Raj

Weekly Reading Roundup for February 17th, 2013

A collection of some articles I have been reading over the past week:

Also take a look at this SEO white paper from HubSpot. It’s a great piece and one I think all publishers should at least familiarize themselves with as they continue to grow their audience and readership.

Raj

IDFA & Mobile Advertising

As we all know mobile usage has been ramping up quite nicely to the point where mobile usage should surpass desktop usage within the next few years. App makers and content creators alike have been struggling to generate meaningful revenue on mobile, partly because the old way of doing things simply doesn’t work. In the past, advertisers could reach users by targeting ads based on cookies and opt-in information provided by the users. Sadly for these advertisers and the publishers who serve the users, this hasn’t been very easy to do on mobile.

Apple’s new iOS 6 could be a huge game changer for publishers and advertisers alike. Within the new operating system, Apple has now created something akin to a “persistent cookie” that can then be used by app makers and developers to target individuals with better mobile ads while not jeopardizing the individual’s privacy. Privacy is built in by design in that Apple offers its users to select “Limit Ad Tracking” if they don’t want anonymous usage information to be compiled on them.

Hopefully the new IDFA system will give publishers the revenue generation opportunities that they are use to seeing outside of mobile while also giving advertisers the confidence to continue to put spend towards mobile. The push towards the mobile web is inevitable; for publishers and advertisers, its a matter of staying ahead of the curve to derive value from mobile.

Raj

Revenue Cannibalization: Striking A Balance

What if you are a publisher with various sources of ad income? What if you have CPA deals next to CPM display ads? Or perhaps even CPC text link ads next to CPM display ads? This post focuses on the latter, in which a publisher needs to understand the revenue split between two competing (but complimentary) sources of ad revenue.

At the last publisher I worked at, we had an interesting mix of text link ads based on directly negotiated CPCs (direct partner/non-auction) and display ads trafficked via CPM. In many cases, publishers choose to stick with one ad revenue source (display ads OR text link ads) because cannibalization can occur. In a nutshell, cannibalization is the process by which one ad can potentially take away clicks from another portion of the website or an ad.

In our specific case, we realized very quickly that there was an equilibrium that needed to be struck between our text link ads and our display ads. In essence, if the CPM we negotiated with a direct deal advertiser was too low (commensurately, if the eCPC was too low based on the CPM and the CTR) we risked actually losing money on net when considering the clicks that were lose to the display ad, rather than having the user click on the (higher paying) text link ad.

Publishers need to understand that for any given deal they sign in this scheme, they need to ensure that total revenue on net is higher, even if they are getting a higher CPC text link ad or a higher CPM display ad. In the case of the display ad, understanding the CTR from the display ad is vital to understanding the eCPC, and thus the total affect on monetizing the user.

Raj

Guaranteed Inventory: The Ideal Publisher Setup

If you’re a publisher who is currently looking to secure direct deals for your website, good work; many publishers find that direct deals can bring in a much higher CPM than their remnant inventory, further boosting their revenue and strengthening their monetization efforts. This post will focus on a way of creating something akin to guaranteed inventory while also creating price pressure within the auction. As you will see, both advertisers and publishers will win with this strategy.

Overview
Guaranteed inventory generally sits at the top of your waterfall. It’s highly coveted by advertisers who want to be the first impression that a user sees on your site and highly lucrative for publishers who can charge a premium to said advertisers for the opportunity to sit above the auction and get a first look. Typically Guaranteed inventory means you as the publisher are setting aside a certain amount of your available impressions exclusively for the advertiser.

Comfortably Clearing The Auction
This does carry some risk for the publisher. As a publisher, you have to feel confident that the CPM you are getting directly will almost always clear the vast majority of bids you are seeing in the auction. If the CPM you are receiving from a direct advertiser doesn’t comfortably sit above the auction, you may leave money on the table as the guaranteed advertiser gets to display an ad that may be worth less than the one from the auction that could have potentially ran had the guarantee not been in place.

That being said, for the publisher, the ideal situation is an advertiser who pays a very high CPM but doesn’t actually have guaranteed first look. In this scheme, the advertiser effectively takes first impression since their CPM bid is far above the normal remnant CPM that the publisher is seeing from their networks. For DFP users, you effectively create a line item that isn’t guaranteed inventory but rather normal inventory that goes through the auction. As a result, if there is ever a situation where the network can beat the advertiser’s CPM, it behooves the publisher to provide that specific impression at auction to the network, thereby maximizing publisher revenue. By making the advertiser go through the auction, you theoretically create price pressure within the auction by inducing network buyers to raise their bids and hopefully beat out the higher paying direct advertiser.

The ideal situation is an advertiser who pays a very high CPM but doesn’t actually have guaranteed first look.

Win Win For All
A lot of advertisers may not like this setup since they feel they are paying more for not much benefit. In fact, the advertiser should stand to achieve a much more effective campaign as well as ROI on that campaign since theoretically they are now paying the exact price they would like to hit for the exact number of impressions that will convert best for them (assuming they are optimizing their CPM bid based on their KPIs). First impression is thus determined by the auction, but generally goes to the higher paying CPM advertiser in most (if not all cases) and the difference between them getting guaranteed all first impressions versus getting close to all first impressions is negligible.

If you find yourself in the middle of negotiations where you can obtain a higher paying non-guaranteed advertiser, ensure that their CPM bid is well above the remnant CPM you are seeing so as to effectively give them “first impression” without guaranteeing the inventory (for legal reasons you will always have to state this in your IO so as not to misrepresent yourself); you maximize revenue optimization efforts since the advertiser has to go through the auction and will (most likely) win while (most likely) putting price pressure on the other networks, thereby increasing their bid at auction and delivering more overall revenue to you, the publisher. Your advertiser still gets what they want (“first impression”) because the CPM bid is so high that the auction usually can’t match this number while the publisher gets what they want because the higher paying advertiser CPM puts price pressure at auction and hopefully induces the networks to bid higher and make the auction more competitive.

…you maximize revenue optimization efforts since the advertiser has to go through the auction and will (most likely) win while (most likely) putting price pressure on the other networks…

It’s a good strategy for publishers who are working with a small handful of direct advertisers, and can lead to very strong revenue growth when implemented and managed properly.

Raj

Publisher Monetization Strategies – Bound Together by Audience

The inevitable march towards audience buying is well underway and has been well underway for quite some time by this point. Yet, across the web, I still see publishers aligning themselves across industry or business verticals: content publishers who are writing male-centric content are huddling together for group inventory plays and so forth. What’s the real problem here? Publishers should be aligning themselves with other publishers whose audiences match, not some perceived and (quite frankly) archaic notion of verticals. The only verticals we should be moving towards are “audience-targeting verticals”. If I am a reference publisher whose audience of Males Aged 18-25 nicely lines up with a content publisher or blog who happens to have a large following in that demographic as well, we should be able to band together and provide our inventory in aggregate supply.

For a while, the problem for most publishers was the lack of functionality and ability to actually provide audience targeting solutions above and beyond simple things like geo-location, browser type, and perhaps some other built-in features that come from ad servers. As ad servers like DFP began to open up custom targeting functionality to their small and medium tier DFP clients, publishers within this range also became exposed to the massive third party data pools that many of the major publishers have been using for quite some time now (think companies like BlueKai, Lotame, eXelate, etc. as audience targeting data providers and large publishers like NYTimes.com).

One key problem for small and medium tier publishers is their inability to attract top dollar or advertisers based on three factors:

  1. lack of audience targeting capabilities within the ad server;
  2. lack of publisher brand recognition; and
  3. lack of traffic volume

As already highlighted above, smaller publishers are now more capable than ever to integrate advanced audience targeting solutions within their ad server. Granted hurdles remain in that the costs of delivery to provide those targeting solutions may be cost-prohibitive for some publishers, but over time these costs should go down as more and more publishers adopt these solutions (costs for data providers should go down as economics of scale occur, thereby creating price competition and forcing the prices publishers have to pay in transmission/delivery fees to the data providers).

The last two points are key and directly related. Since publishers have been aligning themselves on industry verticals, it may have been difficult for publishers who couldn’t neatly fit into a vertical to get top dollar advertisers, thereby effectively making their traffic volume become a hinderance to their ability to gain more money. However, now that publishers have audience targeting solutions, they can come together in a sort of “audience match vertical” whereby any publishers, regardless of type, size or content, can come together and provide a large amount of inventory based on the types of targeting offered. Advertisers win since they get highly targeted placements based on the publisher’s audience targeting capabilities, while publishers win since they are no longer handicapped from the lucrative world of direct premium sales due to a lack of traffic volume or brand recognition. Sure, many of the major advertisers will still care about publisher brand recognition. But I think as those advertisers see a better return per dollar spent by using these audience targeting solutions, they will feel less and less worried as before in name recognition. So long as the publisher’s brand isn’t seriously detrimental, wouldn’t the advertiser want to accurately target the individual and get better ROI?

There are still some challenges that publishers face. Notably, there is still no way for publishers to reach out and connect with other, similar publishers (based on audience targeting) since other publishers may not know the targeting capabilities of a publishers (hint hint Quantcast et. al. you have an incredible opportunity here to match up publishers based on the collective knowledge of audience data from all of those publisher clients you have). This obviously hinders the ability for publishers to offer greater collective inventory together, but its a rather small hurdle to overcome in order to make publisher offerings more successful. Therein lies an opportunity of course, and over time publishers will realize that they can attract premium ad dollars by coming together around their similar audiences.

Raj

Monetizing Mobile Audiences: A Publisher’s Perspective

Eli Portnoy wrote a great article in TechCrunch recently discussing the possibilities for advertisers to attract and target mobile audiences. This post followed on the heels of KPCB Partner Mary Meeker’s great presentation on the state of the web and the move towards mobile recently.

I wanted to cover some thoughts on mobile monetization, specifically from the publisher’s perspective. Eli’s comments are focused obviously on the advertiser: they recognize the power and potential that mobile can have especially given the inherent segmentation and localization that only mobile can provide at the moment (read: segmenting an ad message to a user based on where they are, what they checked in to, what time of day it is, etc.)

The issue at hand isn’t necessarily on the demand side as savvy advertisers are already launching some very successful mobile campaigns that take advantage of the segmentation capabilities inherent with mobile. The real issue in finding enough publishers at scale to make the campaigns worthwhile. And even more specific, finding a single outlet on the supply side that can truly provide reach for a campaign.

Many publishers are still working on optimizing for mobile as they are still slow to update their sites for the mobile interface. In this regard, many publishers can’t service mobile campaigns since the scale to serve enough impressions is lacking. You now have a problem in the market where the supply of ad inventory falls way below the demand; simple economics would dictate that the publisher would stand to benefit from such a market imbalance but unfortunately mobile CPM prices are still way below their true potential.

How do publishers stand to gain? Eyeballs are moving to mobile: a recent statistic pointed out that almost 50% of individuals in the US now have a smartphone. Given this, no publisher should be asking whether or not to focus on mobile, but rather, whether or not they should pursue a specific mobile strategy over another. Since many medium-tier publishers don’t necessarily have the scale to service a large branded advertiser’s campaign, it may be important for publishers to band together and provide a larger pool of available inventory. This would help the entire ecosystem by providing more revenue opportunities for publishers while giving advertisers the true scale they need to pull off their campaigns (further reinforcing the importance of mobile as a new medium to target audiences and therefore encouraging more ad spend and budget to flow into mobile).

For now, the real key for a publisher is to ensure that they are mobile-ready. Advertisers will notice and monetization opportunities should increase.

Raj

Ad House Reference

I own a number of domains, many of which I have not developed for lack of time and also for lack of formally conceptualizing how I will use the domain, but I recently purchased a domain adhousref.com. As the name would suggest, I want to create a website that provides simple and basic details about the online advertising world, such as which agency is owned by another, what advertisers work with said agencies, etc. Really the idea was born out of the fact that I have found it extremely difficult to find even basic information with regards to agencies and the online advertising world (especially since I am very new to the industry and also don’t have much knowledge about the ins-and-outs of the industry). The idea for the site was inspired by a great website that an adviser pointed me to called sellercrowd.com (and, for those of you who are already in the industry and know the ups-and-downs, ins-and-outs, check out this great Tumblr blog).

Over time I am hoping that the site will evolve and become a trusted source to learn about up-to-date news within the online advertising world. It is definitely conceived of as a resource to help the sell side of the advertising industry, but I definitely see some uses in the future for the buy side as well (for example, since campaign RFPs are still very much so used, perhaps buyers can post their RFPs direct and manage them via the site). While I recognize there are plenty of other sites out there that have this information (and even on some ad agency sites they have very specific information about their offices, their work and specialties), most of those sites are built behind pay or login firewalls that add (in my opinion) an unnecessary layer to an already massively layered process.

More details to come as the concept for the site gets finalized and slowly built. I think between the redesign of Raj Design Group, work being done for American Academic Prep, and the update of the MAUA website, this is going to be a pretty busy summer.

Raj

The Fragmented World of Online Media Sales

The Beginning
Recently I have been working on building an in-house premium online display ad sales unit within PeekYou. We’re slowly approaching 10mm monthly visits, and as a result, are looking towards new channels to monetize our traffic beyond simple Google display ads and direct text link deal partnerships. Whereas just a few years ago, major brand name advertisers were content spending big ad budgets for pure volume-based CPM campaigns, many advertisers are now looking for very specific audience buys and targeted display campaigns. It is for this reason that we integrated our DFP ad server with Quantcast’s Audience Segment API.

I have the space, you bring the campaign
As we have learned the hard way, getting in touch with advertisers in order to sell our inventory direct to them is proving to be extremely difficult. There are numerous websites out there (such as sellercrowd.com) that help online ad sales reps by anonymously connecting them within a forum-style Q&A site, in order to make sure that the sell side is able to monetize their inventory. Gone are the days where a publisher can simply integrate audience data, and sell premium display.

Next steps
I am 100% sure everyone on the sell side (and buy side for that matter) has had the exact same feeling towards the entire industry and the fragmented nature of advertising online. I recently came across a great article that focused on bringing small businesses online and into the display advertising world (most small businesses focus on products like Google AdWords/SEM to market their wares online since they don’t always have the resources to create an effective display ad campaign like some of the bigger advertisers out there). Perhaps publishers within our tier of traffic (anywhere between 5mm to 15mm monthly visits) should be looking to target these mid-level advertisers to better monetize their inventory, rather than going after the agency-supported advertising clients? Until publishers can get a fair shot at pitching their inventory direct, online media sales will continue to be a fragmented, disjointed marketplace.