Key Takeaways

  • Ad revenue and subscription revenue monetization models come with unique pros and cons.
  • Neither is always better than the other, and they aren't mutually exclusive.
  • Implementing a hybrid approach takes a balanced and measured touch, but it can lead to maximizing ad revenue for publishers.

A lot of publishers treat the ad revenue vs. subscription revenue debate like the Pepsi vs. Coke debate - they choose one or the other and stick to it. But really, both are good. Ad revenue and subscription revenue can scale with publishers as they grow, and both can be consistent cross-platform revenue sources that do much more than keep the lights on.

There has to be an answer, though, right? Not exactly. In the ad revenue vs. subscription revenue fight, there may not be a clear winner. But there is a clear way to maximize your revenue - regardless of which side of the argument you fall on. Read on to learn about the pros and cons of each model and how to combine them flawlessly.

Playwire specializes in growing digital advertising revenue for publishers, but we recognize that other revenue sources can play a big part. That's why we take a holistic, consultative approach to working with publishers. For the best of all revenue worlds, reach out to Playwire.

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The Publishers' Guide to Ad Revenue

The Ad Revenue Model

Most publishers are familiar with the ad revenue monetization model. It works across web, mobile, over-the-top (OTT), and connected TV (CTV). You place ads - usually programmatically but also through direct sales - on your content and get paid by advertisers for the ad impressions you send their way.

Ad Revenue Pros

  • As a general rule, when your traffic grows, your ad revenue grows.
  • Programmatic technology has made the buying and selling of digital ads mostly automatic and much easier for publishers.
  • Publishers are in control of dozens of factors that can increase their ad revenue and assure a recurring revenue stream.

Ad Revenue Cons

  • Until you have a large amount of traffic, ad revenue remains relatively small.
  • Yield optimization amounts to at least one full-time job, if not more. And that's time that most publishers do not have.
  • Every dollar that flows through the system gets a cut taken out of it by various players: demand-side platforms (DSPs), ad servers, supply-side platforms (SSPs), and more. That means you get less.

The Subscription Model

Perhaps the ultimate example of the subscription model is streaming giant Netflix. Their subscription-based business model includes one monthly subscription fee that unlocks millions of hours of content. You can find examples of websites and apps making the subscription model all over the internet. Sites put premium content behind a subscription paywall, apps charge subscription fees for use and OTT Netflix competitors spring up all the time.

Subscription Revenue Pros

  • Subscription revenue is predictable revenue. The number of subscriptions you have gives you a good idea of the rough monthly recurring revenue you should expect.
  • You keep the total revenue from subscriptions. That's as opposed to ad revenue, which goes through various third parties who all take a cut.
  • You can bypass the sometimes negative effects ads can have on the user experience with subscriptions (and save time on managing your programmatic advertising setup).

Subscription Revenue Cons

  • Users need a lot more convincing to pay for a subscription than they do to see an ad before or while they view some content.
  • The loss of one subscriber is often a much bigger hit to your revenue than the loss of one user in the ad revenue model.
  • If your content is leaked, copied, or shared, you have a much more difficult time getting users to subscribe.

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The Complete Ad Revenue Resource Center

The Hybrid Model

One of the most common examples of a hybrid subscription and ad revenue model is the old "remove ads" value exchange, in which a user pays a subscription fee in order to view your content without ads. While this is a common (and ingenious) monetization model, it's not the only way to combine ad revenue and subscription revenue.

For example, if you use rewarded video ads on your site or app, you can make the "reward" the ability to view a piece of content that would otherwise only be available to subscribers. That way, you encourage much more ad revenue from your users who aren't yet ready to pay the full subscription fee.

Hybrid Model Pros

  • The hybrid model can best serve all users: those who don't mind ads and those who would pay money to not have to see them.
  • Under a hybrid model, a user is never without value to you. If they don't subscribe, you still get the ad revenue from their impressions on your platform.
  • Using both monetization models can provide you with actionable information about your users' preferences and behaviors.

Hybrid Model Cons

  • The technical lift to incorporate both digital ads and subscriptions can be difficult to overcome unless you have a good developer or ad revenue partner who can handle it for you.
  • You have to manage both revenue sources, which takes up more time and energy.
  • You must create and deploy content and ad strategies that fit into this complementary model without leaning too heavily to one half of your audience or the other.

Get Your Revenue on the Rise

Whether a hybrid monetization model works for you or you're more purely about ad revenue or subscriptions, you can be certain of one thing: You're not making as much ad revenue as you could be. That's because you're not working with Playwire yet.

With Playwire, it doesn't have to be ad revenue vs. subscription revenue - it can be ad revenue and subscription revenue with hybrid models driven by innovative ad units like rewarded videos. Ultimately, it's about what's best for you as a publisher. And we're all about what's best for publishers. To learn more, reach out to the Playwire team today.

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