Definition of Monetization [repost]

As one of the initial posts here, we’re going to cover “What is Monetization?”.

Here are some definitions:

  • The Wikipedia definition has some of the traditional definition, but also includes web-related aspects of “adapting non-revenue-generating assets into those that generate revenue”.
  • The Free Dictionary defines monetization in traditional ways that are not related to the focus of this website, and refers to legal tender and conversion of government debt.
  • From Investopedia is this definition of monetize: “To convert into money”, and discusses “monetizing website visitors”, which we’ll refine more further down.

Monetization, in a modern (including web-related) context, can be said to be the conversion of a virtual or mostly-virtual asset into money or its equivalent.  Examples of these types of assets are domain names, website traffic, website visitor names or email addresses, and reputation/buzz about a website/person/company/brand.  Examples of the equivalent of money would be the balance in an affiliate account, an online account such as PayPal, or coupons.

While bloggers and others with web pages believe they are monetizing their visitors or their traffic, they are more specifically monetizing aspects such as visitor’s clicks, visitor’s attention, and the conversion of interest into leads.

  • Clicks: Most people can understand that a click can be tracked, and this tracking allows payment for the click.
  • Attention: An example of monetizing attention (or assumed attention) is banner ads that are paid per impression.  Show 1,000 banner ads, get paid $10, which is one penny every time the banner is shown.  What is being monetized is the assumed attention of a website visitor to the display of the banner on the webpage.  We cannot measure actual attention, other than in a focus group or study, but the aggregate actions that result from of thousands or millions of impressions can be measured.  And, from measuring the outcome of the actions, the assumption of attention to the banner ads is made.
  • Conversion: Whether through clicking on an ad, from entering an email address, from calling a telephone number, or from other outcomes, website owners and others can monetize the conversion from “not-a-lead” to “lead”.

This website will have more on monetization, and we’ll end here by saying the pricing factors of  monetization are a huge variable, and in many cases the confidence of the value offered may be the main reason why one website monetizes better than another.

July 7th, 2009 by