In The Age Of Ad Blocking, Publishers Must Shift Focus To Lifetime Value

philbarrettThe Sell-Sider” is a column written by the sell side of the digital media community.

Today's column is written by Phil Barrett, senior vice president at Purch.

Ad blocking turned digital marketing on its head in 2015. Publishers relying heavily on ad revenues fear for the very sustainability of their businesses – and have been forced to critically examine their approach to user experience.

While ad relevance and disruption from ads are part of the conversation, at its root, ad blocking is more about finding the delicate balance between the value users are gaining from a service and the level to which they’re being monetized. To do this effectively, publishers must shift their focus from traditional monetization methods to developing lifetime value from users.

Most publishers focus on metrics such as revenue per visit and cost per 1,000 impressions (CPM). This “episodic” approach drives publishers to maximize the number of ads served, overwhelming the user and interrupting their experience – inevitably pushing them away.

As publishers focus more on users who will generate lifetime value, they’ll need to make adjustments in how and when they monetize users and what kind of ads they serve, along with an expansion in the services they provide.

Smarter – And Later – Monetization

Publishers don’t need to monetize a user on his or her first visit, and the smart ones won’t. Revenue from that single impression isn’t nearly as valuable as a user’s long-term loyalty. If publishers can keep visitors coming back and, ideally, get them into their database, there are much greater monetization opportunities down the road when the relationship and loyalty have already been established.

This shift toward smarter – and later – monetization will require buy-in from advertisers and brands, which must be convinced of the longer-term value. This is where data comes in. Serving a better user experience on the first visit will likely result in increased member registration, which provides the richest consumer behavior data available. Not only does registration allow publishers to track consumers across all screens, it also opens other channels of communication and remarketing, such as email, which remains the most effective marketing tool.

Smarter monetization is critical on mobile, as consumers increasingly spend their time browsing and shopping on their phones, especially on apps, and the smaller screen is not suited to an abundance of ads. We know conversion rates on apps are higher than those on mobile web, and as in-app spending grows, publishers must ensure the ads remain relevant and helpful.

Better Services

Loyalty isn’t just about reducing the oversaturation of ads. It’s also about publishers providing users with a valuable service – something sticky. This is, in part, why there’s such a focus on mobile apps. They offer more convenience and, because of that, they also boast higher conversion rates. As a result, more publishers are investing in mobile apps, as well as other service-oriented features, beyond content, that keep users coming back.

The best-performing loyalty programs do a good job at recognizing their users for engagement and offering tangible rewards. Recognition can come in the form of gamification, which may offer “badges” or a leaderboard for engagement.

For example, forum contributors on a site may be recognized with “badges” for the quality of their posts, encouraging participation on the forums and allowing other forum users to easily identify those subject matter experts. Rewards should entail things that users value, which may include cash back, free shipping, exclusive offers or coupons.

BeFrugal, Splender and other sites offer cash back for members to reward users for their time and use of the site. As ad blocking continues to gain popularity, publishers will look for ways to diversify revenue – offering their users with valuable services in order to generate lifetime value that doesn’t rely on monetizing the first interaction.

More Personalized And Timely Ad Experiences

With targeted advertising becoming the status quo, I expect to see further advances in collecting and analyzing user data across all platforms, leading to a more tailored advertising experience for consumers. There will be a greater focus on location-specific advertising, especially on mobile apps where advertisers can leverage mobile device IDs to track consumer behavior and more accurate location data. Location-based advertising is the truest form of “in-the-moment” advertising, as it pinpoints a user’s exact location and serves relevant ads for nearby stores or restaurants based on a set of behavioral triggers that align with various “mobile moments.”

As publishers work to serve a better user experience, we’re also likely to see an increase in mobile native advertising, which provides a more natural experience for users. Not only are they more immune to ad blockers, but when done well they perform better for advertisers. More than half of consumers click on native ads with the intention of purchasing something, compared with just 34% with traditional banner ads.

The conversation around ad blocking is unlikely to subside anytime soon, so publishers that focus less on monetizing every user session and more on building user loyalty through services that offer high user value, which can be monetized, will end up on the right side of the balance sheet.

When in doubt, always put the user first.

3 Comments

  1. Great article, but I've started using the term "blocker" instead of "ad blocker" as so many of the extensions, apps, and devices for ad blocking also clobber many of the analytics and behavioral advertising services.

    Reply
  2. It's great to hear Phil mention forums! Good forums are incredibly sticky because they are packed with thought leaders and enthusiasts in their specific verticals. Actual, real forum content keeps users coming back for more.

    Reply
  3. Thoughtguy

    This is a good article.

    I’m no tech guy but I have to say that I’ve been rather impressed on several recent articles written by digital ad experts who clearly understand why people are using ad blocking these days, that they’re doing it to protect themselves from malware, creepy tracking and so forth and clearly stating that something needs to happen from the ad side. There are still a few bogus, patronizing and arrogant “ad blocking is killing journalism” pieces showing up from time-to-time but it’s a relief to read the insights of ad folks who actually get it. Anyway, something needs to give on the creep-fest that as digital advertising in 2016.

    That “something,” in one’s view is a simple combination of respect on the part of publishers for their readership’s privacy, protection of the readers’ safety by a complete and total lack of malware on their sites’ ads, no more pop-ups, spontaneous blairing audio and/or data devouring, overage fee causing video, and other creepy, obnoxious, invasive and dangerous ads.

    Reply

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