• by Tom Hespos , May 25, 2004

Many moons ago, I wrote a column on how online DR advertisers need to balance negotiation for performance based ad deals and going rates in the marketplace, in order to ensure that a CPC or CPA deal will actually clear. It is possible to negotiate a performance based deal that will encounter clearance issues because of other ad contracts a publisher might have in place that pay the publisher more handsomely.

Revenue optimizers within many publishers' ad servers exist in order to ensure the most profitable ads are running in place of less profitable ones. If you book a $5 per sale CPA deal with a publisher that guarantees at least 1,000 sales a month, the dynamic nature of inventory allocation and the effect of the revenue optimizers might contribute to a failure on the publisher's part to deliver to guarantee. Since inventory can be sold in so many different ways, you might find your ads bumped in favor of a $.50 CPM ad from another company. In short, it's possible to negotiate terms that are too favorable to the advertiser, with wide-scale preemption occurring as revenue optimizers pass up your ad in favor of ads that pay the publisher more money.

If you have open-ended CPA or CPC deals with publishers that call for as many clicks or sales as they can deliver, this isn't too much of a problem. Your ads will run in remnant inventory and you'll take whatever you can get. But if guaranteed levels are involved, that fabulous deal you negotiated might work against you.

If you watch your campaign statistics continually, you'll notice any shortfalls in guaranteed clicks or sales pretty quickly. But we should also be tracking campaigns that encounter clearance issues, identifying the publishers who repeatedly pre-empt client advertising, and assembling this information such that DR buyers within your agency have an idea of going market rates and who the habitual pre-empters are.

This might already be a feature of certain ad servers already, but if it's not, ad management companies should take note. We need the ability to flag campaigns and publishers that fall short of performance goals, track the shortfall percentages, and be able to see this data not only as it relates to a single client, but across all clients.

Since the online ad marketplace is returning to health, it's not unreasonable to think that we'll encounter an increasing number of situations in which preemption will occur, particularly in specific high-demand inventory channels. As the market continues to grow, DR buyers are going to need to develop a sense for which CPC and CPA deals will actually clear and which ones are doomed to be pre-empted. This is a skill our traditional DR brethren have developed. Since we've focused over the past several years on getting rock-bottom pricing rather than 100% clearance, and since inventory demand has been much less than supply, our sense of what is likely to clear and what is not might be a bit off.

Tracking pre-emption is one way to keep tabs on this, as well as a way to provide hard data to back up recommendations to clients to change CPA bounties, consider moving from CPC to CPM pricing, or to sweeten the deal on offers they might be running. If we're not doing this already, we should be.