A year ago, publishers sold 5 percent of their inventory via online ad networks, a year later, that number has shot up to 30 percent. That has a lot of scary implications for anyone but the ad networks. As I read the original post in Mediaweek, I recalled a presentation given by the absolutely brilliant Aaron Pilhofer of the New York Times at the Investigative Reporters and Editors meeting in Miami earlier this summer. Aaron said, “You can’t outsource your future.” As we look to the local Web and local media in our new focus, this is a big one to keep in mind. If your business model is advertising driven, your business is advertising — you can’t outsource a significant percentage and expect to stay in business. Unless, of course, you like working for someone else.
Before the comment slamfest begins, I do see a lot of value in ad networks for turnkey sites and personal publishers to grow their businesses. But if you have an ad department, you are in a whole different ball park and need to check if you are addicting yourself to the crutch. You need to run your own ad platform and become the local ad network. Imagine if local bloggers in your market used your version of adsense instead of Google. That’s making dollars instead of pennies.
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It’s a cliche, but it really is a different answer for every site. I agree that using these default ad network ads across your site is idiotic (and any site using Adense ads on their main pages should be shot).
But there is an arguement for many sites to use an ad network to grab some national ad money, or money that can be used to sponsor a special section (Say, a P&G buy to sponsor some special section across 50 sites).
The problem with a lot of the local ad networks that are being launched is that they’re being launched by companies who can’t sell the inventory they already have. Or even worse, they’re selling the network ads at a CPM 75% or more off the premium price.
Ad networks are awful, horrible things. They sell your ad inventory at fire sale prices and provide relatively limited control and accountability.
That being said, they are also filling a need. Honestly — if you had 100 million ad impressions to sell every month, could your sales staff even come close to selling out every month, especially at the “premium” price? How about 500 million? 1 billion? I’m not making up these numbers — a very popular site can reach those levels.
The quote from Aaron Pilhofer is right on the money, but I’ve seen that TV sales people generally aren’t trained in the art of selling web ad inventory. Until that changes (and everyone should be working on that now), ad networks can help pay the bills. (As a side note, I would argue that the Pilhofer quote applies just as much to classifieds as it does to sales.)
It’s also fun to think about starting your own local AdSense, but do you have any idea how much work that would require? Tons of development, a diversion of focus from the main TV site, stiff competition in the marketplace… it’s a fascinating business idea, but based on what I’m seeing on most TV sites, it’s waaaayyyy beyond their reach.
From the article:
“Online publishers are producing more inventory than the market demands…”
That’s an incomplete, and thus incorrect statement. Publishers are producing more inventory than the market demands *at the current price*. It’s simple economics — advertisers want to buy a certain number of ads at a $10 or $20 CPM. They will likely buy ten times as many ads at a $1 or $2 CPM (which, incidentally, may still be a higher CPM than what an ad network would provide.)
Of course, like the article mentions, many of the larger sites want to maintain the illusion of having “premium” brands, like Martha Stewart Living Omnimedia. I would argue that the market is finally realizing that $20 of premium is worth less than $5 of cheap.
MMMM…outlet store salami!