“The Sell Sider” is a column written by the sell side of the digital media community.
Today’s column is written by Daren Trousdell, CEO at OneUp Sports.
Publishers that rely on an advertising model to survive and thrive have a big decision to make: Should they take control of their own ad tech stack and evolve to become a platform business or give it away for a smaller slice of the pie?
The New York Times reported last week that Facebook may begin hosting publisher partner content and selling 100% of the inventory. It appears that Facebook has also convinced a few major media outlets to join the initiative, the Times said.
On one hand, a percentage of something is better than nothing. But is anyone as concerned as I am that some major publishers are seriously considering handing their entire digital value proposition over to platforms like Facebook? Are they essentially giving up without a fight?
Platforms command a different type of advertiser investment. If you look across the landscape of popular platforms, such as Snapchat or Twitter, you can see that early advertiser investments are much larger – $750,000 for a day’s worth of advertising on Snapchat – than what the average publisher is receiving. The rationale is that the blend of audience, cross-media placements and social data immediately enhances the value of the digital advertising product. I strongly doubt these platforms are negotiating declining eCPMs or fighting for RFPs for allocations.
Evolving from a publisher play to a platform isn't easy. It requires an investment in technology and significant organizational change.
There are many amazing publishers on WordPress and other similar services with an endless list of plugins and options. The problem is that these options historically haven't evolved a property or group of properties. Taking it to the next level will require an investment in custom development and integration to build features that can help merge audience, data and placements for profit.
The direct sales team must now sell a much larger and complex solution. It's no longer just about moving available inventory and responding to RFPs. Now you must connect brands and agencies with unique features, new formats and data to reach a group of goals. Impression delivery is only one of several goals, and the sales team can make or break a platform deal in the pre-sales phase.
Deals, Deals, Deals
The best platforms are deal machines. Everything from audience extension to technology sharing will drive the best platforms forward. Big brands have clearly noticed and are investing to best position themselves as audience and capabilities grow.
Snapchat, for example, has leveraged its audiences with a unique capability: its spin on messaging. Instead of chasing agency RFPs in its early monetization growth, Snapchat is dealing with inbound demand, which is where any media business wants to be.
A platform business also has a distinct set of metrics that help to support a higher enterprise value. This will be critical when the process of exiting or taking on new investment partners.
Publishers should consider what they must do to make this shift. Doing so will enable them to take their business to the next level.