So, are Web publishers totally screwed -- or aren’t they?
That’s not the official theme at the Interactive Advertising Bureau’s annual meeting (it’s actually "Revenue: the Next Wave"), but it appears to be the reigning question at the event, which is being held this week in Carlsbad, Calif.
Based on the topics discussed by various speakers thus far, the future of ad-supported traditional branded sites is very much up in the air. The ongoing threat of ad networks, exchanges and demand-side buying platforms turning sites into commodities has many asking scary questions -- while others are expressing steadfast defiance.
During a session focused on mergers and acquisitions in the digital space, Tolman Geffs, co-president of the Jordan Edmiston Group, posed the question, “Is brand advertising in decline?" He pointed to dropping stock prices at the NYT Co. and Yahoo and shared ominous stats for publishers who earn a living selling traditional, context-driven brand opportunities. According to the data, in 2009 more money was spent on direct marketing and promotions than branding.
For digital, he predicted that branding and direct response tactics were starting to blend. “We think this is not just the economic cycle,” he said. That means advertisers are purchasing audiences, rather than buying ads on a site-by-site basis. Geffs estimated that 80 percent of display inventory is sold directly, but by next year that figure will dip to 70 percent.
“Tons of players [are] getting into the audience-selling market,” he said. “Premium publishers are losing a key advantage.” Historically, publishers have sold brands based on premium content and premium audiences, but that dynamic is fading, Geffs said.
Of course, that’s not a trend most traditional Web publishers are crazy about, but it’s inevitable, according to David Moore, chairman and founder of 24/7 Real Media. During his keynote address. Moore said that agency-led demand-side platforms are here to say, and publishers must accept that fact.
Making matters even more complex, the online ad process is becoming increasingly crowded.
With more players involved in the display ad chain -- from ad serving companies to exchanges and data suppliers -- publisher margins are taking a beating, said Geffs. An online ad buy generating a $5 CPM may result in just $1 going to the publisher that sold it, according to his data.
That’s leading many publishers to question whether all this high-tech selling is good for business.
During an address titled “I Didn’t Kill Newspapers," Eric Hippeau, CEO of The Huffington Post, said that a year ago, the site was using ad networks with the promise of better targeting its news-junkie audience via sophisticated data. But the venue was earning a 40-cent yield from its indirect sales.
“No one can build a business, let alone a large one, with those kinds of numbers," he said. "Algorithms might work for search engines, but not for us.”
Instead, THP has spent the last year doubling its sales force. Currently, the site sells about 15 percent of its inventory through networks, and expects that percentage to hit zero in coming years. “We’re doing it the old-fashioned way,” Hippeau said.
Meanwhile, several prominent IAB executives known for doing business by old-school methods urged publishers to stand up for themselves -- though execs were careful not to directly call out networks, exchanges and demand-side platforms.
During Sunday’s awards ceremony, IAB Founder Award honoree Jim Spanfeller, president and CEO of The Spanfeller Group, said publishers need to show more “respect” for themselves and the opportunities they present to marketers.
Similarly, the night’s other Founder Award winner Wenda Harris Millard, president and COO of MediaLink, spoke of the online ad industry needing to join the “adult world’ of the business.
To do so, the industry needs its members to assume responsibility for shaping its future. “Forceful and fearless leadership will help accelerate our beloved business,” Millard said.