Two documents by Pubmatic came out yesterday that are of interest to Ad Operation teams. The Q4 2008 AdPrice Index is helpful as a gauge for publishers on what returns they should be seeing from their network efforts – outsourced or not. The numbers compared to a year ago just hurt to look at and while the numbers held up quarter over quarter according to the report, for most publishers it’s hard to see CPMs at this level.
The second document released is a white paper titled “Death to the Ad Network Daisy Chain” and it did a very good job of laying out what daisy chaining is and why it’s so resource intensive. For that part alone, the document is probably helpful for those responsible for managing network-based revenue to explain to sales or upper management the work involved and why a network optimization partner might be a good option to consider.
I read both documents looking for ideas on how to answer a bigger question that publishers are asking – should they even be running networks on their sites? To many it’s a natural conclusion that yes, networks are the way to go – it only makes sense to monetize every possible impression. While we are all shocked by the low CPMs, it’s the market that sets the price. Others are certain that networks only serve to cannibalize their own efforts to maintain higher CPMs. This topic is usually one of the most active at the AdMonster events as we have publishers in both camps. Members often take away additional pros and cons from these debates that in turn help inform their strategies on the network issue.
There was something in Pubmatic’s explanation of dynamic default optimization that kicked off an idea I’d like to better understand and explore. Every impression in this model is evaluated by each participating network and the highest paying network gets its impression served. Networks can look at many aspects of an impression to determine it’s value. It can be attributes of the user or of the placement that can determine its value. Realize that this evaluation of the impression by a network is not transparent to the publisher – they only know what they got paid, but not necessarily why they got paid that amount. To be clear, this isn’t about Pubmatic’s process – it just helped illustrate for me how little a publisher knows about a network’s decision process.
Perhaps the lack of transparency is something that can be tackled between networks and publishers. I’m generalizing, but the days when a publisher’s approach was to simply generate more page views is over. It no longer pays to do so. Instead they need to start focusing on producing content that is going to generate revenue – be it through their own sales efforts or networks. Yet some of that information from networks is obfuscated from the publisher. It seems to me that networks or network optimization companies that can provide actionable data to publishers would stand out from the crowd. Going even further, providing the publisher with some of the targeting capabilities that the networks have at their disposal would be helpful.
Somewhere in that thinking is a win-win solution – a different kind of network optimization. Companies are going to get out of the content game if it doesn’t pay. Without the content, the networks have nothing to offer advertisers. Both sides need to push CPMs up. Perhaps through greater transparency, we can make that happen.
Rob Beeler is Vice President of Content and Media for AdMonsters and has worked in Ad Operations for over ten years. Rob started attending AdMonster events in 2004 as a member and will be in New Orleans on March 8th for Publisher Forum US XX
.