Breaking Down the Online Publishing and Advertising Industry

One thing I pride myself on is my ability to break down business models. I tend to use the business model canvas as it’s a very simple, effective and concise way of articulating your business model. Quite possibly the most misunderstood business model in today’s web businesses is the advertising and publishing industry. The reason it’s so misunderstood is that because so many people consume it every day, they’re often mislead to believe they are the customer. However, as we all know, if you’re not paying for it, you’re not the customer. As I’ve written before, I’ve always been challenged to decrease my time consuming and increase my time producing.

It’s first important to understand the cross section of the publishing and advertising industry. The cross-over is called distribution. The term distribution might be an awkward term for many people in the online word because it’s probably more commonly known as sales, but distribution is a little bit more than sales. It’s the whole process of how you’re going to get your product to your eventual users. Sales is just a function of that. The goal of both the advertiser and the publisher is the same – costumer acquisition. Customer acquisition for them is being able to go to another business and sell them user attention. In order to gain attention, they must offer an exchange. Usually there is an exchange between your time and theirs, through a medium called content. Once this exchange takes place – you read an article on their website – then they have now procured their product to be able to sell.

Most people assume that because you use Google’s search engine it means you are a customer. This is simply not true. You’re attention is a product that is being procured. Google’s procurement process is to give you something of value (discovery) in exchange for something you have time (attention). It then sells that attention to someone else.

To make this easier to understand, let’s compare it to a manufacturer’s business model, which is very easy for pretty much everyone to understand.  So, just as a semi-conductor gives something of value to it’s suppliers (money) in exchange for something they have (sand), so to is a publisher giving away something of value (their content and therefore time) in exchange for your time (and therefore attention). It then refines the sand and creates semi-conductors.

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Seth Godin has once said:

Attention is a bit like real estate, in that they’re not making any more of it. Unlike real estate, though, it keeps going up in value.

I love this quote. It speaks volume to how large the advertising industry is and can be. It also speaks to how much is at stake – your attention. I believe procuring our attention is the single most important aspect of today’s internet businesses. It’s also quite possibly the most difficult and potentially the most costly. Everything we do is based on a limited supply of it and therefore there will always be a constant battle to procure as much of it as possible.

Next time you are annoyed at an organization for the content they used to procure your attention, remember, it’s your attention. You get to choose what you do with it.