Take the wheel
Rafael Cosentino, senior vice president of business development at Adblade, offered poignant insight to newspaper publishers: When it comes to the Web, the advertiser is in the driver’s seat.
“This is all about the advertiser,” Cosentino said. “And it’s about adding value. Advertisers don’t care about where they’re advertising. In this realm, they’re not loyal. What they care about, understandably, is getting a return on investment and being able to measure which points of distribution are going to drive their business forward.”
Online, newspapers’ competition for advertising share is exponentially greater — by sheer volume of Web publishers — and online advertising, in general, continues to be challenged in some significant ways.
“No matter what kind of advertising you encounter online, it’s always perceived as an interruption. A banner, a kick-over, it’s always something that you immediately look for a way to close. The reader looks for the X to close it. With print, we’re not dealing with the same thing. Turning the pages in a magazine, and encountering the ads becomes a sequential part of the overall reading experience,” Cosentino said.
Banner ads and right-rail ad placements have become so commonplace on the Web that readers have grown adept at ignoring them based simply on placement.
“There’s no ROI for the advertiser on the right rail,” Cosentino said. “That’s why the majority of Adblade’s business is within the article or below. That’s where people look; that’s where people are engaged. That’s where people respond.”
Through its OptiServe platform, Adblade has created a way to consistently maximize advertisers’ return on investment. Adblade lists Hearst Corp., The Washington Times, USA Today, and others among its clients.
“We were able to create this whole new revenue source for publishers. We weren’t displacing or cannibalizing any existing inventory or revenue. We’ve actually created a new space in the article — or after the article, whatever the case may be — and publishers can even sell into that space,” Cosentino said.
A cooperative approach
Print publishers had their world turned upside down when centuries of print workflow gave way to digital media and content made up of ones and zeros instead of sheets of film and engraved cylinders. Digital workflow left newspapers scrambling to standardize ways of creating and disseminating content that suddenly was no longer tactile until printed as a final product.
So, publishers and advertisers convened at industry events to determine how to move forward. Out of those discussions blossomed the idea of third-party assistance to digitize ads, proof ads, communicate about ads, and distribute them across publications and publishers. Ad networks were born of the necessity to get digital content into print, which ultimately paved the way for digital content to be deployed across the Web.
“The idea of an ad network is that you can distribute a message, in a homogenous fashion, and figure out which distribution point gets you the best ROI,” Cosentino said.
ROI is where digital media excels over its print counterparts. While there are certainly ways to track the effectiveness of print advertising, the process is exponentially easier with digital.
“We’re looking at a whole new animal here, because you really can figure out which points of distribution work the best,” Cosentino said. “Publishers and advertisers can track clicks, impressions, sign-ups, and purchases — data that reveal which online publications are delivering the best value.”
While industry pundits still lament the low value of online advertising, Cosentino said he sees a very different picture.
“For some of these publishers, it’s an entirely new revenue stream,” he said. “Depending on their profit, we have publishers we send $8,000 checks to, and publishers that we send $400,000 every month.”
Misconceptions about online ad networks abound, and no one knows this better than Jonathan Bellack, Google’s director of product management for publisher ad platforms, who spoke with E&P about the dated perceptions of Google’s AdSense.
“(Google AdSense) started as an ad network that focused on a couple of things,” Bellack said. “It focused on contextual targeting, based on analyzing the content of a page. Advertisers wanted to display against specific keywords. Originally, it was focused on text formats, which are mostly text ad units — a lot like what you see on search sites.”
During the past few years, Google AdSense has evolved to more frequently deliver display ads and is now part of Google’s broader value proposition known as the Google Display Network.
What has not changed, however, is Google’s understanding that publishers have a brand to protect, and that they’re not inherently inclined to just open up their Web properties to just anyone. AdSense enables publishers to block domains, approve or reject ads, and block “sensitive categories,” according to Bellack.
“Google also operates DoubleClick for Publishers (DFP), which is an ad server for publishers that have their own operations, and are directly selling ads and making decisions about who to work with,” Bellack said. Publishers deploying DoubleClick and AdSense are able to leverage “dynamic allocation,” allowing AdSense to backfill impressions that are not otherwise sold out by the publisher. This is vital for publishers seeking to maximize ad dollars that come in through their digital properties.
“In a newspaper and magazine world … if you sell more ads, you add more pages. If you sell fewer ads, you cut pages. So the inventory exists based on what you sell,” Bellack said. “Online, you have this unique challenge. When a user is on your site and generating ad impressions, if you don’t put something there, you’ve lost the revenue opportunity … It’s a perishable commodity, and publishers just don’t sell everything out themselves.
“The other big trend here is the idea of exchanges,” Bellack said. “Instead of just working with one intermediary — and hoping I got a fair deal — I’m going to have these networks compete against each other, based on what they think my inventory is worth. And that’s going to help expose the best possible value.”
Adblade and other developers have embraced a self-serve advertising model, as well, allowing online access to advertisers to create, proof, approve, and launch an ad without any hands-on intervention from the publisher.
Wave2 Media Solutions is a big player in self-serve display advertising solutions, though Brian Gorman, Wave2’s vice president of sales, was quick to note that the Wave2 platform may be used to publish any kind of content — advertising or otherwise.
Founded in Europe, the developer made quick inroads in the North American market and now boasts 200 U.S. websites that are complemented by Wave2 AdPortal technology.
“Five years ago, self-serve advertising was mainly available for classified, private-party ads, and real estate,” Gorman said. “The private-party classified systems were bolted to the publishing system, but the functionality for the Web was limited. So we saw an opportunity.”
Gorman named off a noteworthy list of early adopters, including The Boston Globe, The Virginian-Pilot in Norfolk, Va., The New York Times’ regional group, Houston Chronicle, and The Orange County (Calif.) Register. A subscription model enables publishers to have a fixed monthly cost, which Gorman said could range from $500 to $1,000 per month.
As with all other aspects of publishing, in the realm of self-serve advertising, context matters. Gorman said the self-serve model is best suited to certain categories of newspaper advertising such as real estate and obituaries.
“With obituaries, we’re talking about an existing revenue stream that has stayed consistent. What our software does is help them increase ad revenue. We have some markets where they have seen a 20- to 30-percent increase in ad revenue because of self-serve,” Gorman said. “Funeral directors, rather than sending emails and faxes, or making phone calls to the newspapers, can create the obituaries, get a proof on-screen, and before it’s published, know exactly what that obituary will cost, and can communicate that to the family. In this way, self-service has greatly improved customer service from publisher to advertiser, from advertiser to consumer.”
Newspapers are still generating the majority of their ad revenue through direct sales, according to Google’s Bellack. Ad networks are an excellent way to supplement those revenues, but leveraging them will introduce a new challenge — one of channel management — that is worth tackling head-on.
“Don’t sell yourself short,” Bellack said. “You don’t want to undercut important relationships you have already, but you don’t want to lose new opportunities. So publishers are trying to solve that in various ways.”
But many publishers are frustrated by the sheer volume of companies that have sprung up to address this problem — all of which make big promises but don’t necessarily have a long track record of working with newspapers.
“Every day, I receive an email from some network that is going to help me sell more video, sell more stories, sell more ads,” said Rich Medeiros, director of advertising at the Pittsburgh Post-Gazette.
Take a look at the number of developers that have created network and software solutions that bridge the advertiser-publisher relationship, and it quickly becomes apparent that this is fertile ground. There’s a legitimate value proposition, and there’s money to be made.
Adblade is a network partner of the Pittsburgh Post-Gazette. “It really has helped us increase revenue from non-standard placements, such as below articles,” Medeiros said. “That was a revenue channel that we, frankly, hadn’t explored. What we’ve done is use the back-end tools to test and measure ad placements, and it’s helped us with the overall yield of the website and allowed us the ability to serve advertising-related content that’s going to have the highest yield.”
Publishers are not the only ones seeking guidance in navigating the digital content space. Advertisers — especially smaller, local businesses — often turn to the newspaper to be the expert on what type of ad is going to move the needle.
“The questions I often hear are: ‘What is the optimal ad placement on a page? And what does it look like? Line ads? Video?’ I’m not sure that we know,” Medeiros said. “But one thing I do know: If we have a disciplined process to test and measure all of the interactions that consumers have — with our content and the advertising — I know that we’ll begin to develop a very good understanding of the optimal page.”
According to Google’s white paper “Display Business Trends Publisher Edition: What’s Trending in Display for Publishers?” content monetization is “one of the fastest-growing segments in advertising. Publisher video impressions grew nearly 70 percent in the second half of 2011 across the DFP Video platform.”
“A publisher gave me this (quote) a few years ago, and it was so good, I use it a lot. He said, ‘Without the data or the analysis, publishers … know there’s gold buried on their land, but they don’t know where,’” Bellack said. “So, publisher education and tools that enable them to understand their inventory are important.”