Chitika Ad Monetization Matrix: A New Tool to Redefine Ad Monetization

Chitika Ad Monetization Matrix: A New Tool to Redefine Ad Monetization

  • 15 November 2011

Across industries, the Boston Consulting Group Matrix and the Gartner Magic Quadrant have long been fundamental tools in conducting business analysis. These tools are invaluable in helping businesses direct resources toward the segments with the highest worth or potential to optimize their revenue stream. In an effort to contribute a similar tool to the world of online advertising, Chitika Insights developed the Chitika Ad-Monetization Matrix (CAMM).

The CAMM measures the three key aspects of online advertisement markets: volume, click-through-rate (CTR), and the value per click to an advertiser (CPC). In our quadrant, each category is represented on the CAMM with a size proportional to its market share (i.e. volume). On the horizontal axis, we plot the click-through-rate, which corresponds to the likelihood of an advertisement being clicked by a user. Finally, on the vertical axis, we plot the CPC, which refers to how much an advertiser is willing to pay a publisher when an ad is clicked.

These axes yield four distinct market segments, as shown in the following diagram:

Notice that Insurance is a unit within the Special Interest segment as it captures the highest CPC across all quadrants, but has a relatively low CTR. Alternatively, Banks reside in the Click Kings segment, with exceptional performance in both CTR and CPC. Transportation captures the highest CTR across all units, but with the second lowest CPC, finds its home in the Economic Essentials segment -- ads with an abundance of low paying clicks. Last but not least, Media, with the lowest CTR and CPC across all units, takes its place in the bottom left corner of the Obscure & Unpopular segment.

By understanding the implications of each of these segments and incorporating them into marketing campaigns and SEO, advertisers can have a higher potential for site monetization. Generally, overall monetization is lowest in the lower left and highest in the upper right. One of the biggest aspects of control for publishers and advertisers is the volume of their particular markets. Using a chart like this, analysts can discover where they have too much or too little volume, and optimize the volume of each of their categories by the revenue they produce. Secondly, ads with high CPC but low CTR (Special Interest) are really meant for a narrow audience – meaning, that to maximize their monetization, they should only be shown in cases in which audience intent is clear. Alternatively, ads with a higher CTR generally are applicable to a wider audience, and therefore do not require such targeted scenarios to profitable.

This article was a joint production by Jeffrey McQuillan and Gabe Donnini