Magazine Publishers Talk of Creating Online Ad Network

Rivals Looking to Band Together for Scale, Better Rates

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NEW YORK (AdAge.com) -- Rival magazine companies are discussing the creation of an ad network that would sell targeted ad space across many of the industry's websites, according to executives at several different publishers. Discussions are "very preliminary," with just one meeting so far, but another meeting is in the works.

"The ad network is front and center," one magazine executive said. "We're getting killed by ad networks. A lot of companies feel like, as consumer companies with a flood of online content, if we could just create some scale on our own and sell across it, we can get a lot better ad rates."

Publishers are increasingly reluctant to let ad networks buy up publishers' unsold online ad inventory and sell it as a network buy at a significant mark-up, an executive at another company said. "Publishers are giving away access to their audiences way too cheap," he said. "When you sell to a network you make pennies. I'd rather give that value to the advertising community. If the advertising community or the buyers need something, why shouldn't I provide it to them on my own? The challenge is that each individual publisher doesn't have the scale necessary."

It's talk that's surfaced before, the executive added, but it may be getting new traction. "It's not the first time that it's started, it's just the pain may be greater now," he said. "Now there are maybe 500 ad networks. Last time the conversation started, there were maybe only 200 ad networks."

The idea is the latest example of unusual collaborations being eyed by rivals from the print world. Publishers are also considering establishing a storefront from which they could sell digital editions of their titles for devices like Apple's anticipated tablet, without handing over control to Apple, as Ad Age reported first last week. "I have been involved myself and have heard about discussions among companies on a number of different initiatives that would involve consumer publishers sharing resources in a way they never would have in the old-fashioned print-only world," an executive said last week.

Unique advantages
Advertisers don't necessarily set out to buy inventory across magazine sites as opposed to other kinds of sites. And various publishers have already hooked up with broader networks or assembled networks around certain topics, such as Hachette's Jumpstart Automotive Media or Martha Stewart Living Omnimedia's network, Martha's Circle. But a magazine publishers' network, if it could achieve the crucial scale required, could offer advertisers behavioral targeting on professionally produced, "well-lit" sites.

Time Inc. started operating a network across its properties earlier this year, arguing that its advertiser-friendly sites should be more appealing than many networks' blind buys around the web. But scale is a crucial part of the game for ad networks, so collaboration among publishers could be even more appealing.

"Controlling your own inventory and making money off it is smart if they can get it work," said Michael Hayes, exec VP-managing director at Initiative Digital. "There's a lot of margin in there, a lot of money to make. For them to push it off to someone else doesn't make a lot of sense."

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