Why Stylist Has Retreated From the Open Marketplace

Female-focused Stylist is the latest publisher retreating from the open marketplace, which accounted for 5% of its revenues when it ceased trading there last month. As the fashion, beauty and pop culture publisher controls more of who buys its inventory, it expects CPMs to rise. But at the beginning of December this was too early to tell. “If you want to advertise in premium environments—as advertisers tell us they do—that can’t be funded at $2.50 CPMs,” head of digital at Stylist Group David Hayter said. “That doesn’t fund quality journalism or premium environments unless you’re doing it at mass scale.” Increasingly, publishers like The Financial Times, South China Morning Post and Stylist are retreating from the open marketplace, adding scarcity to protect their ad rates. The depreciation of third-party cookies coupled with Apple’s IDFA restrictions are leading to significant reductions in open marketplace efficiencies for buyers. Cookie matching is even further compromised, thwarting how advertisers identify audiences, but also, how buyers apply data sets, build retargeting pools and apply frequency caps. In November 2019, open marketplace revenue made up between 25% and 40% of Stylist’s global revenue, despite taking between 70% and 80% of its impressions. Over the last year, the publisher has consciously tried to reduce reliance on the open marketplace through partnerships with the U.K.'s Ozone Project and by focusing all its effort on direct-sold ad campaigns. When the coronavirus hit and programmatic ad rates plummeted, that decision-making process was sped up. “At the beginning of the pandemic, everyone was trying to increase yield, scraping around for cash at the time, looking at what fill was out there," Hayter said. "At that point, you could do nothing to increase yield aside from a penny here or there.” Pulling inventory from the open marketplace Open marketplace monetization rates were dismal. In the U.S., CPMs fetched an average of $1.35 in August, according to data from tech company Polar, as publishers struggled to monetize traffic peaks. In November, when Stylist pulled inventory from the OMP, it accounted for 5% of the publisher’s revenue. But the detriment it was causing to the business was untenable. As its direct-sold campaigns grew in popularity, less inventory was available, so the spots open marketplace buyers were able to win weren't necessarily reflective of the whole Stylist audience. The discrepancy between the CPMs for direct-sold campaigns and open marketplace grew. From what audiences a first-time advertiser would see to the potential for data leakage, trading in that environment stopped making sense. After making the change, the site speed improved “marginally,” Hayter said, and internally people commented on the quality of the ads. During the process, Stylist was filling inventory with more house ads promoting its events and subscriptions. Stylist, which had 2.8 million total visits in November, according to Similar Web, is heavily funded by advertising: Between 80% and 90% of revenue comes from ads. As such, programmatic ads are still very important, and the publisher remains focused on running programmatic guaranteed and private marketplace deals. A wake-up call for publishers For now, Stylist is considering how to proactively communicate this change to agencies and how it will benefit their clients, as there’s often a disconnect between what marketers say they want (premium environments) and where they spend their money. Increasingly, more publishers are waking up to the fact that the free-for-all Wild West of the open marketplace is an increasingly fraught environment for both advertisers and users. “When you speak with [news publishers], they say, ‘There’s no way we will have any business without some form of ads in the future,” Martin Galvin, GroupM’s trading director said. “There is long-term trust and resilience compared with the dramatic short-term reactions to Covid.”

Publishing News

Stylist Is the Latest Publisher Retreating From the Programmatic Open Marketplace

Programmatic advertising remains important, but so does control of its inventory

Lucinda Southern

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Lucinda Southern