Are Ad Networks Ripping Me Off?

A lot of developers complain about how much ad networks take - that developers get only 3 cents out of the 10 cents per click the advertiser pays. While it's not that simple, let's break down how the money flows so we can determine what the true cuts are, and thus, what you are or aren't getting. I managed over 100 million ad impressions per day on Facebook for another ad network and I want to share my learnings here. Ad Networks Get a Volume Discount Ad networks can aggregate traffic across pubs to negotiate higher payouts-- often up to 50% greater than street payouts. If you don't have personal relationships with the large advertisers, then you might not know what offers perform the best or what the appropriate payouts are. You are counting on the ad network being smarter at rotating ads and negotiating better payouts than you could. So if the ad network's cut is less than the increase they drive, then you're ahead. Ask your ad network how strong their advertiser relationships are or if they're running through another ad network and just taking a cut. How Many Middlemen Are There? So how do you tell? Note what ads are being run on your apps (taking into account your country mix). Find out where you can get those offers direct-- through either the advertiser themselves or through the ad network that your ad network is buying through. Yes, it's true-- your ad network is probably running through another ad network. For example, the underlying advertiser may be paying 20 cents a click to an ad network, who resells that traffic at 14 cents to another ad network, who then resells to you at 7 cents. The actual numbers may vary. Webfetti toolbar downloads may pay $2.75 per install and have an install rate of 1 in 15 clicks. Thus, the click is worth 13 cents to the ad network (such as Azoogle, Neverblue, Commission Junction, LinkShare, Copeac, or any other guys). Most of the other ad networks on Facebook are sourcing offers from one of these ad networks, as opposed to running direct. So they might get 10 cents from the ad network that has that relationship. And then that network might pay you 5 or 6 cents. With so many hands in the pie, by the time it gets to you, there might not be much left. Calculate Their Cut So here's how to test it out. See those ads being run on your app? Look at the redirect URL (for example, azjmp.com is Azoogle and tracking101.com is CPA Empire). That will tell you what network your network is running through. Contact them and find out what the street payout is and then find out what you can get if you drive a lot of traffic. If you can't do at least 100 leads a day (a few thousand clicks), then they probably won't have time to deal with you or will just give you the street payout. If you do have enough volume to matter to those networks, set up an account and start testing. Because of country differences, you may have to run a mix of ads-- and continually shift based on what's the latest performers are. And for offers that do perform, you'll also need to rotate through dozens of creatives, since running the exact same ad all the time will cause banner burnout. Don't have an ad server? You can consider openx.com (which is the old Open Ads) or Google's new Ad Manager (which is quite good, if you're willing to accept some limitations and a bias towards AdSense). Winner Stay On - Let Ad Networks Compete Yes, there is a fair bit of margin you can recover by doing this. It may or may not be worth your time. Another option to test is by rotating ad networks and letting them compete. For example, run 50% of your traffic with RockYou and 50% of your traffic with FlingWeb. Find out who is paying you more. And if one network is better than another, don't just kill the one that isn't performing--- keep them at perhaps 5-10%, just so you can track trends that affect all ad networks. All ad networks claim they pay the best. But don't take their word for it--- test it out! Make sure that they are earning the margin they take from you. Most publishers have limited experience with affiliate marketing, so for now-- it's an inefficient market where those who know take earnings from those who don't. But, as with any evolving industry, markets become more efficient and new competitors drive ad network profits down. Those profits settle where the middleman can earn a fair return on top of their operating costs-- paying for salespeople, ad network engineering, and a reasonable level of overhead. Those middlemen who are extravagant now, enjoying fat times, will have to become lean later. And you as a publisher will stand to win. So ask your ad network what cut they are taking and where they ad value. For the ads they are running, can you get the same or better payout? Are they favoring advertisers that monetize poorly for non-financial reasons? Is there an incentive structure in place that does not align with your interests as a publisher? Are these people that you enjoy working with and answer the phone when you call-- or email, if that is your preference? How lavish are their offices-- since you're the one paying for it. The "Best" Ad Network So which ad network is "best"? You'll see on these forums that some people who do very well on AdChap don't do well on SocialMedia. Yet, you'll find folks for whom the reverse is true. Maybe for your traffic RockYou monetizes the best. It depends on your traffic and how much of a cut the ad network is taking. Note that your cut is set individually and is not indicative of what other guys are getting. I've seen publishers get anywhere from 20% to 100% of the gross revenue they generate. I'll guess that the average cut taken by an ad network is about 35%, though that figure fluctuates. And if there's a middleman or two in-between, then you can assume another 30-40% is taken, such that you're getting about a third of the gross payout. Another dimension to consider is the quality of the ads you are willing to accept. If you run CJ.com or linkshare.com, then you are running ads from merchants such as Walmart, Netflix, Proflowers, and other recognized shopping sites. These are great brands-- however, you will suffer a significant earnings decline by running only that. I experimented with tens of millions of impressions per day and was able to get perhaps 5 to 10 cents per thousand impressions. That is an order of magnitude worse than what you'd get from running offers that are less tasteful, such as the ones that require downloading software, entering your phone number, or providing your personal information to win a particular prize. Direct Advertisers Pay More If you don't mind running such offers, then your best bets for networks are cxdigital.com and cpaempire.com-- followed by azoogleads.com and neverblueads.com. You will have to spend a fair bit of time running many offers to find ones that work, plus you will start with the street payout. If you want to maximize your earnings, but don't want to spend time each day rotating ads, then I'd recommend you try FlingWeb.com. I can personally vouch for the folks that run the companies I just mentioned, since I dealt with them on a day-to-day basis in managing the Social Media ad network. Look at each ad network and find out for yourself whether they are an ad network running through another ad network or whether they have exclusive offers in which they can guarantee you the best payout. Share Your Learnings I want to see the pubs win the monetization battle, so please share with the rest of the developer community what is working. Unlike with ad networks, where one gains at the expense of another - you as a developer don't lose when you help other developers monetize better.

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Are Ad Networks Ripping Me Off?

Dennis Yu

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Dennis Yu