“The Sell Sider” is a column written by the sell side of the digital media community.
Today’s column is written by Jeff Turner, head of ad product for RED at The Washington Post.
Every few years there’s something new in digital advertising that threatens publishers’ revenue and puts the digital publishing industry at risk.
Past years’ potential threats include the rise of programmatic buying and fear of race to bottom-rate CPMs, the introduction of ad viewability and vCPM buying, Facebook’s 2018 algorithm change that cut referral traffic to publisher content and the EU’s privacy regulation known as GDPR.
Similar to GDPR, the United States’ best-known privacy regulations will kick off in 2020 with the California Consumer Privacy Act (CCPA). The CCPA, along with similar state legislation, threatens to kill cookie-based ad targeting and, along with it, millions in potential advertising dollars.
Many say the death of the cookie will also lead to an increase in contextual advertising and a resurgence of advertiser blacklisting – a practice that blocks a brand’s advertisement from running against articles that contain a list of blocked topics. Since blocked topics tend to surround original journalism and political news, the lack of audience targeting and increase in advertiser blacklists have converged into the most recent threat to publisher revenue.
A recent Wall Street Journal article about recent advertiser blacklisting efforts highlighted the monetary impact of these blocks and their threat to the news media. “The use of lengthy keyword lists is going to force publishers to do lifestyle content and focus on that at the expense of investigative journalism or serious journalism,” one publisher said. In a post-cookie world where content matters more to advertisers, there is a fear publishers may abstain from news and political and investigative journalism in favor of advertiser-friendly content. This future-state would be detrimental to brands, consumers, journalism and democracy at large.
Does the shift to contextual ad targeting and subsequent advertiser blacklists pose a serious threat to premium publishers? No. In fact, this shift will make advertising with premium publishers more valuable and stronger than ever. Here are four reasons why the post-cookie era will be the golden age of publisher-driven advertising.
1. Smart advertisers care more about whitelisting than blacklisting
Many media buyers use blacklists as a strategy to receive lower ad rates – buying generic “run of site” campaigns that span all articles – but with blacklists to omit specific content. The end result is an ad for a financial advertiser, for example, may run on all content except politics.
However, while this strategy may provide lower ad rates, it will also lower ad performance and user experience. How well would a finance ad work if targeting sporting or celebrity content? Without targeting users’ web history via cookies, the answer is: not well.
Instead, advertisers are best suited to focus on whitelisting, or targeting toward content that is aligned with their brand message. More importantly than being concerned about brand safety, advertisers should focus on brand suitability – identifying and targeting content that is on message with their ad message and branding.
2. Machine learning has made whitelisting far more valuable
Publisher taxonomies and contextual advertising are not new to digital media. Every publisher has a taxonomy, and many large publishers use a form of automated filing to generate their taxonomy rather than relying on manual editorial filing.
However, in the past several years, machine learning has elevated contextual advertising targeting to new levels of granularity desired by brands. And by scaling contextual whitelisting to aggregated news platforms like Apple News, and/or pooling publisher supply together through programmatic means, advertisers can find scale against their whitelabeled content now more than ever before. This provides an opportunity for even the smallest of publishers invested in original content.
3. A strong programmatic stack is the key to longevity
The Wall Street Journal is quoted as saying “ad-blacklisting threatens to hit publications’ revenue.” While individual blacklists may cost publishers revenue, the risk is actually relatively small due to what’s known as “displacement.”
Most publishers only have a 20-40% direct sell-through rate, meaning they only sell 20-40% of their owned ad supply through traditional sales channels for a set rate. The other 60-80% is monetized through programmatic channels, where advertisers buy across multiple publishers through an automated, primarily bid-based platform.
If an advertiser applies a blacklist to their direct campaign, the publisher isn’t actually losing revenue – instead of the ad running on blacklisted content, the ad is displaced to other non-blacklisted content where there’s adequate supply. As a result, the revenue risk to publishers really only exists with bid-based programmatic campaigns, where an advertiser who may have bid $3.15 on an article about Russia may end up not bidding due to a blacklist, leading the publisher to make only $3.10 off the second highest bid. While five cents may seem low, if this occurs against millions of ad impressions per day the loss could be substantial.
This risk is real, but it highlights the importance of a strong programmatic ad stack regardless of blacklisting efforts. This risk is not new and merely reinforces the fact that publishers must optimize their ad experience and ensure their ad supply is premium and highly viewable – a practice that has shown to improve overall programmatic rates.
4. The old adage is true: Content is king
As the bulk of advertising dollars continues to go to the top social platforms, the main advantage publishers have over these platforms is content. For many publishers, subscriptions have become a key focus of growth. There are many reasons why readers become subscribers, such as a desire for fewer advertisements, an increase in readers’ perception of publisher trust and a desire to associate with specific brands. While all of these are motivating factors behind a potential subscriber’s decision to convert, it’s clear the 16% of US consumers who pay for a news subscription are not breaking out their credit cards for non-differentiated products. Subscription fatigue is an increasing risk, and now more than ever publisher revenue is tied to trusted, original journalism.
Publishers’ ad supplies are also becoming more premium as consumer trust shifts away from social platforms toward publisher content. A recent survey by Signs.com found that trust in advertising on social media platforms is increasingly low, with average trust for Facebook ads registering at 23%. Conversely, a study by IAS revealed that readers found advertising on premium publishers more than 74% more likable, more than 20% more engaging and 30% more memorable when compared to viewing the same ad on lower quality sites.
Inevitably, 2020 will be another year of change for digital publishers. However, just like in years past, publishers will continue to thrive if they embrace these industry changes and develop new, differentiated sources of revenue. It is publishers’ investment in trusted, original journalism that will serve as their anchor, allowing them to overcome these changes while simultaneously providing quality content of critical importance to the American democracy and wider public.