News Corp. today became the latest big publisher to erect a fence around its newspaper web sites -- including WSJ.com, TheTimes.co.uk, NYPost.com, TheAustralian.com.au, and MarketWatch.com -- in hopes of pushing online ad rates higher.
The company announced today it is launching an a private ad exchange, News Corp. Global Exchange, that will only contain online ad inventory from those sites while locking out third-party ad networks and exchanges that had once re-sold ad inventory, often at lower prices.
"Content aggregators would like to commodify our content, while data scrapers would like to aggregate our audience -- the only way to reach the world's greatest content and the most prestigious and lucrative audiences is directly through our digital properties. Third parties are no longer invited to the party," said News Corp. CEO Robert Thomson in a statement.
Over the past few years big-name publishers including Conde Nast, Business Insider and Hearst have erected private advertising exchanges as a way to cordon off prized display inventory and make it available only to certain ad buyers at certain prices. The rationale: protect the value of prized direct-sold ads and prevent third parties from skimming margins and data.
Those private exchanges have been largely experiments with only portions of inventory allotted to them and results mixed -- Forbes has seen more value in open exchanges. But News Corp. has decided to commit to the closed model.
News Corp.'s motivations are two-fold. First, it believes it's leaving money on the table by selling ads via ad networks that prioritize audiences over content. That is, ad networks pitch advertisers on the ability to target, say, a business executive but to do so on the lower-priced gossip blog he or she may read during lunch than on the more expensive Wall Street Journal.
Second, News Corp. wants to stem the ability for third-party ad tech companies to siphon their audience data. By dropping cookies or other tags on News Corp. sites, those ad tech vendors would be able to those those visitors on and off News Corp. properties and create audience pools such as "New York Post readers interested in the Yankees" to sell advertisers those audiences on other sites, without cutting News Corp. a dime.
News Corp.'s private exchange aims to attract advertisers based on the audience its properties' attract and the first-party data the company is able to collect on that audience, such as addresses provided when subscribing to a publication or email addresses when registering an account that retailers and others could hypothetically use to target people in their own customer database.
News Corp. is partnering with automated ad seller Rubicon Project on the private exchange. The ad tech firm, in which News Corp. took a minority stake in November 2010, will provide technology to sell desktop and mobile display ads via real-time, Wall Street-style auctions as well as to process ads sold directly via the publishers' sales teams, said Matthew Karatz, chief of staff and head of strategic operations at Rubicon Project.
According to a spokeswoman, News Corp. has been winding down its relationships with ad networks over the past year. It will discontinue remaining arrangements with third-party networks as it rolls out the News Corp. Global Exchange in the coming weeks.
Wednesday's announcement served as a reminder that the new News Corp. is still the company that used to characterize Google as a vampire for making money by aggregating content it didn't own—like that of the Journal or New York Post, which the company also owns.
According to Outsell Inc. media analyst Ken Doctor, newspaper sites can set minimum prices on their own exchanges that are 20% to 50% higher than what they would get from ad networks. He added that News Corp. is well suited to operating its own exchange since it can offer advertisers space across more than 50 websites.
"News Corp., having multiple brands and distinct yet overlapping audiences, has more ways to mix and match," Mr. Doctor said.
-- Crains' New York Business contributing
Brought to you by: 4INFO