Direct ad sales account for the majority of ad revenue that is earned by most large online publishers, and it seems the trend of the week is to shut out ad networks in an effort to preserve quality and maintain ownership over inventory.
However, the industry can't deny that as much as 70% of advertising inventory from large online publishers is now being sold as non-guaranteed inventory and this share is continuing to grow. With growth in advertising budgets slowing and sales staff and resources being reduced, advertising on the Web is bifurcating into two distinct categories:
Ad networks are the primary source of demand for non-guaranteed ad sales. If the debate is whether or not publishers should work with ad networks, it seems the answer is as simple as the ancient proverb -- don't bite the hand that feeds (and pays) you.
Developing secondary sales channels are a natural evolution for any maturing industry. We only need to look at a few mainstream industries to see this:
The key is to differentiate the products that are sold via each sales channel so that the buyer perceives different benefits at different price points.
It may be true that as the economy improves, direct ad sales will pick up again, but there are many reasons to believe that even when big ad budgets come back, the dependency on non-guaranteed sales for a significant portion of overall ad revenue will continue. This is because:
Direct sales will continue to be the primary source of revenue for large online publishers, but direct sales will also continue to face challenges such as ever-growing competition and an abundance of ad inventory. Savvy publishers that create a solid strategy around monetizing non-guaranteed inventory will be in a much better position for significant revenue growth.
Develop a distinct strategy for non-guaranteed inventory... today
The first step is understanding how to manage non-guaranteed inventory more efficiently, while protecting the publisher and fellow advertiser brands. There are ways to control the quality of ads without taxing your staff. There are ways to segment inventory to offer unique products through the direct sales force and through secondary channels that don't create channel conflict.
Due to the economic crisis and the lack of resources or necessary expertise, some publishers have not yet developed a distinct strategy for non-guaranteed inventory. It's just not perceived as a significant breadwinner.
It's time to wake up -- non-guaranteed inventory is more important now than it ever was, and creating a distinct strategy for non-guaranteed inventory will allow publishers to drive higher revenue even with less resources.
There are at least three key elements to developing a strategy for non-guaranteed inventory that publishers should consider:
As online advertising increasingly bifurcates into premium sponsorships and non-guaranteed sales, it's important for publishers to develop distinct monetization strategies for each sales channel. More and more ad dollars are flowing through ad networks and exchanges as they increasingly provide solutions and capabilities that advertisers desire. As a result, savvy publishers are figuring out how to work within this ecosystem to maximize their revenues and manage their brands, rather than hoping for a return to the environment and economies of the past.