other programs.”
– Individualized letters and email are the most common form of personalized communication.
– Conversion and close rates are the primary measure of success, followed by email actioning, website traffic/page views, and impact on retention and churn.
Personalization is another important step to efficient marketing activities. If they need to measured in numbers or in the sense of a customer relationship ratio is something companies has to evaluate and define for themselves. In terms of platforms owners the digital currency question remains. Is there not a need for a change? What value does a website visitor have in a special business content environment or vice versa in a consumer area – and why? Is e-mail newsletter text- or picture advertising the most unrated form of advertising? A lot of question the study brings back to life. The rebirth has just begun…
The executive summary of ‚The Power of Personalization‘ can be downloaded here.