The Problem With Using Paywall Data to Increase CPMs

The Problem With Using Paywall Data to Increase CPMs

Every publisher knows audience data from paywalls is incredibly valuable – it attracts advertisers by enabling them to deliver highly targeted ads to precisely defined audience segments. Every time an audience pays for content, publications have the potential to grow and enhance their audience data sets and then to use this data to win advertisers.

But while it’s clear that data positively impacts audience revenue generation, publishers surprisingly struggle to monetize paywall data pulled from paywall subscriptions. Advertisers today are swimming in a sea of data, and the lion’s share of that audience data is being captured by big players such as Facebook and Google. This gives advertisers the bargaining power to pay pennies on the dollar for first-party data if anything at all.

But how can some publishers like FT successfuly secure its forces in this ocean of data?

Originally posted on Digiday, below’s points from Lucia Moses‘s article leads us to the answer.

In theory, … data could be used to enable advertisers to pinpoint a select audience that is core, affluent users of the publishers’ site. That’s one of the ideas behind Time Inc.’s new paid-content strategy. As publishers give up some traffic associated with putting up a paywall, it’s attractive to think they could make up for the loss by charging higher CPMs for their registered users.

Advertisers can now get user-registration data from Google and Facebook, which have the volume individual publishers lack, Smith said.

Rarely are publishers able to charge higher CPMs for user-registration data, said Steve Goldberg, managing director at Empirical Media. “For almost all publishers, the best they can do is use it as a filter in addition to — versus as a replacement for — third-party data,” he said. “One of the challenges is that paywall subscribers tend to be a small fraction of the overall audience, and that can lead to delivery issues, especially in shorter flights.”

And some advertisers are focused on other criteria. Numbers-oriented media buyers will push back against the idea that paying readers are worth more than freeloaders. Convincing advertisers that their first-party data is more valuable than a look-alike audience is a challenge, admitted Brendan Spain, The Financial Times’ U.S. commercial director. “It’s the constant explanation of quality versus quantity,” he said.

The FT is working around the scale challenge through subsc1riptions, which are core to the its model. Over the past decade, the publisher has been able to fine-tune its use of the data. The FT asks registered users to provide their industry, role and job title.

About 75 percent of the FT’s advertising is targeted based on that audience data, and the FT charges advertisers 20-50 percent more to reach people who identify themselves as C-suite executives, financial advisers and other select, high-value categories than those who fall into the FT’s second-tier audience, which includes mid-level managers or students, said Spain.

But even for the FT, scale is a constraint to selling this way. To address this issue, a few weeks ago, it introduced a product called FT Audience Plus that lets advertisers target that C-suite executive audience when they visit other sites.

Read full article on Digiday.

This just shows that paywalls may not be the answer for some publishers. With options such as this, sometimes, swimming with the bigger players’ tides will be a more practical move for publishers.

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