Companies that developed professional advertising operations saw increases in revenue, often significant ones. Click To Tweet
Among key findings of the study:
- Companies that developed professional advertising operations saw increases in revenue, often significant ones. These companies recruited experienced sales professionals and compensated them with salary and commission that constituted a living wage. They also have a rate structure that supports their financial sustainability and as well as a playbook for selling and delivering on their pitch.
- Unlike their mass counterparts, the companies typically do not use a rate model based on cost per impression (CPM), pay per click, or deals (such as Groupon) that require a large audience to make any money. Instead, these organizations use direct sales to advertisers and offer exposure to smaller, highly engaged audiences. This enables them to command higher rates as they are unlikely to be sustainable at the lower rates.
- Local news sites sell advertising primarily to local small businesses while niche sites can target larger advertisers. Larger niche sites also have sources of revenue in addition to advertising, such as events.
- We found little evidence that organizations are responding to recommendations by experts that they develop multiple revenue streams, including sources other than advertising. On average, ad sales accounted for nearly 80 percent of total 2014 revenue. Six sites reported that 100 percent of their revenue came from advertising; six others said it accounted for 90 percent or more of their revenue. This is a vulnerability: in any business, revenue diversification is key to financial stability because if one source falters, there are others to fall back on.