Publisher Salon Grows Revenue After Cutting Resellers

Showing that publishers are better off controlling their own programmatic destiny, news publisher Salon has grown revenue after cutting off access to its inventory for the vast majority of resellers earlier this year. That increase comes from being able to charge more for its inventory and also by reducing its ad-tech fees. Salon limited its resellers under the assumption that working with them gives publishers less control over pricing their inventory, ultimately reducing margins. “Rather than us getting a CPM that’s reflective of many different sites, [including those] less premium than ourselves, by standing alone, we command more of a premium,” said chief revenue officer Justin Wohl. “There is not one ounce of let’s go back to that reseller thing. We’re going to keep on tightening versus opening again.” After Cutting Open-Market Programmatic, Bloomberg Media Sees Efficiency Gains, Revenue Losses Salon started pruning its resellers in May. In July, revenue per thousand impressions (RPMs), a metric based on revenue from programmatic display and page views, was up 83% compared with January. Salon, which declined to give exact financial figures, generates all of its revenue from open web display programmatic. Resellers have been falling out of favor for several years now in the programmatic industry. The IAB released the ads.txt protocol in 2017 in part to root out unauthorized resellers. As supply path optimization (SPO) has grown in popularity, the impulse to trim unnecessary ad-tech partners, on the buy and sell side, has only grown. Yet most publishers have chosen direct deals and private marketplaces to implement their SPO strategies, with the notion that the open marketplace itself is inherently uncontrollable. The revenue gains that Salon has posted since removing resellers are preliminary evidence that open web programmatic and SPO strategies can coexist. Salon's growth in RPMs outpaced the growth of the wider industry between January and July. CPMs, which are highly correlated with RPMs, for open auction programmatic in the U.S. only rose by 21% between January and July 2023, according to Operative’s STAQ benchmarking data. Operative draws CPM data directly from ad servers and supply-side platforms (SSPs), representing over 30 publishers, more than 50 SSPs, and over $3 billion in revenue on an annual basis. Cutting out resellers may have helped stem the losses of Salon’s lagging 2023. For the first half of 2023, Salon’s RPMs were down 46% compared to the first half of 2022. The overall market, as measured by Operative, was down but not as drastically: CPMs were down 14% for the first half of 2023 compared to the first half of 2022. What exactly is being resold? It starts to sound very suspect.Tom Triscari, economist at Lemonade Projects But in July, Salon caught up. RPMs were down 22% compared to July 2022. Operative’s data set, meanwhile, showed July 2023 CPMs down by 11% compared to the previous year. Where Salon was once performing nearly three times behind the market average, that gulf post-pruning its resellers narrowed to two times. “The fact that they’ve seen some significant increases even on month over month or a few months over time, that’s impressive within this economy and the market,” said Sara Levitt, senior director of product marketing at Operative. The questionable value of resellers Resellers theoretically add value by adding another pipe of demand. But in the SPO-era of ad tech, publishers are seeking sell-side partners that make their content look more premium and not simply increase the volume of bid requests. “The only reason for [resellers] is for incremental revenue,” said Tom Triscari, economist at programmatic consultancy Lemonade Projects. “What exactly is being resold? It starts to sound very suspect.” Less well-known publishers might need to take demand where they can get it, and that means allying with other publishers in a resold group to attract buyers seeking scale. Brand names like Salon don’t need to play this game, Triscari said. Salon eliminated resellers by removing lines from its ads.txt files introduced by its supply-side platform partners. SSPs will often introduce resellers into a publisher’s selling pathways at the beginning of the SSP-publisher relationship, Wohl said. Salon retained a few reseller lines from authorized resellers, like Wunderkind, Wohl said on a Digiday podcast in late June. Made for Advertising Sites Are Programmatic's Latest Boogeyman While it’s hard for publishers to ascertain how much of their inventory ultimately gets sold by resellers, Wohl said the number of lines that resellers made up in Salon’s ads.txt files outnumbered direct seller lines by five to one. In removing resellers, Wohl has also been able to identify SSPs that weren’t driving much demand to Salon without the reseller networks. As a result, Salon has ended relationships with two SSPs. “Without the reseller, [we] see their wins are pretty clipped,” Wohl said. “[Demand-side platforms] aren’t putting their buys right into those SSPs, but rather, those SSPs were creating business opportunities in the middle.”