It had been a while since I settled into a magazine expose, so the reward was refreshingly obvious. This article featured excellent writing, with behind-the-curtain insight supported by sourced facts. It had a rhythm to it that made my mind dance. It ended leaving me smarter and wanting more. It seduced me to read another article in this issue: a hysterical piece by Jason Feifer on how brands don’t understand “selfies.” I giggled out loud as I turned the pages.
Content is not created equal.
It differs in quality, and that difference can be tied to the person responsible for producing it. Professionally created content starts with journalists who have skills and expertise non-journalists will never have. Some journalists do it better than others, but they all do it better than you and me.
When a premium publisher with professional journalists and writers sell ads on an exchange (open or private), what they are really doing is disconnecting the value of their professionally produced content from their ad sales proposition. The value buyers place on these programmatic ads is tied to data and performance. Content is eliminated -- or at best, severely diminished -- from the equation.
That’s why CPMs, a reflection of value, are so much lower when ads are bought programmatically versus direct sales, where content quality is incorporated into the sales proposition. This spread is something like $2 bucks per thousand for an ad sold on an open exchange, versus a $20 CPM for an ad sold directly. The spread between CPMs for direct buys and private exchange buys are less dramatic, but nonetheless significant.
So let me get this straight. Online advertisers have a high demand for highly targeted ads, and publishers have limited supply. That dynamic should mean CPMs for these ads should be higher than ads sold directly, not hundreds of percent lower.
When I sold ads for Newsweek, we had geographic editions that, on a CPM basis, were materially higher than our national run. It induced advertisers on the fence to buy us nationally while charging a hefty premium for advertisers who demanded more targeting.
How is doing the reverse a good idea? How can premium publishers sell a high-demand product at rock bottom prices, while simultaneously diminishing the core value their professional journalists and writers bring to the equation?
When I pose this question of viability to those in this space, I often hear back “this ship has sailed” from the makers of the boats. Then I immediately think about the Titanic.
There was a time when everyone thought the world was flat. That’s because when you constantly talk to like-minded people, you’re always right. Venture-capital-backed technology companies have done an unprecedented job of convincing premium publishers that CPMs for highly valued ad impressions with limited supply should cost less, and that content is almost meaningless as long as you reach the “right person.”
Well, the earth is not flat -- and programmatic doesn’t help premium publishers increase the value of what they sell. It allows them to collect money without selling, and empowers buyers to purchase high-valued ads at lower prices.
That could only end badly for premium publishers in this brave new world.