Publishers in 2018 face an array of barriers to profitability. Platforms are competing for publisher revenues, programmatic intermediaries pile on the costs to facilitate new ad buys, and ad opportunities are compromised by consumers using ad blockers.
FatTailexplores in detail some of the key challenges faced on the “Programmatic Playground” as well as opportunities to monetize in what is, an increasingly competitive environment.
3 Key Challenges
The first is barrier to entry is Platform Competition. If you’re not Facebook or Google, you’re a publisher battling for a small percentage of the overall display advertising pie.
According to eMarketer, in 2016, 73% of display dollars were run through programmatic channels, meaning that total display dollars accounted for $34.9B. About half, $17.1B, is spent through Facebook and Google.
Further illuminating this disparity is the 2016 IAB half year report, which revealed that the top 10 publishers captured 74% of ad revenue. The next 15 publishers capture another 10%. What’s left? 16% of the display advertising ecosystem, or roughly $5.5b. While not a small number, these marketplace economics show that publisher and platform consolidation is happening, and it is eating that industry pie.
In the coming years, we expect to see Verizon, AOL, Yahoo, and their mobile businesses take larger parts of the overall industry share. With relaxed rules around data tracking and net neutrality, broadband service providers like Comcast and AT&T may also develop as new ad tech giants. They pose further challenges to publishers.
With the substantial and continually growing proliferation of programmatic intermediaries, publishers are deploying a larger number of partners to facilitate buys. Ad tech costs add up across ad servers, demand side platforms, supply side platforms, yield management platforms and an array of highly skilled professionals to manage all of these solutions. Estimations abound that publishers ONLY receive 30 to 50% of the programmatic dollarsonce the supply chain is paid.
Last but not least, Ad Blockers have become a mainstay for 26% of digital media consumers according to the IAB. Most of this tech is deployed on desktops, which represents a greater opportunity for mobile ad campaigns. For marketers, this means there are fewer ways to reach these consumers, especially the coveted 18-34 year old user set. Publishers lose these ad dollars, placing further pressure on their bottom lines.
It’s not all bad news, though. The same programmatic forces that are creating challenges are also creating new revenue streams for Publishers:
Audience Extension Campaigns
There are 3 data points that can be leveraged within the programmatic ecosystem, and adopted by Publishers to continue to target consumers off-site; On-site behavior about your visitors’ habits, cookie/device IDs and person-based data.
On-Site Behavioral Data
By analyzing the frequency of section visits and types of content consumed, a publisher can deliver a variety of behavioral segments based on the stream of content their users consume. Users are defined based on their interests (sports, autos, and energy), functional role (finance, management, sales & marketing) and even lifestyle segments (health, high net worth, and style). Buyers on demand side platforms access sometimes hundreds of targeting segments from a specific Publisher, and can then layer on geographic targeting, frequency caps, and attribution methodologies tied to the overarching digital strategy.
Cookie and Device IDs
Even if a publisher hasn’t developed a data sales strategy, they can still leverage the core elements of site tagging, and site visitor data to segment audiences, define behavioral profiles or to target users cross-device. An internal trading team will use any number of demand side platforms to turn those data sets into actionable targeting segments while using white lists to keep the delivery onto premium properties. This approach allows Publishers to optimize towards contextual relevancy for an ad that delivers deeper resonance with the consumer and therefore commands a higher value.
People Based Data
Existing email address lists are immensely valuable for direct targeting and as a base for modeled data tied to third party data providers. Publishers can partner with onboarding providers to turn email addresses and physical addresses into targetable users and new audience models. These data points can be turned into cookie segments, device IDs pools and Facebook ID targets.
With the expanse of data available to a publisher, they can create competitive advantages tied to conferences and more holistic marketing.
Publishers including MediaPost, Fast Company, and Penton hold in-person activations throughout the year. Advertisers have been to MediaPost’s OMMA Audience Buying or the Data and Programmatic Insider Summit. Entrepreneurs attend Fast Company’s FCLA and Innovation Festival. Business people in industries such as a farming and product manufacturing attend the Farm Progress Show and Natural Products Expo. These events embody the core culture of their respective brands and allow for community members to meet, share ideas, and learn from marketplace experts.
Publishers that consistently collect consumer data, hold the advantage of high volume and quality of audience data connected to specific interests.
In addition to advertising opportunities, these publishers can create additional types of marketing opportunities by connecting email lists, cookie, device IDs, and site behavioral patterns. The output is proprietary research, white papers and sponsored content available to bridge the connection between consumers and marketers. B2B publishers can create ebooks, webinars and studies that speak to the needs of their market. B2C publishers can develop combinations of branded content, email marketing campaigns and programmatic distribution of this content at scale.
All of that said, the interesting opportunity created is the continued democratization of the media business. Think about it; Advertisers are asked to think like publishers in creating branded content at scale, Publishers now have an opportunity to use the tools designed for advertisers to create brand extension campaigns, Consumers are now creators, and agencies are becoming consultants and AdTech Platforms are the relative newcomers to the ecosystem that disrupt publishers.
With the array of opportunities available, Publishers should consider data as the defensible opportunity, comprised of wholly proprietary assets. Whether monetized individually or through a connected strategy (across devices, properties, data management platforms, demand side platforms, algorithmic decisioning and identify resolution services), these disparate data points create new opportunities for publishers.
FatTail (www.FatTail.com) Founded in 2001, FatTail provides integrated media sales, operations, finance, and marketplace solutions. Our revenue management platform, AdBook Plus, is used by many of the world’s leading publishers to streamline and control the entire advertising lifecycle from proposal creation through billing. It includes integrations to leading ad serving, CRM, financial, business intelligence, and demand-side systems.