Digital advertising models

Advertising is keeping its central position as a central revenue model in digital media, but advertising will be applied in novel ways compared to traditional media. The digital media offers both the advertising space and customer data for advertisers. In addition, the ability

to measure and target advertising open lot of opportunities for advertising content and pricing. (Argillander 2015) Additionally, advertising model is becoming especially important in publications that readers are paying for, and more precisely in local and niche newspapers (Nygren & Zuiderveld, 2011). Digitally, advertising is nowadays sold through automated systems, where advertisers make their purchases according to demographic audience but the exact sites or outlets where the final advertising messages is going to appear is unknown. Naturally, there is a higher commission for associated advertising. This transition towards automated sales of advertising is causing challenges to incumbent media organization in terms of profitable revenue streams from digital advertising. Furthermore, there is a strong belief amongst most leading newspapers that digital advertising can be improved with investments in systems and skills needed in tracking the subscriber data (Doyle 2013).

Traditionally, pricing of media advertising has been based on the certain amount of contacts; for example, newspapers have been charging their advertisers according to circulation whereas media organizations have been taking a commission of providing advertising space. In terms of internet advertising, the pricing is usually based on the click (CPC, cost per click) or display (CPM, cost per thousand impressions) based revenue models. Furthermore, the price-level of advertising depends on how targeted the advertising message is and how likely that message leads to a transaction. On the other hand, Google changed the game by introducing the search engine driven advertising based on the action type of pricing. (Argillander & Muikku 2013) In a search engine like Google, the rank of the advertiser depends on both the bid price of certain keyword and the click through ratio, which means the amount of users who click a specific link in relation to all users who view the link. This means that the most relevant ads will be ranking higher while encouraging advertisers to use targeted ads and only bid on relevant keywords. (Panda 2013) Internet advertising is becoming more dynamic than ever before. Advertising space is sold and modified in real-time bidding according to reach of a campaign, feedback, and price changes. Changing prices, in turn, are evolving dynamically according to supply and demand of advertising space. (Argillander & Muikku 2013)

Following concepts represent relevant themes in digital marketing environment. The fundamental goal of these short descriptions is not to increase detailed technical understanding of each element but rather outline the palette of digital advertising models.

Therefore, these themes are discussed more deeply again in the empirical section of this study as they need further attention regarding to future media research.

Mobile marketing/advertising: Effective mobile marketing is also challenging due to differences in devices and operating systems, and it should be adjusted according to limitations of mobile devices, such as screen and keyboard sizes. There are three major advances in mobile marketing from the strategic viewpoint, which are the fact that mobile devices are always with consumers and connected, the possibility of using location-sensitive offers, and the possibility of personalizing messages and offers. (Berman 2016)

Programmatic buying: “Programmatic buying refers to buying digital advertising in an automated manner. Programmatic buying differs from traditional direct buying in that it takes place in real time, and impressions are bought individually, often in an auction. One of the basic principles of programmatic buying is pursuing efficiency from the advertiser’s perspective. Compared to traditional direct buying, the role of data utilisation is particularly highlighted in programmatic buying.” (Alma Media 2017a)

Content marketing: Content marketing refers to sharing key information in order to increase engagement with customers. The most essential is the goal orientation that drives the content production and planning. By content marketing it is able to change the image, deepen the customer relationships, affect customers’ buying behavior or affect emotions.

There are several ways to implement content marketing in digital environment such as:

articles, blogs, videos, animations, reader competitions and so on. (Alma 2017b)

Rich media: Online rich media consists of a selection of interactive methods that are displaying motion and sensory traits like video, audio, and animation (Chabrow 2006). The term ”rich media” relates to online content with multimedia elements including sound, video, or content that moves when a user is clicking on the page that features content (Shaw 2004). Statistics has shown that interactive rich media advertising has earned significantly higher click-thorugh rates than the non-active rich media ads. In addition, the higher user engagement and user interactivity has been garnered. (Rosenkrans 2009)

Native advertising: Different brands have increasing opportunities for new and more efficient ways to put advertising message into the flow of information and news content due to new technologies and consumer touch points (Kurnit 2014). On the one hand native advertising can be defined as a desired marketing communication that appears in stream (Campbell & Marks 2015), but it could be described as a type of advertisement that is merged in the page content, and at the same time it is adjacent with the general form of the

page and the platform from the editorial point of view (e.g. Marius 2015; IAB Finland 2017c).

Therefore, native advertising might feel and like like an original editorial content of particular online media. This, in contrast, has resulted concerns and debate over whether consumers are being confused or mislead due to nature of the native advertising. (Kurnit 2014) Campbell and Marks (2015) emphasize that native advertising should provide a clear source disclosure and offer similar value to context in which it is placed.

Augmented reality: Augmented reality (AR) refers to ”The practice of displaying digital information over people’s real-time view of objects, people, or spaces in the physical world - -. Augmented digital information may be viewed by users, for example, via smart phone screens, large video installations, or holographic projections.” Augmented reality can be used to creating interactive advertising and packaging, and enhancing the overall customer experience, especially in terms of gaming industry. Researchers has found that there might be a huge potential to implement AR in integrated marketing programs. (Scholz & Smith 2016)