Tag Archives: advertising

How to Make Money With Digital Media

Hulu - 24

The first question that comes out of any Media Executive when I mention New Media is “How will we make money?” To which I always answer “How will you make money without new media?”

However, they make a valid point: this is a business and if we can’t make money at it then we should be doing something else. So let’s try and figure out what it takes to make money online with your content.

Old Media Revenues

Let’s begin by looking at the costs of making television content and its associated advertising revenue. I’ll be using Fox Network’s “24” as an example.

  • Producing one episode of “24” costs around US$4,000,000.
  • Each 30 second advertising spot during “24” sells for around US$364,000.
  • Each episode of “24” is seen by around 10 million viewers.

If Fox sells 100% of the advertising slots on “24”, they make 364,000 x 2 x 16 = US$11,648,000. The cost to each advertiser is US$364,000 / 10,000,000 viewers x 1,000 = $36.4 CPM (cost per one-thousand viewers). If FOX wants to supplant their television network with pure online distribution, then they need to find 32 advertisers, each willing to pay $36.4 CPM, and -more importantly- ten million viewers willing to seat through 32 advertisers while watching their shows online. Good luck with that, but it’s not happening.

Old Media Models, New Media Tools

Remember that you’re not trying to replicate your business model online, you’re trying to supplement it and, eventually, re-invent it. You’re giving your viewers the convenience and freedom to watch your content when they want to, how they want to and where they want to. All you need to do is make sure A=B: let every viewer who migrates online represent as much revenue as they did on TV. Many will still watch you on BOTH places.

Fox Networks has an interesting problem here: they make about one dollar for every viewer. That’s a $1,164 CPM rate (remember, even though it costs each advertiser $36.4 CPM, Fox can potentially sell 32 ad slots during each episode of “24”, netting them $1.16 per viewer – think about that the next time you pay $1.99 per episode on iTunes).

Now, Fox cannot get anywhere near a $1.1K effective CPM rate for online content, but CBS can apparently sell their shows online at higher advertiser CPMs than on television, and Hulu is selling ads at $20 CPM, so let’s assume Fox can sell eight spots on each online episode of “24” at $40 CPM (for argument’s sake). That makes Fox $320 per thousand viewers.

New Media Thinking

So, how do you design your new media strategy? Think about the following ways to maximize the revenue around your online content:

  • Get your content online, it adds to your regular programming.
  • Give the viewer the choice to watch your content online.
  • Foster a community around your content: it’s all about the engagement.
  • Online lets you target and personalize advertising. Use it to your advantage and charge a premium for it.
  • Your online audience will tend to be younger and more attractive to advertisers.
  • Online content will not cannibalize your regular programming, it will enhance it.
  • Use online distribution to your advantage: if you run out of inventory, find partners that will give your content additional exposure.
  • Allow the viewer to gain control.

And remember, the time is NOW.

Using Twitter as a Marketing Tool

A friend recently asked me about ways his clients could use the power of social networks. As I was explaining to him the nuances of socnets as marketing tools, it occurred to me that Twitter could be used as a powerful marketing weapon. Imagine being able to immediately reach your clients with breaking news at zero cost.

Here are some examples, for different industries:

  • Retail: inform clients of new promotions, sales, time-limited offers, etc.
  • Real Estate: post new properties the moment they come on the market.
  • News: breaking news, behind the scenes info, insights into developing stories.

In this context, it’s no different than an RSS feed to which your readers subscribe – except that Twitter is somehow more immediate, and more personal than an RSS feed. Twitter, you see, is a two-way communications medium, whereas RSS is one way.

I searched the internet for more examples of people using Twitter in this context. One company using this is Woot.com, a website where you can buy items at ridiculous prices during a short amount of time (and very small inventories). I subscribed to Woot’s Twitter feed to check it out: Woot broadcasts the latest deals via Twitter. If you’re into the whole Woot thing, you’ll want to be informed as quickly as possible about new deals, as they usually go quite fast. Receiving a short tweet (that’s what a Twitter message is called) on your cellphone or Twitter app is preferable to constantly checking the Woot home page. After all, some of us have work to do.

Woot’s Twitter solution is as simple as it gets. You subscribe, you receive a tweet every time a new product comes up for sale (or when a product sells out). It’s one way (you don’t get to talk back), but who wants to talk to an automated script anyway?

Guy Kawasaki also uses Twitter as a marketing tool, this time to advertise new posts that appear on his Truemors website. But he sends too many tweets throughout the day and he won’t automatically add you to his list, which means you can’t talk back to him.

Robert Scoble, of Scobelizer fame does get it. He doesn’t send too many tweets, and he will automatically add you to his Twitter list if you add him to yours. Seems to me like the right thing to do. I certainly don’t want to be listening to someone’s tweets if I can’t reach back to him when I want to follow up on something he said.

NBC’s Jim Long uses his Twitter account to share behind-the-scenes looks while he’s off on secret media tours to Iraq or following President Bush to Australia. Though he won’t automatically add you to his list (so that you can tweet him), I get the feeling he would if you ask nice enough (and I suppose Guy Kawasaki would too. The problem with this it that you need to be able to contact them through some other means, as it’s not possible through the Twitter interface). Jim does, however, post a little too much as he tries to keep the conversation on a very personal level. [UPDATE: Jim’s mentioned on the comments that he does automatically follow people on Twitter.]

Here’s a short list of Dos and Don’ts if you plan on using Twitter as a marketing tool:

  1. Do use Twitter to sell your products, ideas, offers, insights, etc.
  2. Do advertise your Twitter account on your website, business card and marketing literature. Here’s mine.
  3. Do create a conversation. Add your users to your Twitter account. Let those who listen to you, talk to you.
  4. Don’t spam. Really. You don’t have to post everything to Twitter… your important messages will get lost amid the junk. If yours is a high-volume Twitter channel, let users know before hand.
  5. Don’t rely on Twitter 100%. Twitter’s service has been down a lot lately. Use Twitter as one more tool in your social media toolbox.

What about you? How do you use Twitter?

Content-centric Communities

Bernard Lunn, at Read/WriteWeb wrote an interesting article about the failure of Eons.

Eons is a social networking website aimed at the over-fifty crowd, headed by the founder of job-site Monster.com. After raising $32M, Eons is now cutting it’s workforce in half – not exactly a measure of success.

In his article, Lunn touches a point I’ve been making for a long time: people gather around content, not around demographic variables (see “The Advertiser’s Dilemma”, “Rethinking Ratings” and “Why Google Should Buy YouTube” for my previous articles on content-centric ratings analysis).

Lunn think the problem lies in Eons’ strategy to connect people around age, a traditional demographic variable, and not around content or common interests. He’s hit the nail squarely on the head:

“…people want to connect around content, not around age. Connecting around content is what Blogs do. You connect on something that interests you. (…) As you get older, you get a more varied set of interests and human relationships across all ages.”

Age/Sex/Location is not a social network

Demographic variables allow advertisers and their clients to easily target their products to artificial segments of the population that probably have very little else in common, other than age/sex/location. In a small-town-world these variables may have been good enough to create desirable advertising targets, but we now live in a connected world where people of all ages and genders interact and share common interests on a scale seldom seen before.

And while you can still use demographic variables to target your product, you’d be missing a much more interesting target, one capable of creating die-hard fans and viral awareness of your product, by ignoring content-centric connections.

As for social networks, look at the successful ones and the “glue” that keeps them together:

Building a social network around content will not magically make it successful, just like putting wings on a box won’t make it fly; but those wings sure help once you put the rest of the airplane together.

The Content-centric Connectivity Chart

The following chart is an example of how people of different ages, genders and cultural backgrounds gather around common interests (caveat: networks are not drawn to scale, connections do not attempt to imply actual traffic for these sites, and age/gender/race were limited by the avatar icons I could find on the net).

Content-Centric communities chart

The Content-centric Connectivity chart highlights two key ideas:

  • Successful networks are built around content, not around demographics.
  • There’s a huge opportunity for anyone who learns how to target their products around content-centric communities.


There will always be products that need to be targeted around demographic variables (e.g., feminine products, some toys, acne-medication, denture products), but the opportunities and tools for expanding your product’s appeal have never been this good.

Quick Guide to Configuring GnuPG on your Mac (OS X)

This is a quick-and-dirty guide to installing and configuring GnuPG (PGP) on you Mac. If you want a more detailed guide, explaining every step, visit http://fiatlux.zeitform.info/en/instructions/pgp_macosx.html

For a detailed explanation of how PGP works, visit the Getting Started page of the GNU Privacy Handbook at http://www.gnupg.org/gph/en/manual/c14.html

For a nice tutorial on selecting a strong passphrase, read http://fiatlux.zeitform.info/en/instructions/passwords.html

Step 1: Download all the necessary software

You’ll need to download the following software (or packages) which will allow you to create encrypted messages on your Mac, import and export encryption keys, and configure everything through a GUI (Graphical User Interface).

Mac GnuPG

GPG Keychain Access

GPG Preferences

Step 2: Install and configure

Double-click on the Mac GnuPG file you downloaded to launch the installer. Launch the “GnuPG for Mac OS X 1.4.7” package (this was the version at the time of writing this article) and follow the instructions to install GnuPG on your computer.

Launch the Terminal application and open a command-line window. Type:

gpg --gen-key

and follow the instructions to generate your keypair. Choose “1” for the kind of key (DSA and Elgamal), “4096” for the key size, “0” to make your keypair valid indefinitely (if you think your key should expire after a certain length of time, you may use the following code: 2 for 2 days, 3w for 3 weeks, 6m for 6 months, or 12y for 12 years).

For your User-ID, enter your name, your e-mail address (this is the address you’ll use to send and receive encrypted emails) and an optional comment. You may use the optional comment field to state an opinion (“Live Free or Die”), to further identify yourself (“Company Name”) or however else you see fit – just remember that the comment field will be tied to your User ID and will show up in your public key. Enter “0” to okay all the information.

You must now enter your passphrase. Your passphrase is the one thing standing between your private key and anyone keen on misusing it or learning your secrets, so choose it wisely.

  • Do not use ordinary words that appear on any dictionary.
  • Do not use the names of your loved ones, hated ones, pets or family members.
  • Do not use personal dates such as birthdays or anniversaries.
  • Do not use short passphrases.
  • Use upper- and lower-case letters.
  • Use numbers.
  • Use punctuation marks.
  • Use something you can remember.

For a nice tutorial on passphrases, read http://fiatlux.zeitform.info/en/instructions/passwords.html

You must now enter your passphrase twice (it’ll be hidden from view) and generate your keypair (it’ll take a long time).

Congratulations… you’re now ready to communicate securely (well, almost ready).

Now install GPG Keychain Access and GPG Preferences.

GPG Keychain Access will let you manage your private and public keys through a nice GUI interface. It also allows you to manage your contacts’ public keys, import and export keys, and publish your public key to a key server.

GPG Preferences installs into the System Preferences panel and lets you select the key server to use to search for public keys. If someone sends you an encrypted messages, you’ll need to know their public key to decrypt it. They can send you this key or you can search for it on a key server (if they published it).

Step 3: Configuring GnuPG to work with your applications

Ok, so now that you have GnuPG installed and a keypair, you need a way to use GnuPG from within your applications.

The following applications will let you seamlessly use GnuPG:


ABKey will integrate GnuPG with your Address Book, adding fields for public keys to every address card.


GPGMail will let you encrypt, decrypt and sign messages from within Apple Mail. It’ll automatically recognize if a contact has a corresponding public key.

GPG DropThing

GPG DropThing allows you to encrypt and decrypt chunks of text and files through a drag-and-drop interface.


Enigmail will let you encrypt, decrypt and sign messages from within Thunderbird, Mozilla or Netscape email.


EntourageGPG will let you encrypt, decrypt and sign messages from within Microsoft Entourage.


Eudora GPG will let you encrypt, decrypt and sign messages from within the Eudora email program.


FireGPG will let you access GnuPG functions from within the Firefox browser. It’s great if you use Gmail for email as it’ll let you encrypt and decrypt messages from within Gmail and even adds buttons to Gmail’s interface to access common encryption functions. It’s still a little buggy, but works well enough.

Sometimes, FireGPG’s options dialog takes forever to appear or won’t appear at all. You need to indicate the path to the GPG executable file. If the options dialog does not appear, simply type “about:config” on a new tab, filter on “firegpg” and change the following keys:

  • Set “extensions.firegpg.specify_gpg_path” to “true“.
  • Set “extensions.firegpg.gpg_path” to “/usr/local/bin/gpg

and restart your browser.

That’s it… you’re now ready to send and receive private messages.

If you want to send me a private message, look for my public key on the key servers. My email address is “granier” at Google’s Gmail service.

Feel free to add comments, suggestions or corrections via the comments form below.

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Get your Virb and Joost invites here

Just got a new batch of Joost (2) and Virb (10) invites for my readers… Joost is now Mac compatible as well.

Leave your comment… (recommend a social network or some Mac OS X software for extra credit). These will go quickly!

While you’re here, read through some of my more popular posts:

5 Steps Towards a Successful Website

Gaming the Cheaters

Detailed CBS/YouTube Weekly Stats and Charts

Analyzing the CBS/YouTube Stats

Blast from the Past! Multi-Dimensional Data Analysis

The Advertiser’s Dilemma

Why Google Should Buy YouTube

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Will erinMedia Topple Nielsen?

According to this article on BusinessWeek (Ganging Up On Nielsen by Catherine Holahan), erinMedia -an upstart media-research company- has secured up to $25 million from a coalition of media companies and advertisers.

erinMedia contends they have come up with a better way to measure audiences than the one used by Nielsen Media Research. According to erinMedia, they can measure every second of television watching and their technology works with any set-top box out there. Nielsen, on the other hand, relies on a proprietary set-top box (installed on a statistically significant number of homes) and reports data on a minute-by-minute basis.

erinMedia’s technology could in theory provide much better data for advertisers and would allow them to serve advertising based on each viewer’s television habits. However, Nielsen’s technology is pretty much the worldwide standard for television ratings… erinMedia has already sued them for abusing this monopoly power, although the lawsuits are still pending.

It will be interesting to see how this battle plays out.

Full disclosure: Our AudienceMeter software was originally designed to work with data generated from AGB/Nielsen people-meter reports. It can, however, be adapted to future data formats.

In other related news, Nielsen Media Research has announced the availability of their Arianna Software in the US. Our AudienceMeter software works in conjunction with reports generated by Arianna, offering additional business intelligence and analysis capabilities.

Tomorrow (Feb. 8th, 2007) I will be attending the We Media Conference at the University of Miami. Drop me a note if you’ll be there @ granier /at/ gmail /dot/ com.

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Five Steps towards a Successful Website

These steps won’t necessarily make your website a success, but ignoring them could seriously hurt your chances of making it in an increasingly competitive environment.

1. Operate in stealth mode until you’re ready to launch.

It’s a no-brainer, I know… but until your product is ready, keep quiet. Monitor blogs (via Google Alerts and Technorati feeds) to get an idea of how many people are mentioning your future product. And monitor your competitors while you’re at it.

2. Create buzz, make’em wonder.

Without giving too much away (see step 1), post a simple landing page on your website requesting potential user’s emails. Keep them updated when something worthwhile happens. A developer blog is another good idea. Again, exercise caution when divulging information about your product.

3. Hold a controlled, limited beta.

Use the emails collected in step 2 to invite a limited number of users to your controlled beta. Invite users who can give something back to you and your product. Controlled betas allow you to carefully grow your website, scale it, fix it and determine where the problem areas are.

4. Make it easy to use, easy to read, easy to share.

Make sure your product is usable without reading a manual or getting an advanced degree in rocket science. The user interface should flow from one action to the next. Information should be well laid out and easy to read. Get out of the user’s way. Make your product ready-to-use. Hire a usability expert and an information dashboard designer. Community oriented websites should let users share their information. Allow them to easily embed your product into their blogs, websites, Virb or MySpace. Make it easy to click and share. Let them import their address books. Let them save to del.icio.us, magnolia, digg, etc.

5. Go public (no, the IPO is a little bit later).

Invite the guys at Mashable, TechCrunch, GigaOM and the relevant industry bloggers to use and review your product. Post it on Digg. You may do some of this at step 3.

That’s it for now.

Easier said than done, but these steps need to be on your mind while you build your product. No, they don’t apply to every idea out there… but if it applies to yours, you’ll know it.

Step 6? What step 6? Oh, yeah… hire a consultant who knows this stuff. 😉

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Two Articles at MediaPost Publications

Reading recommendations for today:

A couple of articles found on the MediaPost Publications website (registration is needed. For quick login credentials, visit BugMeNot).

SMG Exec: Don’t Bet On Pre-Roll

Don’t you just hate having to sit through a 30 second commercial just to watch a short internet video clip? The pre-roll ad (forcing the viewer to watch a video ad before they can watch their chosen content) has had mixed results on the internet. Publishers have experimented with different methods, including shorter pre-roll ads, post-roll ads, adjacent banners, and my favorite so far: a simple sponsorship message (“Brought to you by Pringles”) followed by a more extensive post-roll ad, after you’ve watched your content.

Best quote from the article: “While the guaranteed impressions delivered by pre-roll ads appeal to marketers, they won’t amount to much if they end up alienating viewers.

‘Live’ Ratings Pronounced Dead At Nielsen Meeting

According to a recent Nielsen report, people who own a DVR time-shift 40% of the shows they watch. Although DVR households amount to just 11% of the market, the trend is significant enough to have caught the attention of the TV networks and advertisers. It now seems much more likely that television ratings will evolve in two fronts: a move to commercial minute ratings (measuring the ads instead of the shows) and a move to “Live plus playback” (measuring time-shifted playback in addition to live broadcasts).

Interesting tidbit from the article: “the major broadcast networks have not been getting “paid” for about 7% of their audience – the portion of their audience that is currently played back on DVRs.

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Gaming the Cheaters

The Problem

Users of internet video websites trick the system to inflate the number of views recorded for a particular video. They may do this by setting several browser windows to auto-refresh on their video’s web page, or rigging a number of different computers to do the same thing, over and over again. A group of friends may attack together to confuse any IP tracking measures.

Why It Happens

Fame & Fortune. Bragging Rights. 15 minutes of fame. Why else?

The main reason internet video websites are so popular is because people crave attention. We love to show off. “Hey, look what I made!” – “Look, Ma!!! No hands!” (The other reasons are that people love to be entertained and people are naturally curious).

We can divide the cheaters into two non-mutually exclusive groups: the attention whores and the fortune seekers. Their means are the same, their ends are different. I’ve made the distinction because they affect different websites in very different ways.

Services like YouTube, that thrive on visitor stats and video views, have no real incentive (yet) to do anything about the problem. It actually benefits them. So what if there are users on YouTube who claim to watch 70 videos per hour every single day? It only helps YouTube boost their numbers.

Services like Revver or Metacafe, on the other hand, who pay users for their content, do have a problem. Users who cheat the system into believing more people watched their videos, could steal a lot of money from them. For these services, it’s not the number of views that’s important, but the number of real, attention-paying viewers.

The Solution

So, how do we stop the cheating? Turns out there’s several ways. Most of the internet video services require you to press the PLAY button on the video player to start the video. A simple Page View should not be counted as a Video View. Mindlessly refreshing the web page should do nothing to your video’s view count.

Secondly, videos have length. So measure the amount of time people spend on the web page after they’ve pressed the PLAY button. (You can also write some code to track the video being streamed through the Flash player, but this just seems a lot easier).

This simple method will tell you two things in the long run: how many people actually clicked on your video and how long through it did they watch it.

Granted, some people may just click PLAY and just let the video play while they do something else. This is something we’ll have to live with for the time being. Advertisers don’t know whether you pay any attention to their ads on television, but they still pay for them. You adapt to the limits of the technology. (Advertisers also trust AGB Nielsen to have selected a reliable sample of viewers, but that’s another story).

One problem with the simple method (using time spent on the page) is that you can’t use it to reliably track videos embedded on other websites. This is one point in favor of developing a reliable system to track the actual video streamed through the Flash player. Or you can simply restrict your stats to those from within your website and group the rest as “unreliable off-site video views.”

Yes, you can always write a script to open a web page, click on a button, wait some time and do it again. But it’s about making it harder for the cheaters and reporting more accurate stats.

Thus, three easy steps:

  1. Track video views only AFTER the visitor has pressed PLAY on the flash player.
  2. Use the video’s length and the time spent on the page to measure how far through the video they watched.
  3. Filter IP addresses.

What do you think? Any foolproof techniques to stop the cheaters? Leave your comment below.

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