Commentary

Dire Straits

by Ari Rosenberg , Op-Ed Contributor, April 14, 2011

Stop me if you've heard this one before. A premium content publisher learns that the ad network the publisher previously engaged -- but no longer has under contract -- is still using the premium publisher's logo in its presentations to buyers.

How 'bout this one: A buyer vows he will never buy inventory directly from a sales rep at a premium branded site if he thinks he can get ad impressions on that site at a fraction of the cost through an ad network or ad exchange.

OK, last one: Have you ever heard a premium-branded publisher complain about the difficulty in securing face-to-face meetings with digital buyers, as well as the low CPMs buyers demand to see on submitted RFPs in order to be considered for the buy?

In case you haven't heard, these are dire times for premium content publishers, and it's going to get worse as DSPs become more prevalent -- allowing ad agencies to buy heavily targeted impressions at lower prices through ad exchanges and then"double dip" for buying this way (agencies get paid a fee to buy media for clients and agencies are also marking up the impressions they buy through their own DSP -- hence the "double dipping" and moral hazard clients seem unaware of).

The problem premium publishers face is that buyers barely see the value of buying impressions directly (greater share of voice, roadblocks, integrated programs) when they look at "the numbers" achieved by buying around them through networks and exchanges. And as long as premium publisher logos are part of the sales pitch from the multitude of intermediaries, buyers will continue to ignore the fact these purchased ad impressions also appear on countless eyesores of sites that come with that artificially glorified "site list."

Clients won't arrest this problem of running on unseemly sites through indirect sales channels, either. Many of those who look the other way see these "occurrences" as the cost of shedding their risk in buying media by the "numbers" instead of by instincts.

All of this adds up to too much for a premium publisher's direct sales force to consistently overcome. Premium publishers who also use indirect channels to drive revenue know this -- so why do they continue to dig their own hole?

It's like premium publishers are involved in an arm-wrestling match, but act like their elbows are not even on the table. That's because their other hand is accepting a bribe to throw the fight. Premium publishers can't wean themselves off of the monthly revenue they get from indirect sales channels that count towards their overall quota. So while individuals working at a premium publisher appear to benefit from accepting this revenue, the publisher's own brand value inches closer to defeat.

It's ironic that an iconic brand like the New York Times will build a wall around its digital content to ensure users sense an increased value -- but won't build a wall around its own ad impressions to protect their value and its own sales team.

These are dire times that call for dire measures. The time is now for premium publishers to take their heads out of the sand and dig out of the hole they created by collectively abandoning their indirect ad sales channels (yes. including Adsense).

Before any ad network person jumps in (like, say, fellow Online Publishing Insider Jason Krebs) and says this is just another diatribe from a guy who hates networks; hold off a sec. I am not suggesting these indirect channels don't have significant value to offer buyers and clients. They do, but by premium publishers pulling their logos completely out of the conversation, there will be more clarity in what ad exchanges and ad networks bring to the table, by making it clearer what sites are not seated and which ones are.

Or premium publishers can do nothing to help stop their own demise, continuing to point their finger at buyers and clients instead, for not seeing the branding forest through the impression tree. Which reminds me, have you ever heard the song "Solid Rock" by Dire Straits? There is a line in it that goes like this: "When you point your finger because your plans fell through, you have three more fingers pointing back at you."

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12 comments about "Dire Straits".

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Jason Carnahan from Caring.com & The Caring Alliance, April 14, 2011 at 4:34 p.m.
This article should be considered the Gettysburg Address for the Publisher/Network debate ... concise, 100% accurate and incredible meaningful. Well put, thanks!
Reply

Cam Yuill from AdTouch, April 14, 2011 at 5:03 p.m.

You are totally right...too bad no one is listening.

Bob Gordon from The Auto Channel, April 14, 2011 at 5:10 p.m.

16 years on line with original and value add content - 16 full blown automotive info databases, more video, audio, auto show coverage, reviews and pioneering use of technology than any other automotive web site, and Google slams us while listing “sites” that actually cut and paste our content along with others that use our RSS link to our story, and places them high up in the search results…then to add insult to injury, Google is aiding and abetting these crooks by allowing them to divert our ad revenue to the AdSense ads on the worthless sites. Talk about a class action suit…hmmm.

Paula Lynn from Who Else Unlimited, April 14, 2011 at 5:45 p.m.

It's called theft.

R.J. Lewis from e-Healthcare Solutions, LLC, April 14, 2011 at 6:14 p.m.

Ari,

I really love your stuff. The problem you've outlined goes well beyond ad networks and DSP's, which many publishers say "devalues" their inventory. I think there is some truth to that, but I think what's occurring, particularly with DSP's and behaviorial targeting, (and just as scary for premium publishers) is a broader shifting of value, from "premium brand" to premium audience. If and advertiser can reach their verified known audience, they will reach them where ever they can (on a premium brand or elsewhere), in the end isn't that what premium brands were built on in large part "attracting the premium audience"?

Enter the premium ad network, that acts more as a rep firm from a publisher brand (and pricing) perspective, while still capturing the aggregated reach and targeting benefits of a typical ad network. It is the best of both worlds.

One final note on "devaluing" (which is not really accurate... after all the Internet is now the 2nd largest advertising medium after TV, so there is plenty of "value" out there, but it's shifted).

The "devaluing" problem/challenge began a long time ago with changes in pricing mechanisms. I've blogged extensively about the shifting of risk (and the unintended resulting consequences) that occurs when sites move from CPM pricing to CPC and down to CPA. If you really want to talk about value destruction... let's revisit the whole Internet advertising pricing methodology.

Large national ad networks have commoditzed inventory (and brands) by playing the volume game. They are the Walmart to online advertising... offering lower and lower prices and making it up in volume. Many "premium" brands that distribute through Walmart have had to adapt their ways and love the volume, but hate the margins. Many of the really premium brands have chose to stay away, exactly because it devalues their brand. I can't buy a Rolex at Walmart. It doesn't mean Rolex won't work with a premium boutique who appreciates and sells their value to the customer though....

Wendy Hidenrick from AwesomenessTV, April 15, 2011 at 10:40 a.m.

The interesting aspect of this discussion is that rarely do premium publishers disclose to their own sales team that they are selling off their inventory. In fact I've been told several times we do not sell inventory to ad networks. However I was at an event in Dallas where a fellow sales rep from an ad network said we were on their list of publishers...hmmm.

Chris Carter from AAM, April 15, 2011 at 11:54 a.m.

Given the millions of sites and consequently millions of ads, the advertising is becoming all noise. Web users have become accustom to ignoring it all. It takes a very involved client to prevent his campaign from being two phrases from another Dire Straits song: “That ain’t working” and “Money for nothing.”

Fred Tietze from Time Inc, Content Solutions, April 15, 2011 at 12:28 p.m.

Looking to Wall Street and how the "quants" changed that industry -- samething happening with our industry. Efficiency + volume that delivering results will drive it. Maybe we'll adopy terms form Wall Street like "Flash Trading".

Rick Monihan from None, April 19, 2011 at 2:50 p.m.

Fred, there was already an example of what this media world would look like. Anyone who remembers the ill-fated "Max Headroom" remembers that the ads were sold via an exchange which directed advertising to those tv shows with the highest ratings at any given moment.

There are a myriad of problems in the current online ad world. The idea that you can buy premium content inexpensively (and as Bob Gordon suggests, at times you can via means that seemingly are legal but may not be) is absurd. But in order to get revenue in a market that is fracturing at an absurd pace, many publishers are willing to bend over backward to take what they can get.

What the industry needs is for the biggest premium providers to set standards of behavior and conduct which befit the media landscape and hold advertisers accountable. Google's methods are not dissimilar from those of the early days of the free market when competition was a bad word. Monopolies were considered standard business practice and competition was often begun to derive a payout from the monopoly. If no payout was forthcoming, then a businessman had to have the ability to apply himself and truly crack the market.

Vanderbilt was a master of both methods - and a study of his actions and behaviors would benefit many of us today.

There's nothing wrong with a vast, open marketplace. But everyone has to realize that good content - a good environment - comes with a price. Vanderbilt realized that he could open up markets to more people by economizing and cutting costs and prices. But people often complained that travelling his lines was a spare experience.

If all advertisers are seeking is a number, then ad networks and low prices are worthwhile. If they are seeking an environment, then they must be prepared to pay. But it will take other premium publishers standing their ground, both against those who seek to "steal" their product and those who seek to devalue it.

Andy Lerner from Trust Metrics, April 22, 2011 at 10:48 a.m.

From my perspective as a participant in the exchange/RTB and network market, I'm surprised every single day at the "smoke and mirrors" nature of the entire space. While the longer-term opportunity in that market is exciting for everyone in the digital advertising supply chain, we are definitely not there yet. And the lack of brand dollars -- particularly in RTB confirms how early we are.

One of the biggest issues we see in RTB is that the overwhelming majority of sites in that market are very low quality publishing environments (and there are hundreds of different kinds of problem sites: non-english sites, incredibly high ad-to-edit ratios, sites where the content never loads, sites where the content hasn't been updated in years, hate speech, porn, etc...).

But, amazingly, high quality publishers continue to flood the network and exchange marketplace with tremendous numbers of ad impressions basically giving away their differentiated and valuable product because they are unwilling or unable (I’m not sure which) to do the work to differentiate their product at an impression-by-impression level in those environments. It would be a major mistake for publishers to stop participating in RTB – there’s too much opportunity and value in “buying audience” at scale. But good publishers need to figure out a way to identify themselves in RTB – without hurting their sales force.

Instead of pulling their logos, high quality publishers need to figure out how to stand up and say, “Here I am.” The saddest part of all is that brands – not the direct marketers, but the brands!! – will pay much more for high quality publishing environments in RTB. The brands want the right audience, but the right environment is just as important.

Ari Rosenberg from Performance Pricing Holdings, LLC, April 22, 2011 at 11:06 a.m.

Andy, I appreciate your insight as you are actively participating in the RTB market -- but do you really think premium pubs can make money by offering their impressions on an exchange and NOT lose value/leverage selling directly? I just can't see how the two can coexist -- life is a trade off -- so if a premium publishers want to make money on the exchanges -- they have to do so by losing value selling direct.

Appreciate everyone's comments on this topic....

Ari

Alan Kelly, May 5, 2011 at 6:23 p.m.

I appreciated reading some of the sage words re: work, but now it's after 6, AND time to take out the hickory and play 8-ball, free of tether and/or mouse.