Ad networks aren't killing the publishing industry. Online publishers are using ad networks to kill themselves.
Let me be clear: There's nothing inherently wrong with ad networks -- not even remnant ad networks, those favorite targets of doom-sayers and makers of swine-themed analogies.
There's also nothing innately self-destructive about publishers who use ad networks. In fact, one thing you can say of remnant ad networks is that their intended customers know what they're doing: selling non-premium inventory in volume at commodity prices. It's safe, it's effective, and nobody gets hurt.
The problems start when premium publishers begin to stray. They build their businesses with trusted in-house sales teams and premium networks only to be lured into the remnant market by the promise of a few more dollars. (It's Business 101. You can't play premium and volume at the same time and emerge with your price structure intact.)
You can't deny the appeal -- but at this rate, remnant networks may just be the gateway drug undermining premium brand strategies. It's time to get a hold of ourselves, face up to our problems and take positive steps to lead a healthier lifestyle. Yes, people. It's time for an intervention!
Time for an intervention
"What's wrong with a little dip into the remnant marketplace?" you ask. "I'll only do it on weekends, and I'll know where to draw the line."
Well, the problem is, there's no way to keep your experimentation phase private. Advertisers aren't dumb. They know when your site is in a remnant network or exchange. And as soon as they know they can buy your audience more cheaply on the remnant networks, why wouldn't they? Next thing you know, you're losing direct relationships, your eCPMs are slipping and your brand is fading. But by then it's too late; your CFO is hooked on that fill rate metric -- and it's hard to turn off any revenue stream once it starts flowing.
Now's the time for some tough love. You have to decide what kind of business you're in, and stick with it. If you're going to sell inventory in volume at commodity prices through remnant ad networks, great. Go for it. You can make good money that way.
On the other hand, if your goal is to command high-margin CPMs for premium inventory, then your business -- and your brand -- will only be as strong as your resolve to stick to the straight and narrow. Your new life begins with a six-step program:
- Exit your existing ad network and data contracts.
- Prepare your company for the transition.
- Create unique, premium products like large, high-impact ad units, interstitials and rich media.
- Use unsold inventory to promote your premium content and products.
- Hire and train sellers to be consultative partners for an advertiser's media plan, not just "smile and dial" sales people.
- Extend your own reach to new audiences via outlets that will add shine to your brand, not tarnish it.
Whichever way you go, there'll be pain. If you choose the premium brand model, you'll have to take a hit on revenue in the short term because you're cutting off the remnant networks that have been delivering that short-term high. This might not be the most popular decision you've ever made (though your own salespeople will love you for it).
The volume model has its pain points and prices to pay as well. Reorganizing your staff and products around an optimized network-oriented model is a disruptive process, and it's not going to win you any friends on your sales team. Still, the end result may be worth the effort if that is the strategy you're after.
Whether you opt for the premium model or the volume model, your business will benefit from a more conscious, deliberate, and clearly defined strategy. Once you've experienced stable eCPMs and branded campaigns, you'll feel high on life and longevity. What brand doesn't want that?
|ABOUT THE AUTHOR|
Russ Fradin is the co-founder and President of Adify. He has a 15 year career in online advertising as an early employee of Flycast Networks, early executive of comScore and the leader of Adify.