Commentary
Lies And Addiction
- by Ari Rosenberg , Op-Ed Contributor, June 25, 2009
I think ad networks lie, and I think senior managers at publishing companies with a direct sales team, who also sell off inventory through ad networks, are addicted to booking this unsound revenue in an attempt to meet their personal quota, in spite of the harm this "use" has on the very salespeople they are paid to manage.
Before you attack my opinion, ask yourself: Does using an ad network help a direct sales team more than it hurts them?
If your answer is no, then why do anything to clog your company's main revenue arteries? Selling media is hard enough; how can competing against your own inventory sold by others at lower prices help your sales team more than it hurts them?
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If your answer is yes, ad network monthly payouts are doing more good than harm to your own sales team, then I suggest you walk and talk further with the folks you send out to the streets for battle each day.
As for the lying, not all ad networks lie. I just think they do, and here's why. Are you aware of any other medium in which clients agree to make a media investment with the condition that they are not allowed to know what content properties their ads will appear on? And yet ad networks publicly contend they protect the identity of the content brands they siphon inventory from, by offering clients buys on a "blind basis." So you mean to tell me, ad network sales reps calling on Nike, for example, who may have well regarded-sports sites in their bag of impressions, aren't going to let buyers know that as part of their blind buy, their ads will appear on sites "like SI.com?"
Even when ad network sales reps don't tell buyers what sites they will likely appear on, clients tell ad networks which sites need to be blocked in order to earn their buy -- leaving a clear indication of which sites they will run on. Whatever scenario, clients don't buy anything else blindly -- but we are supposed to believe they do with ad networks, to help protect the desire for discretion by premium publishers?
Ad networks lie when they publicly claim that channel conflict with their publishing partners is a non-issue because they call on different budgets. The thing is, there is only one budget -- the client's. How this overall budget gets sliced is driven in large part by the companies who vie for these dollars. So if ad networks grow their slice, it must come at the expense of another slice -- perhaps the one your direct sales team is calling on.
Ad networks create further channel conflict by proclaiming that the impressions they sell, furnished by publishers, "work better" than the impressions publishers sell directly. This sales claim increases the pressure on your direct sales team to create complex, resource-straining programs in order to earn buys directly because the plain old media impressions they have to sell can be bought cheaper and "apparently" work better when purchased from someone else.
Finally, remember those clients involved in not-so-blind buys with ad networks are not so blind to the price they pay for anything. So when a premium publisher who can be bought through an ad network tries to sell something directly, the ad networks want us to believe their sale price for your inventory will have no influence on the cost pressures this same client will apply to your direct sales efforts. So tell me again how this channel conflict doesn't really exist?
Back when I was at IGN and was promoted to lead ad sales, the first thing I did was cut all ties with ad networks despite the constant pressures to use them levied by my CEO, others on the executive team and the ad networks themselves. I simply would not tolerate having any of my salespeople selling against their own inventory offered by others at lower prices. My salespeople's jobs were challenging enough. It was my job to make theirs easier to achieve success, not harder. IGN did not suffer from this decision; it flourished.
Isn't it time to support your own sales team by letting go of the challenges working with ad networks poses for them?
Great article, Ari ~
Ari,
You are aggregating all ad networks into the same bucket - blind and cheap. There is another role for another type of ad network - one that extends the value of the major publisher, gives that publisher more audience to reach and brings quality sites that are too small to successfully field a direct sales force. Vertical ad networks such as the 200+ powered by Adify Network Builder and others like Travel Ad Network and JumpStart are valuable complements for brands who want to work with direct sales teams they trust to reach larger yet targeted audiences where they spend the bulk of their time - and indulge in their personal interests and passions. Martha's Circle, Forbes Business Blogger Network, SixApart VIP Media Network and AutoTrader Access are all distinctive vertical ad networks created and driven by successful media companies - and enabling them to bring more value to their advertisers. Adify Media works with all our networks to target cross-network brand campaigns to their publishers.
I agree very much with the issues with addiction to blind ad networks - both from the publishers AND the advertisers. It devalues quality inventory. But vertical ad networks are a totally different beast. Adify Media, for one, is 100% transparent - from proposal to site and placement reporting.
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Ari,
Good article, thanks. One point that you should have included is that all networks are not "blind" some have clear channel targeting capabilities. Other then that, I agree that it is not the best business practice for sites to sell against themselves.
Your article was good and pointed out some of the pitfalls to the ad revenue aggregation problem. As I stated in a previous post about a similar article, I tend to place my click through ad patches where they will do the most good. But I don't think I will ever allow myself to put up ads that will take away from my sales. As a publisher, I have to my eye on the bottom line, and if an advertiser starts to show a radical effect I may remove the patch. That's about the only way site owners have to control how much ad revenue is generated versus how much it draws the customer away from buying their products.
Another good one Ari!
I agree that top tier sites should be able to sell out most of their ad inventory via direct sales IF they have a PROPERLY trained ad sales force. If they do allocate any unsold or "remnant" ad space, a portion of the proceeds should
be distributed among the sales force via bonuses and/or used for additional sales training!
I've found that many niche publishers that are part of the "secondary premium" CPM marketplace or " The Long Tail" have NEVER engaged in direct sales and rely 100% on AdSense type networks for their 100% of their ad revenue.
To these smaller publishers it's an easy way to make some quick cash without actually having to learn the business.
For example: they never learn how to install an ad server so they can create channels/categories and/or offer the right size ad units- above the fold, they never register their site in atlas or MediaVisor so they can get on the radar screen of agencies and receive inbound RFP's. Nor do most ever learn how to create results-driven media kits, IO's, Credit Apps, Ad Spec docs, and/or brand specific capabilities presentations.
This is where I see the most "addiction" to ad networks taking place. Will Google AdSense or other ad networks educate publishers on ad serving, media planning software tools and how to respond to an RFP from JWT?
Most would tell you they are not even familiar with those
acronyms!
Education is the key to direct sales. But will most Long Tail publishers ever spend the time and money to educate themselves on the in-and-outs of direct sales? Will they
give up a portion of their ad network profits to hire an experiences salesperson or consultant to teach them what they need to do to compete with affinity sites making direct sales? This remains to be seen. I feel more awareness of education and training for niche publishers needs to be made available as well as continued education for the sales teams of top tier sites!
Ari: As Joelle pointed out, you are painting all ad networks with the same brush.
One could say: All media sales consultants are liars........ And without any actual data to back up that statement, just opinions, how would you respond to that as a media consultant?
You also reference your time directing online sales efforts at IGN. I think you would agree that the online media space has changed quite a bit since 2003.
Content providers have exploded since that time, and it continues to. Would you have every niche content site publisher sell direct? Is there not a place for media sales experts to add value by bringing new audiences around expert content to brand advertisers?
Did you speak to media buyers and management at agencies? They'll probably tell you that good ad network partners add value to what they do, and that the buyers plan to incorporate network buys more often moving forward. There is recent research to back this up.
What do you have to say about Comscore's recent release about the value of vertical ad networks' audiences and their tremendous growth?
Unfortunately, it appears you took the easy way out and disparaged the "old bad ad networks" for publishers lack of online media savvy. Fact is, good broad ad networks are here to stay and will continue to grow. Focused vertical ad networks in specific categories who have expertise will continue to grow. You're opinion may remain, but that's the reality based on market conditions.
Excellent article. I agree with all of your points and for those very reasons, we do not participate with ad networks.
In my opinion, there is a legitimate niche for ad networks and that's with content sites too small to maintain a direct sales force. But, for large scale publishers to offer their inventory through an ad network is suicide.
Relative to transparency, blind ad networks (even if they are truthful) have no way to guarantee that a publisher's brand won't be exposed as a particpant. A simple AdRevelance run will give that information away. If an advertiser isolates its buy to one network, a simple AdRelevance report will supply them with the site list. Remember, we are the most measured medium.
Use ad networks at your own peril.
I spent ten years in the publishing industry and I completely agree that selling ad space is tough, even in the best of times. There were no ad networks during my print days, so I was spared the luxury of knowing I could make quotas because there was someone out there picking-up the leftovers. I had to fight hard to exceed page goals, which of course had a direct affect on the magazine's revenue and my income. At times it was hard, but our team created value because we sold our space on the card, and advertisers knew it.
I'm agreeing with Joelle. It's an excellent article pointing out the problems with blind Ad Networks, but it really should have that caveat in it. Not all Ad Networks are blind (especially verticals), and some don't price compete with their publishers. Putting every Ad Network into the same bucket is a bit unfair.
Cheers,
Eric
Daniel, feel free to attack me and my opinion but I am far from alone with these sentiments. And I could argue online hasn't changed all that much since 2003 (I kinda keep an eye on it) and that Ad Networks were a bad idea then and they are a bad idea now for any publisher who employs a direct sales force.
As for my homework on this column since you did ask, I did not speak directly with agencies about this particular subject, I spoke with clients and they universally can't believe premium publishers are making this mistake.
Vertical networks are a different (I could have been more clear in my column) and not what I am opposed to (at all) if in fact the premium branded publishing sales force is doing the direct selling of this incremental reach such as the case with I believe Forbes and Martha's Circle for example.
While I understand the benefits of selling off remnant/unsold inventory to Ad Networks, there is no way this practice doesn't hurt the direct sales team on the streets and this negative far outweighs any benefits. As Steve Hamkins offered, as a premium publisher with a direct sales force, use Ad Networks at your own peril.
Ari
HMMmm?
Many are missing the point I feel. And Ari, your CEO was probably looking at the cost savings involved in having a (that) team of 'foot soldiers' selling those spots. Along with him (also) having and (no doubt) an understanding of a much bigger picture, that's almost upon us.
For it's surely all about the huge 'Global scale' (aspect) that's fast approaching? And is one that will allow those members of a strong Publisher Network to then get to 'inter-connect' with the many, many advertisers coming from within many Ad Networks (that are themselves), member 'users' of an OPEN Exchange.
Where Publishers (who are 'worth their salt' and who do attract users from all parts of the world), will then see themselves (yes, automatically 7/24), being constantly monetised from a stack of 'niche', global advertisers.
Those (advertisers) with a keen desire to support their content and target their constant user base numbers. And from a supply of advertisers in many Ad Networks who (themselves - via their network) get to come into an OPEN marketplace. (Exchange). - Global advertisers who are then (all) enabled to get to 'inter-connect' with (other) global publisher network members. Advertisers that operate in many 'local' markets, from all over the world.....
With RTB auctions conducted from both ends and all, automatically. And both parties having 'smart' operators (who represent the 'now-a-day' many buyers and seller 'foot soldiers'), continually 'tweaking' the pricing from either end of the equation, both, looking for a 'match'.
Kar-ching !!
:)
Ari: Thanks for your response. I certainly didn't want to "attack" you personally, so I hope my comments were not viewed in that way. If they were, I apologize. My goal was to professionally disagree with your opinion- nothing personal here at all.
I do think it would have been more clear had you made the distinction between broad networks, exchanges, and vertical networks in the article.
Also, I again disagree with the notion that the online space has not changed much since 2003. You don't address the explosion of content providers, page views, and online users with broadband penetration.
This are significant factors in why ad networks started and exist today. If a publisher's audience, page views, and inventory levels have grown about 20% per year, there is a huge supply of inventory in the market. Add to that the incredible growth of niche publishers and the "leverage" in media has swung directly in the buyers' favor.
Perhaps what top-tier publishers could do (and I know many of them already employ these ideas) is monetize their remnant inventory with networks in "non-premium" placements. This provides them with a distinct difference between the value of network buys and direct selling. The ability to create custom sponsorships, integrations, along with premium placements should differentiate the direct sales efforts from the channel conflict with networks.
Not having a media buyer/agency perspective slants this conversation dramatically. After all, they are the gatekeepers of the budgets we're all trying to get a piece of. If they say they like using the "good" networks, and plan to use them more in the future, I'll pay attention to that. Again, reality and winning RFPs pays the bills. Theoretical discussions do not.
Vertical networks are a different story, and (in full transparency) a model that I believe in as President of a vertical firm.
Ad networks do lie. I love the piece and couldn't agree more. In the past 2 weeks there have been 2 ad networks claiming to represent my site even though all of our sales is done directly. We have no affiliation with any networks at all and it's great to let clients direct and agencies know this....they respect us even more. I can say they lie because I have caught them in the act and made a large network send a letter apologizing for misrepresenting our site just this week. I proudly sent this letter to my team letting them know that they sell our product and no one else. Great article Ari.
Ari: Thanks for a good article. In mobile, the problem is 10X worse. For all intents and purposes, all publisher ad inventory is treated as remnant.
In two short years of mobile advertising, mobile ad networks have managed to drive premium CPM from $30.00 to about a $1. Unless publishers take control of mobile advertising inventory, they are not serious about mobile business. I wrote a short blog on the subj. http://blog.crispwireless.com/index.php/2009/06/01/the-failure-of-mobile-ad-networks/
Tom thanks for sharing such great insight, and Boris, I was aware of the similar issues in Mobile but not in such great detail -- you hit this point home even further. Finally Daniel, I over reacted to your post. I am human and I warned in my column this issue is unusually personal for me but our professional disagreement should not be -- good call and feel free to disagree as much as you would like :)
Have a nice weekend.
Ari
Note to all bloggers; if you want to attract a lot of comments, generalize. To broaden Ari's concept even more; when all types of businesses form affiliations with other businesses there is bound to be some competitive overlap.
Hi Ari –
Thanks for the thought provoking article, this is exactly what the industry needs to be discussing right now.
I actually found your perspective offensive to publishers and their sales teams. From the many publishers we work with, we hear of their sales teams selling packages at high rate without any major concern that networks are undervaluing their inventory and they’re not having difficulty competing with ad networks. On the contrary, we’re seeing a number of Road Blocks, custom site sponsorships and other indicators of strong direct sell-through at guaranteed rates. And if publishers are managing their sales channels effectively, as many of our premium publisher customers are, networks are not a threat and are instead an effective sales channel for a portion of non-guaranteed inventory. Proper channel management is embraced in every other industry; the more online media accepts this basic business principle the faster all boats will rise.
Re: Networks
Broad, negative statements are rarely constructive – your comments about ad networks prove this rule. Networks have created and distributed some of the best online advertising technology available; their propogation has been the genesis for success for our industry. Ad networks provide great return on ad spend for advertisers through reach and innovation; as such they’ve played a key role in getting more dollars online. Things like affinity or behavioral targeting can lead to campaigns that just “work better.” More recently the IAB Network & Exchange Committee has taken the bull by the horns by working on well defined guidelines and standards that will benefit the whole ecosystem. The good news is the vast majority of ad dollars going to a large pool of ad networks are very safe. We work with a very long list of networks that adhere to premium publishers’ ad quality demands, pay on time and do the right thing. Ad networks need to be managed effectively, and understood in context of the broader industry. Writing them off outright denies both their positive impact and key role in growing online advertising across the board.
Raj, if Ad Networks are responsible for selling campaigns that "work better" than why don't Ad Networks charge more than a direct ales force charges, instead of hundreds of percentages less.
Everything "works better" when the price is lower. If Ad Networks took their superior "offer" to the market and charged equal to or more than a direct sales team, this debate would turn into a party and premium publishers would be lining up to attend. Instead, many are looking at their watches and wondering when to leave this failed relationship.
Halleluiah! Granted the evolution of Ad Networks has begun (blind & cheap vs. transparent) but an Ad Network is an Ad Network regardless of whether it is transparent or not.
Ad Networks are cold hustlers trying to buy inventory for cheap and sell it off for a profit - period. An Ad Network is basically a middleman. I don't blame Ad Networks for trying. Once people started playing ball it's their organization and sales people who will bear the backlash of that decision.
I will never sell media for a company (again) who also sells to Ad Networks. It's my number #1 question on all job interviews.
Good counterpoint from MediaWeek: "Not Dead Yet: Ad Nets Have Survived, Thanks to the Recession" - http://bit.ly/KRAYN
Two quick comments:
1) Publishers sell to networks because their own team cannot sell all of their inventory. If their sales teams do not want the pressure of the other channel, perhaps they should get out there and sell more. If all the inventory is sold, then the publisher won't use a network will they? That they sell to networks means their internal sales force either can't or won't sell out their inventory. You'd be a fool to let inventory go unsold because it may hurt the feelings of your sales staff.
2) Advertisers go to networks because they can buy across multiple channels in one buy (rather than buying 50 different sites individually) and they get access to technology and features that publishers cannot provide. Publishers typically cannot provide behavioral targeting or support retargeting. They have all kinds of stupid limits on the kinds of creatives you can serve and they tend to be very bad about managing flight dates and even delivery. All of which are important to advertisers.
Strong category publishers do well selling ROS and they do very well selling roadblocks and sponsorships. But they cannot support any strategy that involves reach expansion and typically cannot handle complex initiatives. That is why they sell to networks and that is why advertisers buy from networks.
And publishers aren't white hat here either. Despite what the relationship is supposed to be and contracts that state otherwise, a lot of publishers use networks as a dating service for their internal ad teams. The violate non-competes and go direct to an advertiser once they see the ad come through their network ad tag...and then they exclude that advertiser, claiming a conflict.
There is grey area on both sides...but the winner is the guy with the green...the advertiser.
Cheers
STAC