Magazines are desperately searching for new ways to stave off the bleeding of their advertising losses. Last week they came up with the idea of an online marketplace that could bundle and sell subcriptions to e-readers. Now they're thinking of ending their love/hate relationship with ad network by creating one of their own.
That is an endeavor easier said than done.
Magazine revenues are clearly in peril. Ad pages are down across the board, and the Media100, a list of America's top publishers, is on track to post the first revenue decline since AdAge started ranking top media companies in 1981.
Magazine publishers like to blame a chunk of their online revenue decline on ad networks. One magazine exec tells AdAge:
"We're getting killed by ad networks. A lot of companies feel like, as consumer companies with a flood of online content, if we could just create some scale on our own and sell across it, we can get a lot better ad rates."
And now, after years of complaining that ad networks were selling their inventory at bargain basement prices, magazine publishers want to cut the networks out of their advertising loop.
According to AdAge, competing magazine companies have been "discussing the creation of an ad network that would sell targeted ad space across many of the industry's websites." Plans are in the preliminary stages, but the idea is "front and center."
AdAge writes that a "magazine publishers' network, if it could achieve the crucial scale required, could offer advertisers behavioral targeting on professionally produced, 'well-lit' sites."
Creating a consortium of competing magazines is no easy task, however. Ad networks take over publishers' unsold inventory because in house sales staff is unable to sell it. Pooling together a consortium of magazine advertising will help with the scale problem, but divvying up that revenue and deciding which gets sold first will be a difficult dilemma.
Joelle Kaufman, SVP of marketing at vertical ad network management company Adify thinks it will be hard to execute properly: "If they all work together and play nicely, it could be great. But the first one that defects captures the prize."
Namely, the consortium would either share a sales force, which means creating an entirely new sales team for this product, or they would use existing sales teams to sell across the consortium. When a magazine's inventory isn't seling, it's sales team could easily cut rates to sellout and then drive down the cost of other ads on the network. It's essentially the same problem mags have with ad networks now.
While they hate seeing their non-premium inventory sold at low prices, receiving that income is better than nothing, and publishers continue working with networks.
Creating an ad network won't fix the problem of cost control unless they hire a sales staff equipped to sell out a variety of inventory. And it's hard to imagine that publishers will want to cede control to a network's independent pricing, even if it's made up of other magazines.
Says Kaufman:"Most consortiums fail. They fail beccause they don't have the right infrastructure ad they can't deliver well on what they sold. Is this doable? yes. Is it easy? Not at all."