Happy Thanksgiving to all of my US readers.
Look into the eyeball my friend
Precious man can’t you understand
Look into the eyeball
Tell me what can you see
What can’t you see
You keep it going on
You keep it going on
It’s all about eyeballs. But not in the way we think.
We have become accustomed to thinking in advertising that more eyeballs equates to more money. That for any given CPM, more ‘M’ = more $. That was, and is true for broadcasting. One could extrapolate the same thinking to the evolving unicast world, and that would be a reasonable assumption except that it doesn’t work that way.
But there is one other really big thing. Distribution costs.
- RF transmission – Once you have the transmitter, licenses, business infrastructure in place, the cost of distribution is essentially fixed.
- Print – Production costs are fixed, as may well be distribution costs for certain types, but essentially, more subscribers = more paper & ink and more delivery/postage. Therefore the cost of distribution is baseline plus cost per subscriber per content delivery instance.
- Cable & Satellite – Fixed base cost (satellite & cables), but then a smaller cost per subscriber to get the Set Top Box and connection established. Not a recurring charge.
- Web Pages – Fixed cost per quantum of users for servers and infrastructure, after that the bandwidth paid by the subscriber.
- Web/Mobile Video – As per web pages, except when they all have the audacity to get ‘what they want, when they want it, where they want it’ and then you have to unicast-stream the bandwidth intense content. At that point, your cost per subscriber goes way up.
So. Is having lots of eyeballs really more important than having the right eyeballs? Depends upon who you are. As a broadcaster, it just gets cheaper and generally the advertising becomes proportionately more lucrative. If you cannot attract the right ‘CPMs’ (and who does?*) you lose huge economies of scale in a unicast world, and the costs of providing the service far outweighs the advertising revenue that those eyeballs generate. What’s more, not all traffic is equal. For example, surfers who arrive via search are predominantly “one-and-done” visitors, not necessarily the reliable well defined demographic that most content owners seek.
Perhaps Murdoch is right in moving away from Google and leveraging Bing instead. This is akin to moving out of the expensive shopping mall rental when you have a known brand… the theory being that shoppers will follow, they are qualified buyers and you get to keep more of your own money.
“What’s the point of having someone come [to us] occasionally who likes a headline they see in Google?” Mr. Murdoch asked in his recent Sky News interview. “Sure we go out and say ‘We’ve got so many millions of visitors, you had better advertise’ and so on. The fact is, there’s not enough advertising in the world to go around to make all the websites profitable.”
Unique IP distribution is expensive.
Be careful of eyeballs. Yes you need them to validate viability, but too many eyes watching your every move may be bad for business.
Tell me it isn’t so… I’m listening.
*Ad networks incrementally deliver pennies for every thousand more visitors that publishers attract. Most ad networks deliver between 16 cents and $1 for a thousand and have large unsold inventories.