SCMP's Revenue Fell 25% After Leaving the Open Exchange

It takes a strong stomach for a publisher to pull inventory out of the programmatic open marketplace, especially after an erratic year. But news publisher South China Morning Post (SCMP) is starting to see the benefits of its decision to take more control of its advertising. After withdrawing from the programmatic open marketplace in Asia at the start of 2021, a quarter of South China Morning Post's digital revenue disappeared overnight. Now, the publisher says it’s on track to make up that revenue loss over the next few months, thanks to clients buying its inventory through programmatic direct and programmatic guaranteed deals at a fixed price. “The only way [to drive more direct conversations with buyers] is to draw a line in the sand,” said Ian Hocking, SCMP's vp of digital. “We are not going to offer open marketplace [inventory] anymore. We’re rigorously looking at the long-term future for SCMP and how we work with advertisers." The publisher commented that it is important to regain control of one's product, even if it means fewer advertisers. The brand also never wants to compromise user experience just to increase ad units and impressions. You will be working with more publishers than you’re capable of setting up deals with.—Matt McIntyre, vp, programmatic Europe, the Middle East and Africa, Essence The Alibaba Group-owned publisher has 50 million monthly average users, with 37% from the U.S., according to internal figures. Comscore finds it has 22.2 million global unique monthly users. For now, Asia is the focus of its open marketplace retreat. Declining display media revenue Publishers have long groused about the growing list of problems with the open marketplace. The difference between premium and remnant inventory is indistinguishable, and publishers can’t tout their uniqueness like first-party audience data, specialized content and brand safe environments. Direct relationships with agencies and brands are disintermediate. As the open marketplace has grown and tech vendors have pushed the limits of the inventory at more efficient prices, the pros for publishers are swiftly diminishing. Although some publishers scout the open marketplace as a leads list for sales, SCMP is not interested in chasing the 2,000-plus buyers to have conversations about switching to direct buys. According to eMarketer, 86.5% of U.S. digital display ad spending in 2021 occurred via programmatic channels. The majority of this relies on the open marketplace, Hocking notes. But display media revenue has been declining for publishers for many years. Few have brand clout Nonetheless, few can face the risk of cutting off thousands of potential buyers and revenue, even if the long-term benefits outweigh the short-term revenue drops. When Hocking worked at News U.K.'s The Times of London from 2016 to 2018, he led the removal of inventory from the open marketplace. But few publishers have the brand clout to entice buyers to change the way they trade. “You will be working with more publishers than you’re capable of setting up deals with,” said Matt McIntyre, vp, programmatic Europe, the Middle East and Africa at Essence. “Depending on how curated the supply is, each publisher will represent a small fraction of your spend right now. For performance-based buyers, to drive ROI for clients, they might not have the resources to build out teams to manage deals." SCMP is currently hiring a team of five programmatic specialists who can speak about why buyers should choose some routes over others. It is also running more programmatic direct deals, typically straightforward to set up and easy to scale and use. For clients looking to create bespoke audience segments or buy video inventory over a set campaign run, SCMP is still running programmatic guaranteed deals, which are known for bringing in more money. Although a quarter of SCMP's total digital revenue came from the open marketplace, the publisher also has a subscription revenue stream and has become less reliant on ads. Hocking notes that 50% of total digital revenue comes from display media. The publisher wouldn't share specifics about how reliant it is on this revenue source. Real-time efficiency The coming third-party cookie crunch may spur publishers to withdraw inventory from the open marketplace. However, as Google will likely offer solutions for cross-site tracking, publishers fear that this will funnel more spend to the social media giants' walled gardens. To compete, publishers are flexing muscle around their own first-party data platforms. Of course, the difficulty is Facebook and Google have the budgets, experience and resource to create the most intuitive platforms for buyers to use. Today, more than 80% of campaigns in Asia use activations from Lighthouse, a first-party data platform launched seven months ago by SCMP with customer data platform 1PlusX. Hocking said that so far, it's run 50 projects for partners, as well as hundreds of other campaigns each month. “What you want is real-time efficiency moving to deals, more agencies look for consistent quality and easy to manage buys, rather than angling to get a small advantage out of a harder setup," said Hocking. “We have first-party relationships with users and a raft of first-party data with persistent IDs," he added. "We can own that conversation and build success.” How Cookies Work and Why They’re Going Away

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South China Morning Post's Digital Revenue Fell 25% After Leaving the Open Exchange

The publisher is still on track to make up what it lost

Lucinda Southern

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