It’s A Fight You’re
Not Going To Win
Sure, digital ad spend is poised to capture 50 percent of the total advertising spend. And, the growth of digital viewers is breathtaking.
Does this mean publishers are winning?
Well, no. Even the premium and renowned media publishers still struggle to meet their goals. But, it doesn’t mean the story is about to end. In fact, necessity to hit the goal breeds innovation.
So, What happens when publishers miss their (lofty) revenue goals?
Refinery29, the female-focused lifestyle media company will miss its revenue goals by 5 percent, as per the source.
While it is true that they are going to lay off about 10 percent of their staff, the publisher is rethinking the social media strategy. Primarily, they’re gonna shift their focus from creating short-form videos for Facebook to high-quality video content they can license to TV and streaming services.
“While this [short-fom] type of content has been driving views, it has not yielded a great monetization strategy to justify the same level of continued investment.”
– CEOs of Refinery29.
Specifically, the memo read that the creation of social media content will be 50% less.
Variety reported that Oath’s Q3 revenue drops 6.9% due to the executives shuffle. Oath, which owns several media giants including TechCrunch, Engadget, HuffPost, and Yahoo Sports pulled in $1.8 billion in revenue this Q3. Verizon, Oath’s parent said that the oath’s revenue will be relatively “flat in the near term.”
The earnings report also specified the reason for the drop in the growth rate. The Oath’s search and desktop revenues are declining and that even offsets the growth of mobile ad revenue and video consumption. Oath will integrate its AOL and Yahoo Advertising Platform by the end of 2018 (So, the list is expanding fast) and will focus more on driving the desktop revenues up.
It’s a fact that seeing the ad revenue climbing up every quarter is hard for media business (and of course, every other business in the market). The obvious consumer consumption shift and duopoly’s share in the market is the reason for the hiccup. However, publishers (as seen above) have started to realize the impact of investing and generating content for Facebook without procuring the expected ROI. The same scenario persists on the Apple News platform and publisher are already leaving it behind.
Are We Penalizing the Premium?
Programmatic advertising has experienced a tremendous growth over the years and now it is a crucial part of any publisher’s monetizing strategy.
“By 2020, almost 90% of all mobile display ads will transact programmatically”
The term ‘remnant inventories’ is diminishing from the ‘programmatic’ glossary. But, the issues aren’t going to leave the industry on its own. As you know, we’re trying to deal with ad fraudsters and spoofers for years and now, publishers and advertisers think of a different problem.
And, there’s no discussion or any suggested solution on the record yet.
The entire ad tech industry runs on ad tech tax or fee and every vendor you partner with will end up taking 10 to 25 percent of your revenue. The number goes high for ad networks and ad exchanges. You might think it’s a fair deal at first and taking 20 percent of what they’ve helped you generate seems to be a win-win deal.
Let’s consider a situation where a publisher is earning $2 CPM and SSP will typically take around $0.2 to $0.4. But when the publisher earns $20 CPM, the same SSP will take $2 to $4.
Here’s what the argument is – The SSP will be having the same load/work to deliver both the ads. In other words, there is no added cost to fill the impressions. But in the former case, it earns $0.2 and in the latter case, it gets $2.
Don’t you think it’s unfair to give 10x better money for the same work?
What’s our say?
While it is true that we need an improved pricing model in ad tech, the argument fails to consider all the variables.
- Getting the buyers is as hard as getting the reader – Ultimately, buyers bid for the users, but getting the quality buyers takes a lot of work and it’s a nightmare to foster a relationship in digital advertising. In addition, consider the dynamic floor price optimization and time out running on the background.
- Higher CPM essentially means higher competition – In fact, higher CPMs can be secured only with higher competition and user data. More competition calls for increased processing and optimization (bidder prioritization, bidder optimization, ad density, etc.) work on the backend.
Besides, we won’t see a dramatic increase in the CPM (from $2 to $20) for the same ad placements in most cases.
So, Blockchain Will Save Publishers?
MediaMath, one of the largest DSPs in the digital advertising industry kick-started a race that can modify the way we do programmatic transactions.
The company recently pushed the Underscore CTRL blockchain tech to offer 100% Viewable, Fraud-Free Impressions for the buyers across mobile, online, and OOH. The technology offered by Underscore CTRL promises to determine the likelihood of an ad being viewed by measuring ad placement characteristics and publisher contextualization.
As this happens before the DSP even bids, it can really save a lot of work and resource wasted by the adtech vendors. DSPs can use the third-parties like DoubleVerify and Moat to check the veracity of the results which are recorded in an immutable ledger.
We couldn’t even find any details or whitepaper on the technology let alone results.
So, we needed blockchain to save journalism (ahem, digital ad spends on the open internet)?
Well, not exactly. There’s a talk about the inability of the blockchain to compete or meet the scale of programmatic transactions. On the contrary, if you believe people can contribute to journalism and we need just the blockchain tech, here’s an interesting read from The New York Times.
Criteo Had its ITP Aftermath
Criteo, a publicly traded adtech company reported an annual decline of 5% and you all know who to blame (EU – GDPR and Apple – ITP 2.0)
And, what an ad retargeting leader in the market will do now?
Find the solution or Create one. It’s former in this case.
Criteo has acquired an app install advertising solution provider, Manage. Manage, a mobile app advertising and retargeting company claims to reach 2B+ unique devices every month. Criteo aims to reduce the reliance of cookies by merging Manage with its portfolio.
Is the worst over?
The CEO of the ad tech company said that the worst of GDPR and ITP is already over and they’re steady now. Most importantly, he says Criteo will add more clients because of its self-service tools and less reliance on cookies.
“We are very much in steady mode”
– JB Rudelle, CEO, Criteo.
The earnings call of Criteo is one of the most important ones in adtech. The company is one of the very few publicly traded ad tech giants and its results can be cited as a bellwether for the retargeting industry as a whole. Clearly, the growth predictions correlate with what we have been discussing in our adtech roundups – Self-serving platforms and ID-based solutions.