Often, a question doesn't have an easy answer in the digital advertising business. This is a column devoted to an answer to a single question - and providing a bit of space for it.
Today's participant is Scott Knoll, President, Datran Media’s Aperture business. He recently answered the following question during a conversation with AdExchanger.com...
AdExchanger.com: If you're a publisher today, what are your data and ad exchange strategies?
SK: If I'm a publisher, it's a real challenge right now because every RFP from an advertising agency asks for some sort of audience targeting, and audience targeting is typically defined as someone who is actually in market for some type of product or service.
As a publisher, in order for me to give them what they want, typically I need to use a third party aggregator of intent data. Whereas I can cut a deal and do that, it really puts me in a tough spot. I lose control of my audience.
If you think about how important an audience is, it goes back to the days when I was at Time Inc. and "Time" magazine. In those days it was all about the "Time" magazine reader. Our value was the collection of readers who came to our publication.
Whereas we could spend money on circulation and grow as many readers as possible, the reality was that quality was more important than quantity. We were very careful to make sure we had the quality, because we knew with the quality we could go sell to the right advertisers.
Yearly, there'd be some study that would come out that would look at all the magazines in the industry and detail the differences in the audiences. It was based on a third party survey. Typically, the "Time" magazine reader would come out to be more affluent and influential.
Then we would take that study and go to Rolex, go to Four Seasons, go to the first class programs at the major airlines and say, "Hey, you need to buy in our magazine, because you're going to reach the people who are the trendsetters and the ones who everyone else follows, as opposed to the 'Newsweek' reader, who's more of just a run of the mill kind of pack, or as opposed to "U.S. News Report.'" It was all about the "Time" magazine reader.
Fast forward to now, all of a sudden Time Inc. is selling ad targeting using third-party branded data where it's no longer about the "Time" magazine or any of their publications' readers. It's an audience that's defined by somebody else.
The problem there is if it works, the credit is going to the third party data provider. If it doesn't work, typically the site is blamed. Time would be blamed for the fact that it doesn't work well on their site even if they used someone else’s audience data.
To make matters worse, it rarely scales, especially for individual publishers or aggregators of publishing content. So, you don't have the scale to deliver enough impressions as well.
In addition, due to the scale issue you really don't have any control over other important things like the placement or the context of the page. You're purely just trying to find a cookie that represents this data.
Finally, it's very focused on direct response and less on the traditional advertisers that "Time" magazine has been so good with: the Rolexes, the Mercedes, etc.
What should you do if you’re a publisher? It's a dilemma because on one hand, that's what the advertisers want, on the other hand, it becomes a slippery slope when you start using it.
I think it's important to understand what data will supplement your site and will help you to tell a better story versus what data will replace the need for your own and hijack your audience.
In terms of the exchange part of the question, in a perfect world, I think a publisher is probably better off not giving inventory to an exchange as an exchange currently does not place enough value on the quality of content or of a publisher’s audience. But, once a critical mass of inventory is available - which has already happened -then you almost have no choice, because exchanges have created all kinds of efficiencies for media buyers. Agencies have created their own trading desk to take advantage of these efficiencies and the result is a much more attractive economic model for them.
Really, if you don't participate you're going to miss out on a lot of dollars in the marketplace.
The main reason that we have seen a proliferation in exchanges is because there is, first of all, much more supply than demand, and as long as there's more supply than demand, you're always going to have remnant inventory and pressure to try to figure out a way to sell it.
Then because there's so much fragmentation on the supply side, on the publisher side anyone with a website becomes a publisher – there is no way to get the millions and millions of website owners to act in the best interest of traditional publishers and stop providing impressions to a blind exchange. Once critical mass takes place, then there's a lot of pressure to participate as a publisher, regardless of your content or stature, if you don’t want to miss out on a growing number of large ad buys.
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