Industry Insight: News Organizations Need Longer-Term Revenue Metrics

By: Matt DeRienzo

Some publishers are making an interesting shift from focus on CPM rates in digital advertising to a measurement of “average revenue per user.” If they take it a step further, and think about “ARPU” over the long-term instead of a single session on a website, and in general rather than just advertising, it could go a long way toward fixing journalism’s revenue problems.

Big tech platforms have long used this kind of measure, and a cottage industry of companies specializing in optimization of programmatic advertising inventory has emerged to help publishers make the shift.

Just in terms of advertising alone, it pushes news organizations to think more about user experience. Of course, we’ve always known that at some point data will show that 10 ad units on a home page doesn’t necessarily equal double the advertising revenue five would generate. If advertisers insist that rates be tied in some way to results, the viewability of those ads becomes paramount, and less can be more.

It sharpens focus on keeping readers on your site once they get there—are they seeing smartly curated related content? And on how to get them to return—email and push alerts, but also a good feeling about their user experience on the site.

Thinking about average revenue per user leads to the potential that machine learning has to figure out what ad formats, topics and messages are most likely to elicit a response or action by individual readers.

It should prompt local news publishers to finally get serious about knowing a lot more about who their readers are and what motivates them.

If average revenue per user encompasses all types of revenue, a much more extreme focus on user experience would naturally follow.

In explaining a few years ago why his new Philadelphia local online news site, Billy Penn, was not built around banner advertising as a revenue model, Jim Brady said that he wanted to monetize readers “over their lifetime of interaction” with the site and the brand, not a single visit.

The latter is exactly what most news websites are doing, and it’s why all of the most user-unfriendly designs and ad formats were created. We’ve got one chance to hit this person with as many ad units, popup ads, autoplay videos as we can. And it’s a self-fulfilling prophecy because why would they want to come back after that experience?

Following through on Brady’s philosophy could lead to the unthinkable for publishers who have always lived and breathed the short-term: How many newspapers can we sell today, replaced with how many page views?

If, instead, you are cultivating readers you can monetize for years to come, and in many ways beyond selling advertising against their eyeballs, a publisher could even be at peace with—sit down for this—someone reading a piece of their content for free, and without an advertisement attached to it.

Why not, if it could lead that reader to contribute to your organization at some point (and maybe on an ongoing basis, for years) via voluntary paid membership? Why not, if you got to know what that reader liked and responded to, and it led to lucrative, targeted native advertising or sponsored content deals? Why not, if that reader came to trust your brand so much that you could get them to come to money-making events, or to purchase something via an e-commerce platform that was exponentially more lucrative than some banner ads?

Publishers wouldn’t dream of treating their most important or lucrative advertisers the way that they treat readers. (Although, if you think about it, they do because those advertisers are also readers, and they hate the pop-up ads, autoplay video and predatory print circulation practices just as much as regular readers.) If they believe that the average revenue per user metric makes sense not just for advertising, but all forms of monetization, it should lead to a major shift from short-term to long-term thinking.

Matt DeRienzoMatt DeRienzo is executive director of LION Publishers, an organization that supports local independent online news publishers from across the country. He is a longtime former newspaper reporter, editor, publisher and corporate director of news.

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Published: December 20, 2017

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