ESPN.com’s ad network revolt
Cory Bergman March 24th, 2008
Wow, this is big. One of the fears of online advertising is that it’s becoming commoditized. In other words, an impression is an impression, a click is a click, regardless of where the user sees the ad. But ESPN.com believes that its premium branded content offers an audience and advertising experience that’s worth more than what the market will bear. So ESPN.com is cutting ties with its ad networks and reportedly trying to get other big publishers to do the same, reports MediaWeek. This quote sums up the argument well: “We haven’t even established the value of our medium, and all of a sudden it’s about price,” said Living Omnimedia media president Wenda Harris Millard. “That is very bothersome to people who are brand stewards.” Online ad networks have been an efficient way for publishers to generate some cash on unsold inventory, but the fear is as these networks grow, they’re devaluing the best content by offering advertisers an inexpensive way in. So will ESPN’s revolt make a difference? Most experts believe, probably not.
4 Comments Add your own
1. db | March 24th, 2008 at 8:44 pm
I give them 6 months before they resort to the ad networks again.
The fundamental problem that they have is that they have loads of inventory (probably billions of page views a month), relatively few buyers, and an insistence on having a higher price. What will happen is that ESPN will now force advertisers to buy ads at 10x the rate, but will end up selling 10x less of them (or massively overdeliver, effectively lowering the CPM). In the end, their cost of sales will go up while their total revenue will probably stay flat or dip.
I also thought that Ms. Millard’s comment (”we haven’t even established the value of our medium, and all of a sudden it’s about price”) was quite funny: if we don’t know the value of the medium yet, then why are big brands like ESPN insisting on a certain price for their ads?
2. Anonymous | March 25th, 2008 at 2:10 am
Dizzy needs to sit down and rest a minute.
3. wtf db? | March 25th, 2008 at 12:22 pm
10x rate @ fewer quantity = more profit
I’ll take fewer ads to produce / display at a higher rate any day.
PS: I doubt ESPN has few buyers, but good call on the quote
4. db | March 25th, 2008 at 10:47 pm
10x rate, but 10x fewer with higher cost of sales = less profit
The equation is pretty simple: it all boils down to finding enough buyers. Note that my original comment said “relatively few buyers” — ESPN may have a lot more interested buyers than a local TV station, but it also has a LOT more inventory to sell. Two or three orders of magnitude more inventory, in fact. Selling all of that at top dollar rates is going to be near-impossible, and takes much more man-power than network ads do.
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