Transactional Advertising Driving Lower CPMs Says 24/7 Real Media Chairman Moore

24-7 Real MediaDavid Moore is the Chairman & Founder of 24/7 Real Media, a WPP company. Doesn’t it follow that there is channel conflict between ad networks and large publisher sites with sales teams? What must ad networks do, if anything, to make sure that publishers do not feel like they’re inventory is being cannibalized?

DM: Sales conflicts never occur with networks if the relationship is established correctly from the beginning. Some large publisher sites do not want their name included in the list of sites that compose the network. This means that their inventory is sold blind and yields a lower return to the publisher. Other large publisher sites recognize that including their name will generate better advertising returns for them and their partners. When this is allowed, the network must carefully inform the advertiser that there is no guarantee of how many impressions are delivered to each site in the network, i.e., that the advertisement is rotated equitably among all the sites in the network. 24/7 has not had a sales conflict in over 10 years.

Do large media companies need to face the fact that they are never going to get the CPMs they once did whether online or off?

Large media companies need to understand that all advertisers are incorporating a “transactional” component into their marketing efforts. As a result, their advertising tends to be more focused on the bottom half of the “sales funnel”. Transactions tend to sell at lower prices on the web as the smaller sites have no other choice for revenue. The “net-net” is that media prices are falling across all media as the Internet’s abundant inventory supply continues to deliver results at lower prices.

Recently the OPA announced that a limited group of large publishers would begin offering three, new oversized media units that would only be available through member sites – not ad networks or exchanges. How does 24/7 Real Media‘s respond to this?

New creative approaches continue to evolve and we encourage this activity. These publishers are looking to develop competitive advantage and this is one of their strategies. Overall, if successful, these new strategies will be embraced by the rest of the industry.

As your fellow panelist, Walker Jacobs of Turner, said at the most recent AdAge Conference, another complaint from large publishers appears to be the “punch the monkey” ads available on ad networks. How does 24/7 ensure brand safety?

It is not the responsibility of any medium to weigh judgment on the creative aspects of an advertisement that an agency/advertiser has produced. Obviously, extreme, X rated or fraudulent advertising is never acceptable to 24/7.

Can you share recent momentum with WPP Group’s 24/7 Real Media as it relates to product development and revenues?

Our goal has always been to use our technology to create competitive advantage for WPP companies. That strategy is working.

How do you see 24/7 Real Media and WPP Group evolving in the ad exchange space?

Exchanges will be an important part of the digital ecosystem and will play a role with 24/7 based on their importance.

Are there too many ad networks? Or, for that matter, are there too many media agencies? Who gets disintermediated down the road?

The market place always determines if there are too few or too many players. That will be the case here.

Henry Blodget of Silicon Alley Insider, who moderated the recent panel with Jacobs, Denise Warren of the The New York Times and Vivek Shah of Time Inc., inferred that large sites are the only destinations with quality content. How do you respond?

The panel had a hard time defining “quality” content. What is quality content? Is it content that’s expensive? Is it content written by someone who you know who has a good reputation? Is it an excellent review of a product by someone you have never heard of before? There are hundreds of other questions that can be asked like this. I think the industry needs to define what quality content is as there seems to be confusion with the definition.

Do vertical ad networks from major media properties such as Martha Stewart post a threat to ad networks like 24/7 Real Media?

Any new digital sales offering is competition to a network; however, it also offers opportunities for partnerships.

How do exchanges evolve from the remnant inventory model to a premium AND remnant future?

What is remnant inventory…. other than a bad industry term? There is excellent unsold inventory that has great value to the advertiser. Through increased audience targeting, this inventory will command higher prices either through exchanges, publishers or companies like ours.

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  1. Great interview, there are a lot of networks out there that are completely delusional about the issues you addressed. The friction between pubs and networks as well as handling the notion of “remnant” vs “premium” are merely tactics being exploited by a lot of networks. Its good to see someone who knows the industry so well present their opinions without spin.

  2. I wonder what’s the difference between 24/7 Real Media and other ad networks (other than the fact that 24/& is the largest ad network under an advertising umbrella firm with media buyers as part of the same company).

    Most of the top 10 networks have high reach, BT, demo-targeting. I don’t think media buyers can even tell a difference between the ad networks.

    interCLICK offers some level of transparency. Tremor offers great rich media opportunities.

    But otherwise, the only major differences between the top 10 ad networks are datapools and technology. Some have larger datapools to work with, others may have better algorithms.

    But buyers don’t really knows whose best. Each and every ad network just says they are but fails to back it up.

    I’m not including affiliate and lead gen firms. Those are a different animals.

    Low-quality advertisements may diminish the reputation of the publishers that run them. I think Gawker’s refusal to use ad networks, in addition to having a unique non-corporate voice, probably garners advantageous CPMs and higher total revenues. Only they know if it works better or not. But the art used for unsold inventory certainly raises the value of the site in my opinion. I wonder if they’ve studied that.

  3. Greg Hills

    ‘Large media companies need to understand that all advertisers are incorporating a “transactional” component into their marketing efforts. As a result, their advertising tends to be more focused on the bottom half of the “sales funnel”.’

    Large media companies have already recognized the increased demand for inventory that’s priced for performance. They have created their own vertical networks, which provide significant reach. Given that most advertisers can’t frequency cap across multiple network buys, the limited reach of a vertical network is preferable in some ways to your standard network buy that reaches 90% of the web. Also, a vertical network buy composed of one or two dozen major content sites provides much more inventory control than a “transparent” network buy of 60 or so sites, where ads may well end up running mostly on a handful of social networking properties.

    In addition to vertical networks, direct sales forces will sell non-guaranteed “remnant” inventory on their site for prices similar to the ad networks. In this situation, cutting out the networks is a win-win for both advertisers and publishers. In my experience, this tactic is letting publishers to take revenue from the networks without cannibalizing revenue from brand campaigns.

    Major publishers recognize the downward pressure on CPMs and and are now capturing the demand for inventory that is priced for performance. Not only are major media companies creating their own vertical networks, direct sales teams will sell non-guaranteed “remnant inventory” on their own site for a similar price to what the network is charging.