Commentary

Publishers, Ad Nets Can Retool Relationship To Thrive In '09

Editor's Note: This article has been updated.

It's a challenging time to be an online publisher. Grim forecasts around online ad spending for 2009--particularly display--make it difficult to set revenue goals for the first quarter, let alone the year.

EMarketer, as just one example, slashed its forecast for growth in display from 16.9% to 3.9%, noting that the format was especially susceptible to budget cuts from major brands in the retail and automotive verticals, among others.

In addition to these economically driven forecast revisions, seasonal market factors have historically impacted publishers' first quarter revenue. Huge fourth quarter holiday campaigns close out and budgets for the beginning of the New Year take time to ramp. As a result, in past years some publishers have experienced diminished fill rates and CPM rate drops in January and February.

Dire predictions have also been issued for ad networks. In a recent interview, Razorfish's chief strategy officer Jeff Lanctot forecast the failure of "dozens and dozens" of ad networks in 2009. News that stalwarts like AdBrite have made layoffs; and that smaller, more holistic networks like BlogHer have had to cut back on their payouts isn't heartening, either.

However, while I can't pretend to know exactly what lies ahead, I continue to believe there is room for optimism. EMarketer, TNS, JP Morgan and others have revised their forecasts downward, but they're still predicting growth. Other reports continue to suggest that brands are moving dollars away from traditional media and onto the "innovation and accountability" driven Internet, as London-based Zenith Optimedia recently noted in their report on global advertising spend.

For publishers and ad networks to get their fair share of those dollars as the market finds a new equilibrium, now's the time to take a closer look at initial steps publishers and ad networks can take to cushion themselves in the coming months.

Consider the types of ads shown on your site

Publishers, you may have ruled out a particular kind of ad unit, campaign type or even product category in the past, but every restricted ad type diminishes your overall revenue opportunity now. Without compromising brand quality, think about allowing high-CPM user-initiated expandable ads to run, for example, or adding strong-selling leaderboards above the fold to a section of your site where you previously only showed poorly performing banners. These kinds of adjustments could bring you additional revenue in the months ahead.

Reassess your strike list

The previous point also holds true for advertiser competitor or strike lists. Every advertiser that you choose to exclude from your site shrinks your revenue potential. If you maintain such a list, when is the last time you reviewed it? Of course, there will most likely always be companies that clearly shouldn't be running ads on your site, either because of channel conflict or competition, but these lists do change over time. Revisit yours to ensure it's up-to-date.

The thread that unifies the two steps above is trust. Changing the restrictions on the kinds of ads and advertisers that get face time with your audience takes a considerable amount of trust in the networks--after all, they're the ones that broker the ad deals. It means trusting that networks actually have your brand's interest in mind. And for publishers to trust the networks, the networks need to adjust some of their attitudes and practices, too.

The more communication, the better

Ad networks, as CPMs and advertiser volumes are set to potentially dip, communicating changes to publishers proactively is key. Be up front about changes, rather than letting them find out about problems when they review their performance reports. That communication will help publishers manage their ad inventory better and set reasonable expectations for a successful partnership.

Be vigilant about ad quality

As the volume of campaigns becomes less predictable, networks may be challenged as they try to maintain ad quality standards. Reducing those standards for the sake of high fill rates devalues publisher inventory and angers publishers, putting networks at risk of getting fired. Networks who focus on providing quality advertisers, through good times and bad, will demonstrate they're a trusted partner invested in publishers' long-term success.

Take advantage of new technologies

Another step that many of the Web's largest publishers are taking to ensure revenue stability in 2009 is working with ad network optimizers. The benefits to doing so include access to more dollars; stability through diversification if the optimizer can add new, well-matched network relationships to a publisher's revenue mix; international reach, which allows publishers to tap into global markets to monetize international traffic; and inventory management.

There's a lot of uncertainty going into the New Year, but I'm confident that if publishers, networks and their partners work closely together, we can continue to grow online advertising in 2009 and beyond.

1 comment about "Publishers, Ad Nets Can Retool Relationship To Thrive In '09 ".
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  1. Phil Nott from Maxifier, January 9, 2009 at 9:08 a.m.

    Correct me if I'm wrong but there is no reference to Adify lay off's in the article so no need for a correction !

    May be you mean AdBrite !

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