• by Welby Chen , Op-Ed Contributor, December 26, 2017

Today, the demand side has the power because they know their audiences. While agencies use sophisticated ad tech to optimize campaigns across multiple DSPs, and to pinpoint audiences on the internet, on any device, many publishers are still in the dark about their own users.

This lack of audience awareness is pushing down publisher revenues.

Last June,  Time Inc, the owner of Sports Illustrated and People announced a workforce reduction of 300 employees after ESPN revealed that they are releasing 100 anchors, reporters, analysts and production staffers. 

Last February, The Guardian warned staff to expect losses of up to £90m this year.

At the same time, quarterly results from Alphabet  (owners of Google and YouTube) and Facebook revealed that the two Internet giants accounted for about 99% of the $2.9 billion in advertising growth in Q3 of 2016 leaving only 1% of ad revenues for everyone else.

To get their fair share of ad dollars, publishers need to tip the scales in their favor. One possibility is to take back buying power by packaging their audiences.    

High Demand Audiences Demand a Higher Price

Despite the fact that publishers have ad segments that could demand top dollar, most of them only offer basic inventory packages and generic floor prices for all users. By collecting and analyzing user data, publishers can build custom packages for valuable audience segments.

A banner ad targeted to 35-year-old female New Yorkers can demand a high price tag.  The data is there, it just needs to be analyzed to identify those lucrative audiences that are in high demand.

Publishers can start with their own data. They have valuable first-party data, including information users enter when they register to receive content, statistics gathered about the total time they spend on their websites and apps and the types of content they prefer.

The Guardian conducted a study that showed first-party audience segments deliver better performance (+35%) at greater scale (+600%) than third-party equivalents: while also delivering more valuable customers (+50% transaction value).

Second-party data about user engagement from exchanges including video completion rate, and click through rates can be added to provide a strong indicator of brand affinity and ad format preferences.

Data management platforms (DMPs), dating sites, department of motor vehicle (DMV) records and aggregated GPS data, as well as, other third-party data sources can be used to enrich user profiles.

For example, location data can be used to track users over time and demographic data can provide additional information regarding marital status, education levels, occupations and hobbies.  

Technology should be made available to enable publishers to aggregate audience data from all sources and then slice the data to create packages that the demand side needs. Even better, if they can use the data to simulate that combination of users, ad formats, and price points, that will result in optimal fill rates and profits.

Data Creates a Level Playing Field

Now publishers can sell the same way that buyers want to buy, based on the audiences and not the inventory. Previously, buyers had to sift through multiple requests with overlap from several sources in order to find the right audience.

By publishers identifying and packaging the audiences up front, they can proactively offer more lucrative packages, for example, runners from 35-45 who respond favorably to video ad units.

This package could also be offered on the open exchange but with a higher floor price, since this segment is in high demand. Slightly less granular packages can be made available for programmatic trading to appeal to a wider pool of advertisers, for example just runners, without the other parameters.   

The availability of these packages can be pushed to demand side partners. Buyers will be able to receive the audiences they want directly and the entire ad ecosystem will become more efficient enabling advertisers to increase ROI by reaching their target audiences more effectively.

Data is power, and by harnessing it publishers can uncover audiences that are in high demand.  By fully utilizing the data they have and supplementing with additional data sources and tools, publishers will be able to receive higher CPMs and receive a larger share of ad dollars.