Baking Bread In Online Ad Sales

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tomshieldsThe Sell-Sider” is a column written by the sell side of the digital media community.

Today’s column is written by Tom Shields, Co-Founder and Chief Strategy Officer of Yieldex, an analytics tools provider for sell-side, yield optimization.

Being a premium publisher these days is a lot like being a baker.

If you’re a baker, your content is bread. You craft fine, high-quality bread with organic ingredients, made with patience and care. Your customers love your bread.

Your bread is so good that party planners are valued customers. The planners will often start with a custom-baked “centerpiece” loaf. They also want a number of high-quality loaves and rolls for the meal, and may fill out their basket with some croutons or breadcrumbs. You, the baker, are happy to supply all their needs, but you make most of your money on the centerpiece and the high-quality loaves.

The world changes, though, and some planners don’t have time to go to your bakery any more. They find it more convenient to go to buy cheap bread at the supermarket. Supermarket chains – or retail networks – buy some of your artisanal loaves at rock-bottom prices, then mark the price up to resell the loaves on a shelf right next to cheap bread. You remove your name from the label to avoid cannibalizing sales at your bakery, but you still get just pennies on the dollar.

Worse still, the breadcrumb industry has exploded. Over just the last few years, the rise of giant rapid-distribution networks has enabled planners to buy tons of breadcrumbs at dramatically lower prices. Breadcrumbs still make up only about 15-20% of the entire bread market, but the growth is rapid, and you feel forced to participate. You sell your day-old bread into this distribution network, and again remove your name from the label, but you can’t even pay for your organic flour with the result.

What’s an artisanal baker – or a premium publisher – to do?

The first step is to understand what kind of bread you have to sell. Unlike most bakers, a surprising number of publishers don’t have a good handle on what they will have to sell next week or next month. Learn which bread is hot at parties these days, and which bread is just good for crumbling up, so you don’t give away the valuable loaves.

Then, pay attention to the best bread. Despite the growth of breadcrumbs, the party planners still want good bread. Most people throwing high-end parties (advertisers) want bread that is perfectly suited to the theme of their party, and different from the bread served at their neighbor’s party. They are willing to pay for it, as long as they can find it and buy it conveniently.

The breadcrumb sellers will try to convince you that their trucks are great for distributing your artisanal loaves, but there are an awful lot of pipes to connect and middlemen to pay. And the planners who buy tons of crumbs often don’t control the budget for buying the loaves too. You need a direct connection to your planners, one that enables them to buy from you easily and quickly, but still gives them your best bread, at a fair price.

Similarly, programmatic buying is changing the digital advertising landscape. But programmatic doesn’t need to commoditize your inventory into a pile of crumbs. Invest in systems that show you how much you have to sell, and what kinds of bread are valuable. You spend a lot of time and energy whether you’re baking bread or building content. Don’t just crumble it up.

Follow Tom Shields (@tshields), Yieldex (@yieldex) and AdExchanger.com (@adexchanger.com) on Twitter.

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