From Monetization to Compensation: Refocusing on What’s Important

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Since the early days of online advertising, no conversation about the state of the industry, or the plight of digital publishers specifically, has been complete without a reference to monetization. The word “monetization” is central to the digital media ecosystem and – like the mythical Midas Touch – it evokes the concept of transforming objects to gold, resources to revenue.

But – as King Midas himself discovered – the ability to turn resources, including digital materials and online content to riches, does have its downsides. As publishers have emphasized monetization, online audiences have grown increasingly disillusioned with a user experience that seems to place maximizing advertising revenues above consumer preference, and users are turning to ad blockers in frustration.

The words we choose can be highly impactful and as a result, sometimes, with a simple change in terminology, conversation and attitudes can be shifted and dialogue elevated to a higher level.

Faced with the rising use of ad blocking tools, the various stakeholders in the online ad industry are presented with great opportunity to look at the language we are using and contemplate the move from ‘monetization’ to ‘compensation’, and in doing so, refocus on what is most important – the consumer.

Before we get into the crux of the discussion, it is first important to lay out exactly what these two terms mean. Monetization refers to the conversion of goods and services into profit, or ‘coin into money’; compensation is where ‘something is given or received as an equivalent for services’. While nuanced, there is a significant difference between the two:  the first implies a one-way effort to extract revenues, where the other implies a combined agreement with something in return agreed by both parties.

So, just how widely embraced are these terms in the ad tech industry today? Even a quick search on trade publication, AdExchanger highlights the continued emphasis, where the term monetization returns 1740 results, but just 102 for compensation.

With this in mind, how can publishers and advertisers work together to place greater emphasis on compensation, rather than generation of dollars alone?

Restoring “value exchange”

The digital advertising industry was founded on an unspoken, implicit understanding between publishers and consumers: media companies would provide relevant, high quality content for “free” and in return consumers would view the ads that funded its production. In the early days, companies like DoubleClick talked of “keeping the internet free for consumers” via advertising, but those mentions were typically confined to SEC documents and other narrowly distributed materials. The “value exchange” remained implicit with virtually no communication to consumers.

As the digital media matured and traditional media companies looked to digital advertising revenues as a way of remaining relevant when internet usage was growing, they did so on the fragile foundation of this unspoken and implicit understanding. The growth of ad blocker usage is a strong indication that audiences are not satisfied with the quality of advertising they are being exposed to, and that they are not aware of the role ads play in funding content. This is highlighted by YouGov’s recent UK-based study which found that 56% of the population were unaware that blocking ads creates a direct loss in ad revenues.

To achieve sustainability, we can no longer look at our work as simply ‘monetizing’ or deriving revenue from users. Ad block usage should prompt us to begin to think about the relationship between consumers and publishers as one in which compensation is exchanged – where “something is given or received as an equivalent for services”.

Offering flexibility and choice

It is important to recognize that every ad block user has their own reasons for installing an ad blocker — from data concerns to irritation with intrusive formats — and these objections can’t be met with a universal solution. As our language evolves from monetization to compensation, publishers will need to engage with their users and offer them choices, enabling them to select the most appropriate compensation method from a range of options.

While many consumers will likely opt for the traditional advertising supported experience, by offering alternative compensation methods – be it an ad-free subscription model, allowing users to make micropayments for unique articles, or viewing a certain number of ads in return for content – the value exchange is being brought front and center, and consumers are empowered to “pay” for the content in a manner that suits their specific tastes.

Although it is hard to imagine, if we are unable to evolve the current approach, and move from a mindset of monetizing content to providing compensation choice, then the internet that we have come to know, with its vibrant, content-rich ecosystem where digital publishers can fund their content development efforts, is most certainly at risk.

About the Author

Ben Barokas is the CEO and Co-founder of Sourcepoint, where he is driving the next evolution of the internet – content compensation – providing publishers with solutions to foster a transparent value exchange with consumers. Ben is a serial entrepreneur with a unique ability to identify market opportunities and the conviction to turn them into thriving companies.

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