Audience Reselling: Does It Drive Profits?

Posted by: Matt Shanahan

In audience selling, a publisher sells impressions of a specific target audience to an advertiser. In audience reselling, a publisher sells the audience data to an advertiser via an aggregator or network. The decision to sell the data vs. the impression should be based on a financial model and expected returns. Interestingly, I haven’t found any models that help publishers make this decision.

So here is my take.

Using the math set forth by GCA Savvian, data aggregators on average get $0.50 of every $10 CPM, and publishers receive $3.60 of every $10 CPM. Let’s assume group of advertisers wants to buy 1,000,000 impressions ($10,000) to a specific audience demographic. Let’s assume there is a publisher that has the data to target the impressions. By selling only impressions to the advertisers based on their data, a publisher would receive $4,100 (their $3.60 cut and the $0.50 that would have gone for data purchase).

Now let’s look at this same scenario but selling data and impressions. Assume a 60/40 split for data royalties to publisher. At 40%, the publisher would get $0.20 CPM for their data.

If the publisher had premium pricing (i.e., more expensive CPMs vs. competition), the selling of data will result in purchase of impressions on other sites. In this case, little or no revenue will come from impressions, and the real revenue will come from data royalties. So the break-even point of selling data vs. impressions, is when the data generates 20,500,000 impressions on other publishers sites. But that won’t happen because only 1,000,000 impression are needed. The data revenue for the 1,000,000 impressions would be $200. In this case, the publisher makes $200 vs. $4,100.

Let’s use the case where the publisher has competitive pricing. In this situation, the publisher not only gets revenue from the data but theoretically receives impression revenue because of competitive rates. Assuming equal probability and small number of competitive sites (10), the publisher would generate $360 of revenue from 100,000 impressions at $3.60 CPM and $200 of royalties for the 1,000,000 total impressions. The total now is $560 vs. the original $4,100 of selling directly.

An aggressive half-price initiative by the publisher on impressions is implemented so that they can get all the data and impression revenue. In this case, the 1,000,000 impressions would generate $1,800 in impression revenue and $200 in data revenue for a net of $2,000 — better than scenario 2 but still lower than selling impressions alone.

Selling data about the audience can make sense when it is used to buy impressions for which a publisher is not competing or ever will. Those are rare instances. After doing the modeling, I still can’t find the profit motive in selling data.