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The True Media Value Delta

Slide1
The slide above is one I've been sharing with a select number of people in the industry the past six months. However, Fred Wilson's blog this morning on his personal experience with the inequities inherent in the current digital media landscape inspired me to share it publicly now. 

What is it? This is data from two weeks of a performance advertising campaign in the online education vertical. 

What it shows is the problem existing in digital media that Fred called out. Unless solved, this value delta threatens to undermine the entire industry. The buy-side of the media landscape is capturing all the value of the media while the sell-side, the side where the value is being created with content & audience is getting played. Amazing, isn't it?

There a couple of other issues the data points out. One is the large margins ad networks are taking. The other is the large volume of clicks that never get to the landing page due to multiple re-directs. For those interested the only data layer added to this was basic geo-targeting.

Followers of my blog and those I've been speaking with since the Spring will know that I've become zealous about finding answers to this problem for publishers. Solutions will not be easy but they are possible. So with the momentum like only Fred can muster, and to paraphrase Mr. Jagger, "think the time is right for palace revolution."

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Comments

if this publisher gave the inventory exclusively to the network, would the eCPM be materially higher?

And, that being said, if you were a new fangled network wouldn't you try to gain ubiquity by reallocating these numbers, ie, make the publisher splits higher?

Horse puckey.

You all need to admit that owning the sales mechanism (human or electronic) is worth at least 20 or 30% of the value chain and actively avoiding its ownership carries a similar and additional penalty. Taking the EVA from the buyers and networks requires building unique media offerings which (rarely scale) and firing the networks/affiliate merchants.

andy - of course most publishers are working with a number of networks and yes new networks try to up the ante all the time, FM and Glam come to mind.

scott - i will admit the sales mechanism may be 20-30% of the value chain but i'm hard presses to believe that any business with 50% margins carries a penalty. almost every publisher has unique offerings in place anyway and affiliates are agnostic to anything but revenue percentage.

So you're saying that there is at least one case in which somebody bought something, transformed it, and got three times the purchase cost as revenue.

I haven't yet seen how that's proof of a terribly broken price structure.

CAM

Curt - if you speak to performance advertisers everyday like i do you will realize they are for the most part a very happy lot and have done incredibly well leveraging the current paradigm -even more so with the rise of DSPs and exchanges

i might also suggest you speak with online publishers who are gasping for air as they drown in this structure.

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