Rob Brett is Head of Data Trading and Commercial Analysis at Future Publishing. Here he discusses how publishers can make better use of their unsold inventory, instead of unloading it into a market already plagued by oversupply problems.
I once described network revenue as the drug addiction of publishing − as much as we want to sell all things premium, most turn to the networks for the little slice of revenue. The problem for publishers is that networks are now allowed to cherry pick impressions. They will also fill the rest − but with very low value. The RTB environment has opened up every publisher’s inventory to the Rolls Royce in cherry picking. Ultimately, publishers have not yet faced up properly to this addiction.
I see the issue in two ways. Firstly, volume: unsold inventory has grown hugely – simple economics tell you this huge oversupply will result in downward pricing. Secondly, a complete lack of control on pricing. SSP’s will provide you with a multitude of ways to better manage pricing (secondary auctions, first look, private markets, first refusal) all of these give control on pricing, but how well do they work? Back to the economics − within supply and demand – scarcity drives price. Passing lots of unsold impressions to networks with no set price ensures we maximise our addiction intake − with all the expected results!
It’s time for publishers to get to curtail the addiction, but how?
With the primary problems being supply and price, you can simply solve this by deciding a minimum CPM to apply for your inventory. The higher the minimum CPM, the less inventory flowing to the networks.
This new floor is a stone one. This is the pricing part. A little maths and the classic 80/20 rule suggests 80% of your current revenue comes from 20% of your network or SSP inventory. Use this to calculate your new floor price, and you will take a 20% hit in revenue − but you have also created an 80% drop in supply! This is the scarcity part. OK, arguably you have not totally kicked the addiction, but you’re on your way, having cut out the low level CPM impressions, but kept the higher revenue generating ones!
When kicking any habit, you will face new problems, in this example− 80% of your network impressions are now without ads. An 80% drop in dependency, but you still need a strategy to fill these. You could look at backfill partners, networks or a new SSP, but it has to be over that floor that you set. Do not relapse! We need to break this cycle.
I have some alternatives which are publishers should consider.
Some easy solutions:
- Answer this question − do you need to serve an ad? Some of that expensive content you make − let’s pull it up the page. Fewer ads per page = more value for your premium.
- House marketing. This has limited value, but it is a value. Work with your marketers, up-sell, cross promote, self promote.
- Add some value to your core advertisers − this may dilute your premium eCPM − but you also get to show them some love.
A little more tech-oriented, but still simple:
- Promote your own content − using an MPU slot to deliver ‘Most read, Trending, Popular content’. This has great CTR’s, engaging users, driving up time on site, improving the value of your premium.
Now something a little left-field:
As in this analogy most publishers in the UK have an addiction to this revenue source − I propose a support group. What we ALL do really well is create premium content, this is life before addiction. We need to remind each other how things used to be.
- We should consider promoting other publishers’ content − we could do this via a Premium Publisher Content Exchange, many publishers do this already using content aggregators and the like. It’s just not in ad units, and its promoting paid content, not free content. With the content aggregators in mind, we have already broken the barrier of seeing the ‘competition’ on our site.
- It’s a simple concept of using the standard ad unit and promoting the most relevant content from the Publisher Content Exchange − lets support each other and not the networks.
- Our own research shows upstream and downstream traffic from and to our competitors − so lets facilitate what is the inevitable journey for the user.
- I envisage an exchange allowing lots of other publishers to access our users and pass them on, as we will see new users from our content via the exchange − a win win!
- We could even add in a paid element to help support any costs from an exchange and also create a revenue stream.
We should all understand that users consume multiple publications, so is this such a bad idea? Recent research from Econsultancy shows people visit seven sites when researching holidays, passing these users to other publishers would give value to the user, which in turn drives additional value for your premium. Passing a user from tech site to tech site grows both publishers’ uniques and puts the user on a path of content discovery. Will this cannibalise? I am not convinced it will. Let’s not underestimate the size of the publishing world. A large search engine I use has five billion results for the keyword ‘iPhone’, so a few premium publishers sharing users seems feasible.
Doing the maths − if you have an RPM of £25 on your website and network ads below your floor may have contributed £1 RPM, then your pages are 25 times more valuable when sold as premium. With this type of gearing, you can close any small revenue hit very quickly. I also believe if enough publishers joined such an exchange, many of the low CPM campaigns would increase that bid price, they still want to be on your site, they will just need to pay a fair rate!
All this said – it’s month end, so I am off for one last hit, but at least I am cutting down on my addiction. It’s going to take a support group to get off this and be totally clean.