RTB’s Open Opportunity In The Long Tail

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ADOTAS —
Advertisers large and small will always need big, splashy brand-building ads on high-traffic websites –- look at the growth in native advertising for proof. But they’ll also always need conversions for demonstrable ROI. Fortunately, these two needs aren’t bound by the same set of rules. While high-profile native ads are often confined to the comScore 500, the audience viewing these ads often ventures beyond the most-trafficked sites, creating a huge opportunity to reach the same targets in the mid and long tail. Advertisers are missing the opportunity because the early RTB innovators focused on the comScore 250, leaving the mid and long tail under-served.

By now, every marketer knows that spray-and-pray tactics don’t work. Advertisers have found that various types of targeting technology make their marketing spend efficient and effective, and that it’s difficult to get the necessary reach by making spot buys. Real-time bidding was set up to aggregate supply sources, giving advertisers both reach and results through the use of targeting and data technologies. The first wave of demand-side platforms inspired ad networks to open their inventory to real-time bidding, but that move didn’t necessarily address concerns about low-quality sites within the networks.

As technology was adopted in other trading and transaction management markets, new risks arose as others were minimized and efficiencies gained. These comparable markets saw new risks from value erosion, security fraud, privacy risk, and brand risk.

Technology does not simply create efficiencies or economies of scale; it becomes a new platform to create value for companies willing to innovate. Technological innovation is especially vulnerable to system risk, fraud, and malicious attacks. Those risks are no different in ad tech. The industry is building the tools and processes to minimize risk, reward technology reliability and resilience, and recognize that managing risk from outside attacks is important.

Finally, brand risk is a byproduct of technological intelligence. The first and obvious risk was commercial effect of privacy breaches that (at least temporarily) tarnished brands. The second was when consumer-facing technologies, like websites and e-commerce transactions, under-performed (or failed) and directly degraded customer experience.  In ad tech, we face brand threats from non-human bot traffic, offensive content, and ads served below the fold and out of view.

As I mentioned earlier, it’s widely known that consumers visit sites outside of the top 100, or even the top 500. RTB has matured to the point where the market can now support a second generation of supply partners, a wave that is focused on helping advertisers target consumers on these smaller, niche sites. This is similar to the way smaller stock markets sprung up round the major exchanges. If you ask an advertiser if they’d like to reach the same audience that visits comScore 500 sites, with the same sophisticated targeting and potential for conversion, but via a more efficient publisher offering a lower CPM, then most would answer yes. This is possible in the mid- and long tail, because these sites often have lower overhead and thus lower CPMs.

There’s clearly a big opportunity, but it hasn’t been seized. The big fear about the long tail is that the quality is not up to par with what’s inside the top 100. For many, the term “long tail” still conjures up images of download sites, piracy, or link farms. That isn’t always the case with these publishers. There is high-quality content out there, produced by professional writers or amateurs who are experts in their field. In today’s journalism market, leading writers and reporters often get their start by building their own following on small sites. Before household names like Nate Silver are elevated to the big traffic behemoths, they do their work on smaller sites that start out as passion projects.

The truth is that CMOs often prefer the comScore 100 because these publishers offer well-known, blue-chip web domains. These sites are safe in the marketer’s mind, and prevent the CMO from lying awake at night wondering if anyone will see the ad, if it will land on a bot-driven publisher, or a site with content that damages the brand.

This is the key issue ad technology needs to solve, and it’s really no different from how ad networks were perceived in the past. Any disdain for the network model is derived from a lack of transparency, and some networks’ habit of promising big names sites only for ads to run on smaller sites. The next wave of supply side platforms and exchanges needs to utilize technology that filters out the bad (the piracy sites, and incomprehensible SEO bait) and promotes the good content, helping advertisers access the audience and opportunity in the long tail.

Building solutions that block questionable and non-viewable inventory should accomplish several feats. To start with, it will encourage advertisers to spend more. Brands will always want to be associated with top sites, but they can supplement that spend with additional budget that targets the long tail. They’ll target that same audience, often for less. This will also reward smaller publishers who attract a highly sought after audience, and the boost in revenue will hopefully help them grow.

In theory, this should boost CPMs across the board. When smaller sites attract more traffic, they become larger sites. As advertisers learn more about their audience, they’ll know which profiles have the highest likelihood to convert, meaning they’ll pay more for these impressions, which rewards every publisher, from the top of the comScore 100 all the way to the long tail.

2 COMMENTS

  1. I totally agree that there is gold to be found in long-tail sites. The difficulty comes in trying to acquire those sites as customers at a decent ROI. Even with self-service signup and tools, acquisition costs are likely to exceed the LTV of the customer and I think that’s why they haven’t been focused on as much, not because there’s a lack of desire for them. So it basically cedes the long-tail market to Google because these sites will come to them by default, so they don’t have the same ROI issues.

  2. Totally agree with the comment above!

    Long tail publishers need account managers as well – No ROI in long tail!

    AdSesne gives 0 support/account management, is fully automated and with decent results – Google will own this domain forever.

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