Let's Be Real, Making Money Is Hard

November 18, 2016


Because a publisher’s audience is their currency. No matter how they make money from their content, be it through advertising, paid subscription, syndication - a publisher’s source of revenue is their audience consuming their content. And as platforms proliferate, the “giants” gain more and more power, and advertisers evolve at a much more rapid pace, the publisher of today is losing control over and insight into their audience – the very reason they’re in business. It's what we call “information asymmetry." She who holds the information holds the power, and the two primary actors who have taken over much of this control are advertisers and black box giants.

Tech has evolved advertiser first
Originally, the playing field was even, with publishers having insights into their readers and demographics, buying and selling the same way. Buyers have been buying by audience for quite some time. Behavioral targeting came into play more than 10 years ago, followed by site and purchase data. But publishers haven’t adopted this nearly as much, and buyers have become extraordinarily good at cherrypicking the exact audiences they want. Because publishers have been slower to package their audiences the way advertisers are buying, publishers are not getting full market value.

At a recent publisher advisory board, a number of major, premium publishers admitted they are still selling much of their inventory by context, but anticipate that in three years, 100% of their sales will be by audience. Buyers have already made the shift, and a three-year transition to audience-based sales means three more years on a revenue decline trajectory -- all while buyers continue to get even more sophisticated -- and further contributing to information asymmetry.

  • Publishers have no visibility into what buyers want (and perhaps buyers want to keep it this way). We heard of several publishers having a demand-side platform seat just to see what segments their buyers are looking for to help publishers in packaging.

  • Data is still better harvested and understood on the advertiser side (especially when it comes to data management platforms). Publishers, you have valuable data, and you know your audience better than anyone. But the tools to leverage this data are still underdeveloped, and many of the data assets that companies offer (AOL included) are buyer-first use cases.

  • Buyers are largely responsible for the intense growth in private marketplace auctions, negotiating deals like IOs (and often for the same prices), despite buying much more valuable audiences. Publishers need to meet the PMP demand opportunity, but lagging publisher technology has made PMP management very resource intensive, and a large percentage of deals are often less profitable for publishers than other transactions would be.

Black Box Domination

When it comes to monetization and distribution platforms, there’s no denying that some players in the ecosystem were first to market and large enough to define the rules of the game. As direct sales represented the advent of digital advertising, the ad server became one of the first integral pieces of monetization technology. As programmatic advertising grew in dominance, the easiest evolution was to plug in to the existing ad server architecture, which allowed giants to increase their influence in defining the rules of the programmatic ecosystem.

With the shift to audience-based sales, publishers came to learn that an audience sold programmatically is often worth more than when sold as direct campaigns. This has led to a desire to enable programmatic to compete with direct. This phenomenon has revealed just how much of the information access and control is held in Google's hands.

  • Google has traditionally restricted the programmatic demand to its own source when publishers want to manage yield holistically. As a result, publishers can’t enable their other valued partners to participate, and can’t reap the benefits of potentially more valuable demand to compete with direct -- which is exactly what programmatic was supposed to usher in. Google only reacted to client backlash when it began to seriously affect their bottom line. Unfortunately, the giant's claim of opening up to 3P demand has no dates, no participation commitments, and no idea of what cost -- further reinforcing a lack of transparency and undermining Google's claim of being a publisher-first partner.

Publishers need transparency, and a trusted partner that works in their best interests to maximize opportunity with an open ecosystem.

Learn how to take back control of your most valuable asset with ONE by AOL for Publishers