ADOTAS — Sweeping generalization time: Publishers focus direct sales efforts on maintaining a $20 CPM and when they can’t sell it, throw those impressions to remnant networks and hope they get a $1 CPM for it.
As I said, it’s a sweeping generalization, but most publishers continue to struggle with getting CPMs that they feel they deserve or need to operate and if their efforts to sell inventory fails, the remnant CPM level is frighteningly lower than what they were hoping for. The disparity is rarely addressed as publishers continue to try and prop up their direct sales CPM through a variety of methods and spend as much energy trying to get that remnant $1 CPM up to $1.05 then $1.10 and so on.
It’s time for publishers to adjust their tactics and consider a three prong approach to generating revenue:
Don’t let innovation be a part time job. We’ll discuss this during our Online Technical Forum “Turning Ad Product Innovation into Revenue” on September 2nd.
The idea is that the entire company should take on the responsibility of creating innovative ad products that are effective, efficient, scalable and quick to market. Sales should be armed with something new each time they talk with advertisers and agencies. This can’t be done unless there is dedication to innovation throughout the company. Ultimately these innovative ad units are going to help achieve those premium CPMs.
Do a reality check on your remnant strategy. Publishers who attend our events are of many minds on the best way to approach remnant inventory and I understand those that refuse to run networks as well as those who fully embrace them. The key for all publishers is understanding the amount of energy that goes into monetizing unsold inventory and how much it yields. Raising the effective CPM from $1 to $1.05 may result in significant revenue, but at what cost? Would your directly sold campaigns perform better if they were the only advertising running on the page? Wouldn’t your energy be better spent on optimizing ad products that grow your business, not just your revenue?
In other words, the key is not to consider remnant on the same footing as your other revenue streams. Know when enough is enough. Whether that means outsourcing network optimization or taking the stance that you won’t put more networks into the mix unless they can guarantee a significant increase in CPM, remnant needs to be put in it’s place.
Develop a middle tier of inventory. The Rubicon Project in their Q1 2009 market report called it “secondary premium” inventory and I think this is where some opportunity lies for publishers. It is also the most difficult to execute on. It requires a hard look at your inventory and understanding what you know and don’t know about your inventory. I’ve mentioned it before in an earlier post that networks know more about an impression than the publisher does.
Going after this middle tier requires developing relationships with companies that will make transparent the true value of the inventory. It requires drawing new lines on what direct sales is charged with selling and what will be sold by partners. It requires new packaging that incorporates the innovative ad units mixed with this middle tier that provides value and maintains a higher effective CPM. When you consider the amount of work involved in going after this middle tier, you can see why I think less energy should be spent on remnant.
I’m not alone in thinking this middle tier of inventory is an area of opportunity for publishers. As I spoke with ad ops leaders who will be attending our upcoming Publisher Forum in Portland, I bounced these ideas off of them and found that many were thinking along similar lines. It’ll certainly be a topic of discussion at the event and I look forward to hearing from publishers having success generating additional revenue by better understanding their inventory and concentrating more time on the middle.