Week 6 ~ Tokenized Website Content
The bottom line is…why not increase the bottom line?
In last week’s edition, we checked out website security tokens from an investment standpoint — domain names.
This week, let’s look at security tokens and blockchain tech from an operational standpoint — the website’s underlying content.
While it may seem that website content is efficient as is, things can always be improved. Especially in the monetization facets. We mentioned that if a domain name is analogous to the deed to a property, then the website’s content is analogous to the rental cash flow potential of the property.
Factors like lease terms, overall location, quality, desirability, size, neighborhood, and age all affect the rental cash flow potential of properties. The digital versions of all these factors remain just as important. Noticeable improvements in one or more of these factors can generate greater potential revenues for domain owners, and therefore increase the bottom line.
Let’s focus in on a key selling point for blockchain technology — improving efficiencies — regarding website monetization.
Value Adds
Domain Owners (Token Issuers)
- Can diversify advertisements beyond Google Adsense through an equally autonomous platform
- Generate Fair Market Value ad space rates to boost revenues and avoid forced discounts
- Maintain a greater level of control over what ads/content may be placed on their sites
- Create more consistency and predictability in earnings which results in a stronger domain valuation
Advertisers (Token Holders)
- Seamless placement of ads on participating websites without manual coordination needed with domain owners
- Access to higher-potential audiences through targeted websites (ex. Bodybuilding ads on bodybuilding websites specifically chosen by the advertiser, rather than relying on incumbent algorithms to choose general “fitness” pages)
- Can resell ad tokens at a premium in the secondary markets if the respective website domain is garnering extra traffic and demand
Thus far, security tokens have typically been discussed as investment vehicles for various assets. The instance of advertising and digital monetization gives us the chance to reflect on one of the beautiful features of security tokens — their fluidity.
Rather than structuring the tokens to offer a direct investment, a website owner can structure the tokens to carry IP rights for advertising on the site. Each token can have a specified time slot, advertisement size, content focus, and other points baked into them via smart contracts based on the desired criteria. This structure is absolutely feasible through security tokens and users’ associated Digital Identities (more on this in Digital Finance by the innovative asset manager Baxter Hines).
Rather than advertisers manually contacting website owners (and vice versa), there can exist a digital marketplace designed for exchanging ad space. This marketplace would play a crucial role in ensuring that minimal ad space goes unfilled, and serve blockchain’s purpose of near-maximizing efficiencies — namely, advertising revenue.
It’s a known externality in the advertising world that unused ad space results in monetary losses. In fact, 2019 saw advertising losses reach $42 billion. This is an absurdly high number for a seemingly efficient industry. Keep in mind this figure encompasses all types of advertising (not just digital) and is inflated due to data breaches and accounts of fraud. Nonetheless, extrapolating the fact that there exists a sub-optimal digital advertising structure is the important takeaway.
Visualizing it from a high-level, either the content provider (website) simply doesn’t run an ad and loses all potential revenue in that exact instance, or it must offer a deep discount to entice advertisers to place their ads. This causes discrepancies between actual and projected revenues, and derails the quality of a recurring-revenue machine, like a website.
The ad-space marketplace would allow token holders to trade ad spaces on sites at whatever prices the market deems fit. This would solve the issue of website owners dealing with last-minute pricing since the market will reflect supply and demand in real-time. Ultimately, ad spaces will approach closer to 100% full (rarely is anything a perfect solution) and both website owners and digital advertisers will have more control and predictability over their respective processes.
Going back to the factors that affect website domain valuations, improvements in the monetization process — especially around predictability — can really move the needle.
Structuring security tokens in this way can usher in a whole new avenue of advertising and affiliate capabilities to domain owners who are looking to diversify outside of Google Adsense, the incumbent champ of the online monetization world. Adsense is an effective monetization method for websites with millions of unique visitor, but typically leaves money on the table for anything lesser. A structured ad market could open new doors for niche sites and up-and-coming platforms to further appreciate in value, much like how tangible improvements in neighborhoods drive home valuations upwards.
Partnership Potential: New York Interactive Advertisement Exchange (NYIAX)
One firm already has an operational advertising exchange. The New York Interactive Advertising Exchange (NYIAX), which was developed in partnership with Nasdaq, handles the two-sided digital and mobile advertising market for brands, agencies, and publishers. Advertising contracts are traded in a fashion that strongly resembles futures contracts in finance — which makes sense given the Nasdaq roots.
With an addressable US market of around $50 billion and a business model that relies on transactional fees through the exchange, the next level in the NYIAX game plan could include security tokens. While currently still in its Seed stage (technically, Seed++ with the add-ons), NYIAX has the flexibility to cater to clients and run some R&D, which may lead them to exploring IP-wrapped tokens like the ones discussed in this publication.
As mentioned last week, the digital real estate market shows no signs of slowing. With Google Adsense taking a hefty 30–50% per ad click, it’s likely that disruption is knocking on the digital door. Creativity around monetization will almost certainly be rewarded, and could even become the new standard.
New Topic coming next Wednesday 2/24/21!
Disclaimer: This is not financial or investment advice and should not be interpreted as such. Please do your own research on investments and financial decisions before partaking in any ideas or ventures depicted in this publication.
