Media Literacy on the Rise; But Media Math Scores Still Lag

First some name-dropping. I mean, it’s not everyday I get invited to dinner at the house of Annenberg School Dean Geoff Cowan.

Last Thursday night, I had the pleasure and honor of attending a dinner party / salon organized by Karen North, director of the Annenberg Program on Online Communities; Geoff Cowan, dean of USC’s Annenberg School of Journalism; and Aileen Adams, a cultural affairs director at USC. You know you’re taking a risk when you call a dinner party a salon, but, my goodness, I went home convinced that this crew knows what they’re doing! Geoff and Aileen hosted the event at their house and set the topic for the evening’s discussion: teens, social networking and the state of media literacy. Jeff Berman, corporate and public affairs guru at MySpace, and Dana Boyd, PhD candidate at UC Berkeley and widely considered among the world’s leading authorities on MySpace, led the discussion. I most certainly brought down the group’s average IQ by a dozen points, all by myself.

The evening was so full of information and insights, I hardly know where to start. The rise in media literacy, though, was a topic that figured into almost every part of the conversation. Jeff Cole, a professor and researcher at Annenberg, presented data to show that media consumers are, more and more often, also media producers — blogging, participating through comments in news they read, filtering news and entertainment content in order to share it with friends and wider online communities.

Sure, publishing personal information online or building relationships online, where it’s harder to know whom you’re talking to, can lead to trouble. So can crossing the street without looking both ways. The culture of MySpace, by and large, is making young people (and the rest of us) smarter about media, information and communication — and that’s generally a good thing.

But while I’m convinced that our society is getter smarter about media, and with each mistake or instance of poor judgment that teaches us a new lesson, I’m not convinced that our society is taking the time to understand the economics of the media business. Keep in mind, News Corp owns and profits from MySpace, Google owns YouTube and Blogger and the cable and telephone companies own the pipes that give us access to the internet. We’d better get to know their motivations and business models or else we’re going to make uninformed decisions when we decide to “friend” Borat or Burger King’s King. Yeah, we all know that Burger King is paying MySpace under a sponsorship arrangement. But if we don’t have at least a passing understanding of the terms of advertising relationships, we may be trading our attention, loyalty and trust below market value.

This is particularly important as citizen-journalists decide to go pro. At the Blog Business Summit in Seattle (also last week), there was too much talk about taking your 400,000 pageviews a month, raising a financing round, and hiring a team. Which is fine, provided you have a good handle on the business side of online publishing, and your backers have realistic expectations on their return. Say you put three large, IAB-standard ad units on each page, you now have 1,200,000 ad avails (impressions to sell). If you sell two-thirds of those on a CPM basis to brand advertisers willing pay premium rates, say $10, you’re making $8000 per month, gross. You can fill the other third of the impressions with help from the ad networks, but don’t count on much more than another $800 per month ($2 effective CPM). Over 12 months, that’s $105,600, gross. Gross, meaning you haven’t yet paid yourself, your sales people and someone to collect the money you’re owed. Even without benefits, that’s less than $35,000 per staffer.

And what about sponsorships? That free money with no strings attached, no accountability and no sponsor expectation that their message will reach a pre-set number of prospective customers? It doesn’t exist. Sponsors have expectations just like advertisers. Even if the insertion order doesn’t price the deal in dollars per thousand impressions or cost per click, sponsors are doing the math just like everyone else; if the math doesn’t add up — appropriate value for their sponsorship buck — the sponsorship dollars will dry up fast.

Crunching numbers may not be the fun part of the media business, but it’s an important skill to learn. There’s no free lunch — even on the internet.

  1. # Blog Business Summit said: November 6th, 2006 at 6:06 pm

    How Do You Measure the Value-Add of a Media Sponsorship?…

  2. # Randy Hoffman said: November 7th, 2006 at 5:13 pm

    Of course selling two-thirds of your inventory to brand advertisers willing to pay $10 CPM assumes you can get your selling mug in front of a media decision-maker that has 200 voicemails from reps just like yourself. Good luck.

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