Settling The Network Debate: What Are Publishers Missing?

“Networking” is a new column focused on the evolving roles of networks in online advertising.

Today’s column is written by Andrew Pancer, Chief Operating Officer of Media6Degrees.

networkingIt’s become a sport to bash ad networks over the past couple years, with panels and articles calling for publishers to “fire your network.” My personal favorite was an article calling networks “a tax on lazy publishers” and publishers “idiots”. It’s interesting commentary and does bring to light some legitimate issues. The problem is that these network haters are trying too hard to make a complex solution into a black and white issue.

It’s a tough time for publishers. The publishing business is not easy to begin with. And advances in technology that have caused your traditional audience and brand sales strategy to be at risk have made it even harder. But bashing ad networks is not the answer. There is no going back. The industry has changed forever thanks to the fragmentation of audiences, the abundance of content and advances in technology – and networks and exchanges do provide a value in this new reality.

I am convinced that once the frenzy dies down, the end game will be better for the audience, publishers, and marketers alike. Having spent time on both the publisher and the advertising technology side, I’ve collected some ideas on what publishers should be doing now to adapt:

1. Intelligent use of inventory –

It’s pretty well known that many, if not most, online publishers generate the majority of their revenue from only a portion of their inventory (the 80/20 rule). Publishers on average typically only sell less than half of their inventory through their direct sales force.

Network haters have rallied the publisher world to not even turn over the unsold inventory to networks, arguing that you won’t make any money from it. This misguided strategy is just leaving money on the table.

Publishers should keep the best inventory. You should sell it at premium rates and not turn it over to networks. But the other inventory that goes unsold should not be left fallow. Publishers benefit from every dollar of revenue. Why make profitability that much harder?

2. Creativity by the publisher –

Randall Rothenberg and the IAB threw down the gauntlet last year for our industry when he demanded that we bring more creativity into online advertising. When I say publishers should keep their best inventory, I don’t mean just to run standard creative units. Your best inventory should also leverage your best ad products. Use sponsorships, roadblocks, rich media, video, conversational marketing tools. When you do this, networks cannot compete with you on your home turf. And it is this level of thinking and work that marketers are looking for when they spend at premium levels. Show them you are a strategic partner, not just another place to run banners.

3. Performance –

You cannot rely on the quality of your audience and your brand alone. If you are just selling standard units in non-endemic areas at a premium, you need to rethink your strategy. Now.

A huge eye opener for me moving from the publishing side to the technology side was the fact all we do – all day long, every day of the week – is focus on ROI for our marketing partners. Achieving ROI is the responsibility of every team within our organization. It requires a concerted effort across all functions. Publishers are not able to have this singular focus. You need to put the consumer first and the advertiser second. Outside of the top publishers who have large in-house technology teams, most publishers do not have the resources in place to create a truly unique consumer product while also keeping that unwavering focus on ROI.

As a result, many publishers often have to rely on irrelevant static ads running against general content, and the audience is not influenced by the message. These publishers are not putting their best foot forward for marketers and will get dramatically outgunned by the guys who can target effectively.

Think of the inventory that you do not sell directly. For example, the traffic that comes in from search to articles that were created years ago. There is clear intent there on the part of the consumer. Are you set up effectively to target them? If not, let someone else do it and pay you for that option.

I just do not see any way publishers can hope to compete in this game on their own.
So sell your best stuff. Cordon off your most desired content and develop the best possible campaign you can. Price it at a premium because marketers will pay for quality. But publishers, you cannot solve all of your problems by turning off ad networks. There is an optimal mix of direct sales and networks. I strongly encourage publishers to spend more time finding this balance and less time trying to turn back the clock.

Follow Andrew Pancer (@apancer) and (@adexchanger) on Twitter.

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  1. Great Article Andrew!

    I wanted to add that proper use and segmentation of user data can solve these problems. The publisher always has the power to carve out these premium impressions. But having the proper data available to Ad Networks can turn remnant inventory into Premium. And having relevant ads from BT and RTB campaigns solves the performance problem.

  2. Not sure this is really very compelling. If remnant is only 20% of revenue, shouldn’t the publisher work with that inventory to drive additional traffic to the high sell through content sections and use BT to extend the audience from those sections to the lower value and low sell through areas?

    Not much point for a premium publisher that has decent sell-through to work with a network. Exchanges would seem to be a logical though.

    Different story for publishers with low sell through, they have to work with networks…

    • Isaac,

      All excellent points.

      Using “house ads” to drive traffic from low value pages to high value ones is a tough game and the economics rarely work out. Many sites use links and other tools in the traditional editorial areas areas of the site to do just this. Giving up the value of display impressions to try and move clicks to high value areas typically yields very low ECPMS for the publisher.

      Using BT to extend audiences in areas that are oversold is exactly what Tacoda and Audience Science do for publishers. This tactic works quite well but is very difficult to do at any scale, especially for smaller pubs.

      And I agree. If you are a publisher with very high sell out rates, there is not need for a network partner.


  3. Great article, Andrew.

    Another point to support your argument is that in the current web ecosystem, there are few (if any) individual publishers that have the necessary reach of specific audiences desired by advertisers.