Forbes.com CEO Spanfeller Says CPMs Under Pressure Due to Move Towards DR Metrics - Not Oversupply

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Jim Spanfeller and Forbes.comAdExchanger.com: How important is the display segment to Forbes? Can you share recent momentum in online display ad revenue at Forbes?  Any verticals showing particular strength or weakness given the economic slump?

JS: Display is very important to our business model.  Of late the recession has taken a toll and we are not seeing the same type of growth that we have enjoyed in the past.  My guess is that the year will come in fairly flat. 

How does Forbes.com try to improve display CPMs (great sellers, vertical selling, targeted content creation, technology, etc.)?  Are ad networks and exchanges a part of the strategy? Why or why not?

All of the above…plus we always strive to test any and all new ideas.  Historically we have been awarded some of the highest CPMs on the web.  There is good reason for this.  We reach a very hard to find but yet very desirable audience in a very efficient manner.  Of late, CPMs around the web have come under pressure.  I feel this is more a result of the move towards DR metrics driven in large part by the horizontal ad networks then it is a factor of over supply of ad impressions.  Clearly there is a discrepancy (and in fact a growing discrepancy) between consumer behavior and advertising spend and this has added huge numbers of unsold impressions.  But this inventory can be controlled if the will is there.  Offline there has been unlimited inventory in print and other media for years and it has not affected CPMs.  The big issue here is that the horizontal ad networks are pushing models that are all about clicks in one form or another.  And as such this has pushed a vast amount of advertising to chase the 20% of web visitors that create 80% of the clicks.  It is almost certain that these strategies will dissipate over time as advertisers become more experienced online and as new metrics are developed and tracked.  In the meantime though we all face pricing pressures and these pressures will continue for at least a few more quarters.

Are yield optimizers such as PubMatic, Rubicon Project, AdMeld, Yieldex and others offering a viable option for publishers?  How does Forbes.com manage yield?

Perhaps, but the fundamental issue is that ad networks monetize (due to their model) at such low CPMs that even with great performance from the optimizers the results are not meaningful.  This is the core reason why we do NOT use any outside horizontal ad networks.  They simply do not generate enough revenue to play even a small part in our revenue picture.  Our yield management is relatively easy because all of our impressions carry high value.  In other words we do not have vast buckets of differentiated inventory in email or social media.  We clearly have very differentiated opportunities around types of content but throughout those offerings the quality of the audience and the engagement from that audience remain at very high levels.

Is the ad exchange model good for publishers?  In your opinion, what needs to happen to encourage Forbes.com, or any larger publisher, to place its premium inventory on the exchange?

Maybe…but not right now.  The exchange model could be a good one in the future if enough controls were placed on the types of inventory and the quality of "seat" owners.  Right now the vast majority of exchanges are simply trading posts for the ad networks.

Do you see real-time bidding (RTB) and demand side optimization as an opportunity for publishers? It would seem to follow that if advertisers can map data to individual impressions in a liquid marketplace and in real-time that CPMs could rise for publishers. Agree?

A lot will depend on what the government does in the privacy space.  The vast amount of data being collected across sites by third parties is scary.  Very little is known about these practices.  As these behaviors become more transparent I can see a future where the governors on data usage (either industry- or government-imposed) become a factor in this space.

How has Forbes.com financial vertical ad network strategy progressed? Are vertical ad networks a viable strategy for large publishers? Any challenges?

Yes indeed it has. There are clear opportunities here for well branded sellers.  Our issues have been around the understanding, or lack thereof, of the nature and type of blogs that we are representing.

Other than a vertical ad network, how can large publishers leverage the Long Tail?  Is sharing content in hopes of extending reach an option? 

Maybe…although I would start with sharing links and not full content.  That said both strategies could have real legs in the future.

Jim, here's a scenario for you... Humor me.  :)

Let's say the controls are in place on the exchange to the degree that Forbes.com requires for yield and brand management. And under this scenario, Forbes.com has in-house, digital media traders who sell and manage at least part of Forbes' online display ad inventory via the exchange model.  This creates an in-house expertise in trading and a new revenue stream as Forbes.com traders not only sell, but buy on behalf of direct Forbes.com clients, or buy and sell to benefit from the arbitrage and leverage Forbes' trading expertise.

Have I been sipping too much ad exchange Kool-Aid or can you see this potentially coming true?

Sure but right now given all the issues around privacy that I alluded to above the second half of your scenario will be tough.  Also the ad agencies would want a say in all this…that said though at the end of the day it is the clients who actually pay the bills.

In terms of industry organizations, where does Forbes.com look for support: the IAB, OPA, another?   What more would you like to see from industry orgs on behalf of large publishers? 

We are very active in both the IAB and the OPA.  We also look towards the MPA, the ABM, the ANA, and the 4As.  I think in general there needs to be more focus on moving the online advertising discussion towards demand creation in addition to demand fulfillment.  In doing so, new metrics will need to be identified, ratified and standardized.  Clearly the trade organizations listed above can play a very key role in all this.

Where does Forbes.com stand on ownership of data?  Do media buying agencies and their clients own all the data associated with their campaigns on large publisher sites, or does the large publisher own some or all of it, too? 

Our thought is that at the end of the day the end user is really the owner of the data.  That said we do collect data to help make the user experience on our sites better.  I would think that the advertiser would also have some rights in this space.  I am left wondering though how third party ad networks or buying groups can lay claim to this data unless it is with the express consent of the advertiser and will be used on their behalf alone.  The idea that third parties will use data created by one client to help another perhaps competitive client seems foreign to me although I know that this is the standard procedure that is now happening online.

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