The biggest change in media companies over the last two decades is the shift away from physical products — printed magazines, books, newspapers, catalogs, etc. — toward digital content such as blogs, native advertising and video.
Many people assume because there's no physical product in digital media, costs are automatically lower than in traditional media. This is simply not true. The digital ecosystem comprises many different fees, residuals, royalties and so on. Moreover, the abstract nature of these costs can present a bookkeeping challenge.
Five Percent of What?
The abstraction inherent in digital media can make it difficult not only to determine both revenue and costs, but also to clearly spell out the system of measurement. From publishing content to purchasing digital ads, it can be hard to tell exactly where your budget goes. If you're running an ad campaign on social media, for example, are you paying for clicks or conversions?