What if: art worked according to the business principles of online media
Are you able to explain your job to your spouse / parent / child? In the case of online advertising (monetisation of inventory in particular) a comparison to art became handy to "us" recently. Painting this parallel brought an interesting perspective on the viability and sustainability of our business. Let me welcome you to discuss how that can be improved.
Imagine owning a spacious hall. Divided into many rooms. Let's call it a website. It has got a nice lobby (homepage) which promotes a variable set of thematically oriented rooms. Let's call them pages. Each can be entered either directly from outside, from a different hall, from a different room of your art hall or via its lobby.
As an owner of such a hall you decided to hire a team of artists (editorial team) whose daily job is to create informative and entertaining pieces of art of a different sort. Let's call those content. Any of such pieces of art would be exhibited in its own room, front and centre.
Albeit your hall is publicly free to enter, you would want it to be famous and crowded. Thus you would invest in attracting visitors to recognise its address and come visit either the hall itself or any of the rooms. All above represents quite a chunk of the cost.
So how do you make money then?
Your rooms are spacious enough for adding surroundings to the art pieces of your own artists. That allows for renting such set of placements (ad slots) to artists of a different sort. Let's call them advertisers. Ideally you would want to have all those placements fully occupied anytime a visitor comes to any of the rooms.
Although your confidence in quality and attractiveness of your own art is high, you would only rarely rent your full room to one of those external artists. Let's call it branded content. Thus in one room you would typically find more smaller pieces (ads) of different artists surrounding the masterpiece of your artist.
To maximise the revenue, you would want to sell them all. And add more. And make them more attractive. And add more. Once getting experienced you would keep some for promoting your own rooms while constantly balancing the number, size, attractiveness, price and list of sales channels of each of those placements. Let's call it yield management.
What are those external artists willing to pay for
Some of your clients would pay premium price to have their large oil painting exhibited on the wall opposite the main entrance (or some specific room). You would negotiate the volume of visits during which it would get displayed, time period & price per thousand of such visits. Let's call it a guaranteed.
Others would pay for their art to be displayed at a given location to every single, second or fifth visitor of such room. Let's call it a share of voice (100% / 50% 20%).
You would also meet clients who would want to buy any placement that is going to be in the room visited by a specific person. Let's call them a target group. However, if such a visitor already have been in four rooms, those clients would not want to expose their art piece any more. Let's call that a frequency capping.
And some clients would only want to pay you for those visitors who would want to meet the artist. Let's call this performance.
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Adding agents and auction
Visitors of your art hall come a couple of times a day while going to a few of your rooms. Each visit represents a unique combination of rooms. In order to get a variable set of clients while keeping your business viable, you would motivate external agents (agencies), each representing a set of artists.
What complicates your success is that a vast majority (western markets) or at least a half (easter markets) of your revenue is going to be generated via auction. Let's call this programmatic. That enables your clients to bid (whatever amount) for each of the visits of any of the rooms, separately for every placement.
How programmatic ecosystem works becomes a subject of a separate article.
Whichever way you end up renting a placement, keep in mind that your inventory is perishable. That is a limited number of units which would remain empty at a specific visit in case you did not manage to sell them. No option for catching up at a next visit. Similarly like in travel / accommodation industry, it pays off to hire yield experts.
At the end you would meet many visitors wearing specific glasses that enable them to see only your art. Let's call this an ad-block.
Imagine the business principles in art would be the same as in media.
Such a business might seem like non-viable or at least very complicated. What can we do to improve its sustainability, especially since it is a red ocean already? Let's discuss.
More about the author of photos exhibited on the walls of "us" office.