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How mobile advertising math adds up to profit for media companies


Infographics showing differences in online traffic between mobile devices and desktop computers.
Infographics showing differences in online traffic between mobile devices and desktop computers.

Mobile Internet access is changing the way people consume online content. If you don’t know that already, you must have been living under a rock for the last decade, because nowhere is this more evident than in the news media business.

In fact, 39 of the top 50 digital news sites get more mobile traffic than desktop traffic, according to the Pew Research Center’s State of the News Media 2015 report.

This consumption trend has a huge impact on the sales strategy for nearly every news media organisation. There are some crystal clear takeaways, like the fact that every content-focused organisation now needs a mobile platform.

But some pieces are less obvious, and that has a lot of folks in the news media business scared. Many organisations are just getting caught up with online ad sales, and now suddenly have to pivot and figure out if mobile will dilute their revenue.

It doesn’t have to, though, provided news media organisations are willing to tackle a balancing act between revenue and user experience. There are lots of mobile ad units that can be packaged and sold, including premium positions, interstitials, and standard banners.

The key for sales teams is going to be to look at the rate-per-page views (RPM).

RPM is the total cost of every ad unit on a page. For example, a desktop page with four ad units with an average yield of US$5 per thousand ads served comes to US$20 for every 1,000 pageviews. That’s the RPM.

The challenge many face with mobile is that the pages have fewer ad units. If publishers have one unit per page and charge the same CPM as desktop, their RPM is down 75%, at US$5 compared to US$20.

The quick-fix solution here is to drive more traffic, but that would require the publisher to drive four times as many pageviews to get back to the desktop ad revenue. That’s not an easy task.

This is where the balancing act comes in.

Rather than think of mobile as the desktop Web with less page real estate, media organisations need to think of what they can sell that fits the mobile environment.

Perhaps there’s one banner ad unit per page at US$10 CPM. But if publishers introduce a new ad unit — like an interstitial ad that comes between every three pages on the site and appears full-screen on the user’s device — then they’re leveraging the nature of mobile to give advertisers the consumer engagement they want.

Naturally, they can charge more for these ad units, starting at US$30 CPM. Now the publisher is back up to US$20 RPM with just two ad units. This is a simple example of making this work, but it will require some give-and-take to reach the balance you are looking for.

There are plenty more solutions that can earn incremental revenue. Perhaps it’s a premium ad position that stays on screen or a video unit. It’s up to publishers to test what works on the site and what kind of value it delivers to the advertiser.

Traffic is an issue in the new mobile consumption era. But rather than worry about increasing raw numbers, publishers need to think about generating the content to grow the traffic and then maintaining their RPM for mobile pageviews.

Mobile content consumption isn’t going to slow down. It’s up to the news media to decide how they speed up their ad sales plans to take advantage of it.

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