Author Archive | Matt Shanahan

Analyzing Disparities in the Unit Cost of Engagement

"Demand Map"

This is the second in a series on the importance and use of unit cost of engagement. In paid content, a pricing disparity is defined as a subscriber paying too much or too little for the content compared to their peer subscribers.  Pricing disparities are often hidden because fees are charged based on the contract period or quantity of users neither of which account for actual consumption (i.e., engagement).  Because subscriber value is directly correlated with engagement, the unit cost of engagement can be used to uncover pricing disparities and opportunities for digital revenue optimization. One of the easiest ways to visualize pricing disparities is to plot each subscriber according to their subscription fee and their measure of engagement during the term of the subscription.  At each […]

Importance of Analyzing Unit Cost of Engagement in Paid Content

"Unit Cost of Engagement"

Last week, Scout Analytics announced research concluding that aligning engagement and revenue provides a 20-30 percent uplift potential for paid-content publishers.  After fielding a few questions on the research, I thought it might be worthwhile to explain some of the methodology here in the blog.  This blog entry will address the following questions: What is engagement? What is unit cost of engagement and how do you calculate it? Why is calculating unit cost important? First, what is engagement?  In paid content, engagement is consuming content (e.g., reading an article, downloading a report).  Engagement can be measured at an individual level (e.g., number of articles read by a single user) or at an organizational level (e.g., number of articles read by […]

Publisher vs. Advertiser Priorities: Loyalty vs. Scale

"digital revenue optimization"

Posted by: Matt Shanahan In the debate about business models for digital publishers, the cost of audience impressions is often underestimated.  The expense to create a sellable inventory of impressions requires more than content production, it also includes the cost of audience development, which can greatly exceed the cost of content production.  The classic example of this content vs. audience cost dynamic is “The Blair Witch Project” movie.  “The Blair Witch Project,” whose final production budget was somewhere between $500,000 and $750,000, cost over $25,000,000 to market. As the competition for audience impressions increases, the sophistication and cost of acquiring audience impressions is also increasing.  This leads publishers to decide whether the return on investment from acquiring more fly-by impressions is greater than the […]

Demand Map™: A Quantitative Lens for Revenue Optimization in Paid Content

Posted by: Matt Shanahan In the book Super Crunchers, Ian Ayres looked at hundreds of tests evaluating how data-based decision making (i.e., quantitative) fares in comparison with  experience- and intuition-based decisions (i.e., qualitative).  We were interested in doing the same thing regarding license revenue optimization in paid content. When a publisher designs a license for paid content (i.e., packaging and pricing of access to media and information), they do so with an expectation of how much media or information will be consumed (i.e., the level of engagement).  Typically, the license is defined in terms of sections, volume, numbers of users and usage rights.  When a new license is introduced, the initial price is usually based on previous experience and intuition of […]